Does bad credit mean untrustworthy?

[IndyColtsFan]

ummm, no. I don't remember ever going to a job interview and being required to submit my credit history.

You may not have, but if you signed a consent form for a background check, they probably ran one.

 

[slag]

That might be true in some instances, but in most instances, people dig their own holes by not controlling their own spending and as a result, if job loss occurs, they're screwed. I have little sympathy for them.

My wife has a condo from before we were married and we ran credit checks on everyone who applied to rent it. One person had a credit rating around 420 IIRC. Seriously? That is a sign of being extremely irresponsible. Your credit rating isn't going to be that low without repeated demonstrations of irresponsibility.

Did his wife work too? That's unfortunate, but they should have saved 6 months to 1 year of expenses and if his wife wasn't working, she needed to be. Having two car payments at the same time is insane, IMO.

Yeah, and then when he is out of work for 13 months he'll be irresponsible for not having enough saved up. There isn't a contingency plan in place for everything. Credit should not be used as a yardstick for measuring one's honesty in everyday things unless that person cannot account for why he/she has the bad rating. Give them a chance to explain and if it makes sense, go with it.

 

[Texashiker]

How would you propose that prospective lenders judge a person's ability to pay back their loan?

For lenders, yes, credit history is important.

But, the opening post referred to stuff like insurance and security clearance, not the ability to pay back loans.

I understand financial history plays a big part now in insurnace, security clearance, job etc... How do organizations come to the conclusion that financial history = trustworthy? Does a person with bad credit always mean untrustworthy.

financial history = trustworthy to pay back a loan, yes

financial history = trustworthy as a person, no.

Blanket statements should not be used on any group of the population.

 

[IndyColtsFan]

For lenders, yes, credit history is important.

But, the opening post referred to stuff like insurance and security clearance, not the ability to pay back loans.

It is important for something like security clearance, for the reasons listed by another poster (bignateyk?)

 

[Texashiker]

It is important for something like security clearance, for the reasons listed by another poster (bignateyk?)

So instead of judging a person by their character, we should judge them by their race, or maybe skin color, or how about their sex, along with their credit history?

Insurance companies charge males under 21 years old a higher rate then females. Not that 100% of males under 21 drive dangerously, but a large percentage do. The percentage that drive carefully are punished with the rest. From the time I was 17, to around 28 years old I did not have a single wreck, but I was charged the higher insurance rates due to my sex and age.

Saying that "everyone" in a given group acts a certain way is wrong.

 

[highland145]

What ya'll talkin' about. Bad credik scores?:whiste:

 

[Murloc]

I love comments like that - people never lose their job? Never have medical bills? Never have legal expenses? Job markets never turn down? Factories never close? Lay offs never happen?

When people are punished for having bad credit, their also punished for having bad luck.

Back when Enron closed, there were thousands of people nation wide that lost just about everything they had. I did some computer work for a guy who worked for Enron. He had a 250,000+ house, 2 cars in the driveway and no way to pay for it. Everything had been fine for years, but within 4 months after Enron closed he and his wife had spent their saving paying the house note, car notes, insurance,,,,,. When I fixed their computer, he had 1 months worth of savings left, after that they were going to lose everything. I guess he was "irresponsible" for working for a company that went bankrupt?

he was irresponsible for not selling house and cars and getting less expensive stuff, and having savings only for 4 months (which is not enough to sell stuff)

 

[bignateyk]

So instead of judging a person by their character, we should judge them by their race, or maybe skin color, or how about their sex, along with their credit history?

...

Saying that "everyone" in a given group acts a certain way is wrong.

Security clearances are based on a ton of factors, most of which probably aren't "fair". During the polygraph you are asked about your finances, sexual orientation, religion, love life, masturbation habits, drug and alcohol use, and quite a bit more personal stuff.

Anything that might make you susceptible to bribery or blackmail raises flags.

It's not about fairness. It's about risk. Will someone who is $50K in debt take a bribe? Not necessarily, but they are a lot more likely to take a bribe than someone who has $50K in the bank.

They can deny your clearance for any reason they want. If you are a closet gay chances are you'll get denied. Openly gay, no problem.

 

[IndyColtsFan]

So instead of judging a person by their character, we should judge them by their race, or maybe skin color, or how about their sex, along with their credit history?

Gaining security clearance should not be based on political correctness. As someone pointed out, if you have a bad credit score or are in a serious amount of debt, foreign nationals are likely to target you for "assistance" in exchange for helping you "ease" your debt. Read about some of the notorious spy cases -- in many, the spies were in huge amounts of debt.

Saying that "everyone" in a given group acts a certain way is wrong.

I'm still waiting for you to tell us an objective measure which would accurately gauge people's trustworthiness.

 

[highland145]

I'm still waiting for you to tell us an objective measure which would accurately gauge people's trustworthiness.

A past history of doing the right thing.......like, for example, being responsible with your finances.



Went there.:biggrin:

 

[Texashiker]

he was irresponsible for not selling house and cars and getting less expensive stuff, and having savings only for 4 months (which is not enough to sell stuff)

Once people get accustomed to a lifestyle, they do not want to change. Its easy to say "just downgrade", but in reality its difficult.

I remember doing some computer work for a family that had to downgrade from a 6,000 square foot house, to a 4,000 square foot house. They felt their entire lives had gone down the drain from the downgrade - but at least they had a house.

After Enron went down, there were a lot of people that killed themselves because they lost their jobs and would soon be losing their homes and cars. What can you really say about people that would rather die then to lose their luxury lifestyle.

 

[Texashiker]

I'm still waiting for you to tell us an objective measure which would accurately gauge people's trustworthiness.

There are a lot of ways to measure the "quality" of a person. But for me, the one true measure of a person is how well they take care of their children. But I dont figure security clearance checks will care about stuff like that.

After family relations its job history, how many times married and divorced, ever convicted of a major crime, if so what?

Insurance companies that want to charge higher rates will look for any way possible to squeeze every penny they can out of someone. Credit history is just another way to get that extra penny from people who may not be able to afford it.

It seems this thread has narrowed to to a single viewpoint - security clearance, and how credit score is an example of a persons reliability.

 

[alkemyst]

Credit is run on many new positions now, it's become a big indicator of trust.

It's one thing to be caught up in the mortgage deal now, but another when you have 20 credit cards all 90-120 days late.

 

[DaWhim]

yea it does. it is based on statistics

 

[IndyColtsFan]

There are a lot of ways to measure the "quality" of a person. But for me, the one true measure of a person is how well they take care of their children. But I dont figure security clearance checks will care about stuff like that.

That isn't an objective measure.

 

[HardcoreRobot]

Yes, the wife worked, but her salary was only able to pay either the house note, or the car notes, but not all of it. So every month they slipped a little further and further behind.

Downgrade car(s). downgrade house. rent a room out. get an additional job. all possible options, and honestly situation could have been entirely avoided with normal reasonable responsible planning.

It was one of those cases where 1 person in the relationship made the majority of money, and paid most of the bills. When that person lost the job, their world came crashing down around them.

plan for that possibility

My wife and I bought a house within our budget. If one-or-the-other of us loose our job, we can still pay the house note. Unlike a lot of people who buy stuff based on the highest wage earner.

its sad that this is something to be proud of (not commentary on you, but americans in general)

Texas is talking about passing a law that prohibits using credit scores for choosing job applicants and setting insurance rates, and I will be glad when that law passes.

will fail. gonna drive up costs as companies hire delinquents and have to learn the hard/expensive way

My opinion - there is a link between easy credit and poor credit scores. If credit was less easy to come by, people would be forced to manage their money better.

you can point fingers and try and pass the blame however you want. at the end of the day, given all the information people are making irresponsible decisions. easy credit is available to everyone, yet not everyone has this problem. so how is logical to blame the availability of credit instead of poor decisionmaking? you can put whatever you want into law, but bad people are still going to do bad things, stupid people will still do stupid things, and irresponsible people will still be irresponsible.

But no, I do not think that a poor credit score makes a person less trustworthy. It really depends on the person, and blank statements should not be used.

whether or not financial irresponsibility extends to other arenas is debatable, but you must agree that its pretty solid proof of financial untrustworthyness.

Most people have stole something at one time or another, does that make them a full time thief? No it does not.

Most people have gotten drunk at one point or another, does that mean they have a drinking problem? Probably not.

Most people have missed a payment, and it doesnt mean they have bad credit. To get the type of credit scores that are going to be impacting employment, you are going to need a long and consistent history of f'ing up. Bad luck doesn't ruin credit. Poor planning and spending habits do.

 

[Texashiker]

its sad that this is something to be proud of (not commentary on you, but americans in general)

Why is sad to be proud of? Because most Americans buy homes they can barely afford (or not afford at all)?

will fail. gonna drive up costs as companies hire delinquents and have to learn the hard/expensive way

Hopefully a law that prohibits the use of credit scores for job applicants will pass. It will probably mean more people that need jobs will get hired.

That isn't an objective measure.

So is using a credit score. Credit score places a number on a person, something taking care of your children, being a good person overall can not do - unless your in prison, then you get a number.

 

[IndyColtsFan]

So is using a credit score. Credit score places a number on a person, something taking care of your children, being a good person overall can not do - unless your in prison, then you get a number.

A credit score is purely objective -- there is no subjectiveness about it. As someone said, it might be debatable that a credit score indicates trustworthiness outside of finances, but I don't think there is any doubt that it is a good measure of your financial responsibility.

 

[Texashiker]

I don't think there is any doubt that it is a good measure of your financial responsibility.

Good measure - maybe so

Exact measure - no

 

[gimmewhitecastles]

To get the real value of a person's trustworthyness takes too much time and effort to evaluate.

Credit score is a decent evaluator of that.

If you can't adjust your lifestyle to accomodate your expenses, then why should you be expected to adjust to work situations. Flexibility is an asset for employees.

 

[CVSiN]

wow.. some good credit only Nazi's here..
very unforgiving about peoples problems and issues..

I'm recovering from bad credit.. I was married and when we divorced she demolished me credit wise.
so far its taken many years (10ish) to even get close to recovery.
I consider myself very trustworthy.. I maintained a top secret clearance in the Navy.
I pay my car note (cosigned) and rent and cell phone bills on time..
but I have bad credit still..and I don't have 1 credit card..

I am rebuilding and there are situations in life where this can happen to anyone.. trust the wrong woman.. disasters..company closures.. stock market crashes.. lots of thigns can put people in a credit bind.. where only the necessities can be paid.
and credit drops fast.. alot faster than it goes up..

 

[IndyColtsFan]

To get the real value of a person's trustworthyness takes too much time and effort to evaluate.

Credit score is a decent evaluator of that.

If you can't adjust your lifestyle to accomodate your expenses, then why should you be expected to adjust to work situations. Flexibility is an asset for employees.

This.

 

[piasabird]

I disagree with the consensus. Many people have been layed off and have money problems causing financial problems. Also many people that are married have a spouse that was laid off causing them financial problems. While many people may be considered irresponsible for home repossessions, it is not always caused by bad behavior on the part of the person. Sometimes life stinks and you get the wrong side of the stick. So I think just summarily excluding people based on a credit rating is unconstitutional.

This also favors spoiled rich brats who have more money than brains.

 

[Texashiker]

If you can't adjust your lifestyle to accomodate your expenses, then why should you be expected to adjust to work situations. Flexibility is an asset for employees.

From my experiences - the ones that can not manage their money, are the same ones that do not want to work in the first place.

The people that I have known in life, the ones that are always broke are the same ones that do not want to go to college, do not want to learn a skill, do not want to learn a trade, or even hold a simple job.

My wife and I know a certain couple - he works, she stays at home. They got their SUV paid off a couple of months ago. As soon as it was paid off, she wanted something bigger. So the "paid for" SUV was traded in, and back into debt they went. He holds a full time, 40+ hour week job, but she takes control of the finances. I get aggravated when he calls and ask for $40 just to buy their children milk, or to buy food to last a few days until payday. Why dont you send your wife to college, get an education, and get ready to enter the job market? But no, they can not do that.

Not to say "everyone" with bad credit does not want to work, but there are bunch that do not want to put forth the effort.

Maybe it goes back to "discipline"? The discipline to stay within your limits, the discipline to go to work everyday, the discipline to learn a skill, trade, or get an education and the discipline to keep your bills paid.

 

[highland145]

wow.. some good credit only Nazi's here..
very unforgiving about peoples problems and issues..

I lend for a living. I look at the score but typically ignore medical and, in a lot of cases, foreclosures/repos. However, if there is a charge off with a company in my industry, that's almost a guaranteed turn down.

Bankruptcies get ignored too, in a lot of cases, as long as the prior history was half ways decent and something new has been established since.

But I'm not hiring someone. I'm looking to make $$.