Reply #56: Here's what happens if you don't play the credit game

[54anickel]

http://www.chron.com/cs/CDA/ssistory.mpl/business/27997...

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The problem is that Bensema has no recent history of borrowing money and paying it back. That means he has no verifiable credit and a minuscule credit score. In citing its reason for denying him a better rate, his insurer listed the reason as "total credit less than optimum."

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For people like Bensema who live outside the credit nation in which so many of use are mired, scoring amounts to an unfair penalty.

It imposes rules of a game they have refused to play.

Now those ratings are affecting not only our ability to go further into debt but to get basic services such as telephones and electricity. In some cases, employers use them to evaluate job applicants.

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On Friday, the Federal Trade Commission said Sprint and AT&T agreed to pay almost $1.5 million to settle charges that they failed to notify applicants for phone service that credit reports were used.

You'll notice that the phone companies got spanked for not telling potential customers about the practice, not for the practice itself.

The justification for using credit scoring for non-credit purposes is that there's a "correlation" between our credit histories and other behavior, like filing fewer auto claims. Bensema is proof those correlations are flimsy suppositions.

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