The credit score system was created by the banking system. They have basically bankrupted every small business in the US. My question is, should small business borrowers respect the current social system, based on credit scores, or just let everything collapse, since they have nothing to lose now?
If the past 2 years prove anything, it's that the only response of the American public to getting continuously raped by the bankers and their minions in congress is to bend over further and to smile more when saying "thank you." They won't demand substantial changes to the system they live under, and they'll go back to acting like they did before this, as soon as they are able. Eventually the abuses will mount to the point of unsustainability, and it will collapse, but change won't come from the people themselves.
It matters if you want to play the game. But who is going to get credit new players.. Market is ripe again for all the 20 somethings with 800 fico to borrow to the hilt, day trade or flip foreclosures, start a cupcake business, etc But there are few players left. The best thing we could do right now is to starve the beast as Denninger wrote. http://market-ticker.org/archives/1174-Starve-The-Beast-July-4th,-2009.html "Starve The Beast" - July 4th, 2009 Perhaps its time. There have been a number of people on the forum talking about this, with one of the most recent converts being "iflyjetzzz". Look, we can rant and rave about market manipulation and government-sponsored games. We can petition the SEC, the FBI and Congress. We can demand that they stop it all we want. But they haven't and likely won't until and unless America gets pissed off enough to force them to act. So how do we make that happen, yet remain within the law? Its not that hard, and in the intermediate and longer-term it would be incredibly positive for our economy and nation. We go on a consumption strike until and unless our demands are met. What are our demands? Here's the list: All the financial fraudsters are investigated, indicted, and prosecuted. This includes the con artists in CONgress who got "special deals" from Mozilo and his "Friends of Angelo" program (and who are blocking a subpoena to BofA as it would implicate them), it includes those past and current members of Government Sachs, and it includes all those other financial "professionals" who deceived Americans and others with their sale of toxic exploding mortgage products along with the securities supposedly backed by them. Glass-Steagall is restored, in full, and all the firms that can't exist under it are broken up. Period. The insider-trading that has become blatant and outrageous is prosecuted where illegal and where not, is made illegal and then prosecuted, with the focus being on the size of the scam. This includes obvious circumstances such as August 2007 (Bernanke's phone logs were FOIA'd) where trading patterns made clear that "certain someones" had foreknowledge of the discount rate cut along with Congresspeople who were briefed on the TARP and within hours or days made significant stock trades. Today if you're Martha Stewart you're prosecuted where if you make millions in an hour by exploiting government information "leaks" the SEC and FBI look the other way. The Government withdraws all of its backstopping of financial firms who created this mess. All of it. If you're a bank or other firm and did something imprudent, you fail. Period. This is true whether you're a small regional bank (as is happening now; 5 in the last week) or a big behemoth like Citibank or Bank Of America. No "special deals", no "special guarantees", nothing of the kind. If the government wishes to avoid "systemic risk" then the government regulators can do their damn job. The Fed disgorges all of its improperly-acquired MBS and other related securities. If it doesn't have a full-faith-and-credit guarantee and was bought, it is disgorged - period. The Fed agrees to full annual audits without exception. Those people inside government who conspired with certain bankers to cook the books, along with those in the banks who did so, go to jail. Our own Office of The Inspector General in the government has confirmed that there was an active conspiracy to break the law within the OTS, but not one indictment has been issued. Those who committed fraud in the creation of this economic mess, whether they be mortgage lenders, those who packaged up securities while intentionally omitting credit information, those in the real estate industry to pressed for appraisal fraud and others are investigated, prosecuted and if convicted jailed. All of them. Losses are born by those who made bad decisions, not the taxpayer generally. Those who made good decisions get to reap the benefits, while those who made bad decisions eat the losses. No exceptions. Government cuts the annual budget deficit to zero. If government wants to blow the money it has to have the money. If they can't raise the money they don't spend it. It is time to live within our means and hold government to account for its profligate spending along with promises of "benefits" they know they cannot actually deliver down the road such as Medicare Part D. Until then the position of those who wish to join is simple: No non-essential purchases of anything are made. Period. What's an essential purchase? Here's the list: Enough food to eat at home. No more eating out. Rent and utilities. Essential medical services. Enough fuel to get to and from work. In addition any "excess withholding" is stopped; if you are getting a big fat refund from the IRS every year you are loaning the government your money at zero interest until April. Stop that; its stupid. Change your W4 so you get exactly nothing back or owe a tiny amount; if you pay estimates pay only that which you must and not one dime more. Note that it is unlawful to use your W4 to intentionally under-withhold, but you are in fact not obligated to pay one more dime in tax than you actually owe. There is nothing wrong with adjusting withholding to match (as close as you reasonably can) your actual tax obligation. Put the money you save (it will be a lot!) into a non-TARP Credit Union if you have one available to you, or a non-TARP local bank if you do not. Spend none of it. If we pledge to do this and not resume normal spending habits on wants as opposed to needs until and unless the budget is balanced, the bailouts are rolled back and those who committed fraud go to prison the government will be forced to act as they will simply run out of money. They cannot force you to buy that new iPOD or flatscreen TV, or to take an expensive vacation. Consumer spending is 70% of the economy. This is a consumer weapon that is more powerful than any other means of peaceful protest. Strangling the government and private business' ability to steal from us all by cutting off their revenue will force reform, and has the additional benefit of being exactly what this nation needs to provide a strong capital formation base when that reform is complete. If businesses want my money they can join in the chorus of voices demanding that government stop the looting and start prosecuting. Will any of us be perfect in this endeavor? No. There will be the occasional indulgence I'm sure no matter who we are. But I'm willing to bet we can shrink consumption - each and every one of us - by at least 10% without any real personal pain at all, and if we do so it will send an indelible message to those in government and business: cut that crap out! July 4th is Independence Day. Let's make it a day of freedom from the banksters and government financial marauders. Who's with me?
Mine was trashed almost 4 years ago, so far I don't miss credit even a little... I live within my means.. I'm negotiating a rental currently and they are asking for references but not a word about credit score...
Kudo's Maxpi. Just stop borrowing. Live within your means. Live like your parents did in the 70's. If you're short borrow from your brother, not Big Brother. If you don't have to borrow who gives a shit what your FICO score is.
Credit is useless without cash. I'm in my mid-20's with an 814 FICO. Credit or no credit, business start-ups require liquid cash.
When the going is good apply for as many credit cards as you can. When the going gets tough write yourself checks and max out your cards and then disappear.
Ahhh yes, the ol' legally steal money then bail on them. Heck, even the little guys like us can play the big boys game,, stealing and leaving isnt just for WallStreet anymore, lol. Eddie
Answer to your question: let it collapse. I can remember a time when there was no such thing as a credit score. Your job and a few references were all you needed to obtain credit. Of course running all the small businesses out and replacing them with corporate entities and chains made it necessary, I suppose. Too lazy to make a phone call anymore, I guess. I too think it is bullshit and another way to control people. I do not see why it couldn't work again, might even improve the credit situation. This system is broken as more people ruin their credit in this downturn through no fault of their own.