American working class, Consumers, Credit score, financial institutions, Inequality, Payment & credit history
Components of Our FICO Credit Score
Numbers are an integral part of our lives. From an early age, they define who we are as individuals: age, height, and weight. We occupy space and status in the world, evident by our residential street number and zip code.
The older we get the more numbers we accumulate: social security, bank accounts, credit cards, driver’s license, and passport. These numbers define our personhood and achievements.
Then there is our credit score.
Based mainly on our payment and credit use history – see above chart – the credit score indicates our risk as borrowers. On a scale of 300 to 850, the higher our score, preferably in the 700s, the more attractive we become to money lenders. There’s no hassle to get a loan to buy our dream car, that house in the suburbs perfect for our kids, or enroll for a Masters in Business Administration.
The advantages don’t end there. We’re rewarded with lower interest rates on our auto and student loans and mortgage. In other words, the higher our credit score, the less we pay over our lifetime for goods and services.
My sons and I first learned about the credit score on our first bank visit to open a checking account and apply for an American credit card. At that time, I had an international credit card account issued and payable in Brazil. My excellent payment and credit history had no value in the United States.
My credit score was zero.
Five years later, I began receiving credit card offers in the mail. I accepted an offer from Capital One with a $250.00 credit limit. Two years later, when my credit score hit the 600s, pre-screened credit card offers from major American banks flooded my mailbox.
I have observed that increased debt raised our credit scores. Additional credit cards with higher credit limits also upped our scores. The more we spend and borrow, the greater our value as individuals.
The American credit score system perpetuates inequality.
Low-income, hardworking, honest people with limited access to credit are defined by low credit scores. The owners of Walmart have amassed a fortune providing them with low-cost goods produced by low-income workers across the globe.
High-income middle class workers, who pay their debts, are defined by their top value credit scores. Our financial institutions have become power brokers providing them with credit and other financial products.
The propagators of the credit score system are not defined by credit scores. Their wealth allows them to pay cash for high value goods and services. Immune to the control and demands of the consumer numbers system, they created massive, criminal debt, bringing down the world economy in 2008. Their impunity allowed them to pass on their debt to you and me.
I am a mere consumer number. Do you know your number?