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Our credit system is broken

September 11th, 2010 Leave a comment Go to comments

I got some results back on my credit report.

Choice items such as:

  • Length of account history is too short.
  • Too long since most recent account established.

What the hell? Don't those basically contradict each other?

But wait, there's more:

  • Too many recent inquiries.
  • Length of account history is too short.
  • Too many accounts with balances.

Sounds like I am being encouraged to open a fresh account, because my "most recent account" was created too long ago. But too many new accounts dings me, on the flip side. I have too many accounts at the same time though. It's a catch 22.

However, the major complaint I have is that applying for loans/doing any sort of shopping that requires someone to pull your credit winds up hurting your credit score. This isn't anything new, but I simply do not get it. Shopping around and applying to things should have absolutely nothing to do with your score. That is like being charged 25 cents for looking at a carton of milk at the store but not buying it. Or having to pay to window shop - before you know whether or not you can even afford what you're looking at. Your credit score should only be altered when your credit situation changes. Not for simply checking to see if you can save money by refinancing or shopping for auto loans.

Unless you are extended a new credit line or something else, there should be no change in score. Especially nowadays with so many companies offering specials that require you to apply, shopping for a refinance (which can be turned down easily) costs you points on your credit score. Shopping does not mean you're actually receiving anything.

Also, I am told that "inquiries within the same industry within the same 45 day period only counts as one pull". I call bullshit. I am sure they're still counting each one somewhat.

While I do believe a credit rating system is valuable in some form, ours definitely needs to be overhauled. With the economy moving so slowly, people are looking for various ways to get more money out of their home or car, applying for more credit cards, etc. Regardless of the approval, it is messing with your credit just for shopping.

Suggestions

  • Having your credit pulled should have no adverse affect on your score. Period.
  • The time ranges need to be adjusted. "Too long since your latest account was opened" - that's a new one for me. Really contracts the hell out of the "Length of account history is too short" notice.
  • Consistency across different bureaus - some tell me I don't have enough accounts. Some tell me I have too many. It is like trying to please a committee - you can't please everyone all at once.

I've had credit being built for 10 years, a couple different credit cards, bank accounts and loans. By now I should be receiving no negative marks for anything I've done relating to too many accounts, not enough accounts, too much time, not enough time, etc. However, it seems like raising the number takes an infinite amount of time, but lowering it happens almost immediately when your credit is pulled.

Once again, a sincere disappointment with how a system is run. I also do not see the reasoning behind some of the rules, either.

Categories: Consumerism