Ben Heath

Stacie Weatbrook (Instructor)

English 2010 Summer
20 July 2015
Credit 101: Is this who you are?
Have you ever thought about those ubiquitous plastic cards in your wallet? Ever wonder
how we go to this place where you buy now pay later? I find it fascinating that we are able to
shop with an IOU instead of actually having to pay for things before we take them home. Well
credit has been part of our civilization for a long time. Lets start in the American Colonies and
the frontier. Money was scarce as many early settlers were farmers. Being a farmer you were at
the whim of the harvest. Your harvest was your way of being able to pay for things. Once you
had a crop in hand you could then use it to either sell or barter for goods you needed that you
could not grow yourself. The barter system worked well, in that even if you did not have a
product you could use other belongings or labor to procure the goods or services you needed.
This system did have a flaw. What if your crop was in the growing season and you could not
break away from your farm in order to perform labor for someone else, how would you be able
to pay for goods you needed now?
Often farmers would go to the owner of the local mercantile store and ask for goods with
the promise that when harvest came that they would then pay for the goods. The owner would
make a deal, usually they would agree to a percentage of the crop or a set amount of goods. The
owner would then make a note in his ledger for the amount of goods he gave on credit to the
farmer and then he would count on the agricultural product he would receive come harvest time.
This was the beginnings of a credit bureau. The store owner would keep track of the dealings and

what happened when payment was due. If the crop was more meager then the farmer had
counted on then sometimes he would be unable to make good on his debt. This failing was
especially an issue if the debt was set on a specific value rather than a percentage of the crop. If
the crop was smaller due to weather or pestilence then the farmer was not able to get the full
amount of cash he would be expecting, then it would be a large burden to pay his debts. This was
the first negative history on a credit report. Besides knowing who not to extend credit to in the
future, what does the shop owner do with this information? Eventually others would open
businesses in the same town. As residents came to the new establishment to ask for credit, how
did the proprietor know who was worthy of credit? They would go to the established shops and
ask for advice. Soon that information was valuable and had to be procured for a price. Thus
began the credit industry. Eventually the value of the information exceeded the value in the
lending and the credit bureau was born.
I really do not think that credit is bad. It helps us live the lives that we want, however it
holds us back from the lives we want. Balaji has been in the credit repair industry for 7 years
gave me this little gem, Credit is a necessary evil. There are many things we want but could not
buy without it. It is the flaws in the system that we need to fix. He also mentions the importance
of cleaning up your credit, it is our responsibility to keep the credit industry honest and the
financial industry healthy. He talked about the problems that he has seen with credit reporting.
What are the problems with credit you ask? Well the first thing wrong is that there is no accuracy
in credit reporting. Credit bureaus are under no obligation to fact check everything they are given
to report. They only are required to make a reasonable attempt at an investigation when a
complaint is made.

Here is the real problem: credit has become your reputation. Long ago in a loan office far
far away a loan officer would sit down with a potential borrower and get to know them. He
would look them in the eye from across a desk and ask about items on a credit report and the
borrower would offer up an explanation. After the interview the loan officer would then decide
based on what was on the report and what was offered as an explanation if the borrower is a good
risk. Now we are reduced to a 3 digit number that says little about who you are and more about
what was reported or not reported based on a small amount of data on a very narrow part of your
life. Credit score were introduced by FICO as a way of quickly deciphering the information on a
credit report. The algorhythm used by FICO to determine the credit score is a closely guarded
secret and we only know some basic information. Eventually each credit bureau devised their
own credit score simply mudding the waters.
Today your score is used against you as a reason not to give you a loan or a higher
interest rate. But that is just the start of it. If you attempt to rent an apartment they check your
credit score and may require a large security deposit or not rent to you at all. When you apply for
a job they use your credit score to decide if you are a good fit for the job using your score as a
determination if you will be honest. In the military or government if you want to get a security
clearance they check your credit and if it is lower than a certain point you will be denied. Even
still in the corporate world in order to be a principal in a business you need to have a high
enough credit score (Job). In no way is there any way that credit score can tell you enough about
the person to make a determination for any of these things. You can have a great credit score and
be an amazing con-artist. You could have a score that barely registers on the scale and personally
you are honest with a great work ethic. The score is just a measure of what has been reported on
your credit. What has been reported is in no way guaranteed to be accurate or complete. It

boggles my mind that we are being reduced to a 3 digit score that no one knows for sure is
accurate.
Peter Dwyer and Sharon Wright, look at a new experiment in the United Kingdom in which they
incentivize the welfare class to work by promising them an improved credit report if and only if
they enter the labor force. In their introduction they stated, Critics argue that Universal Credit
will cause a dramatic increase in hardship and poverty (including 600,000 children entering
absolute poverty (Gillies et al, 2013), involve inappropriate expectations of disabled people
(Patrick, 2011) and threaten to make full-time motherhood the reserve of the more affluent
members of society (27-35). This experiment has not changed their status in society for the
better or the worse. In fact there have been other studies that show that access to credit does not
increase a persons ability to move in social status. The reality is, credit bad or good does not
change who you are.
I say we fight the credit industry and release the hold they have on us. Going forward if
we do nothing how many other things may use credit as a means of entry? How much further
will we be reduced to a 3 digit number? There are a few things we can do to fight the system.
They first one is to stay out of the line of fire. If you play the system right you can stay on the
good side and not worry about the problems in the future. Start out by educating yourself on
credit and how to use it.
You should always maintain enough credit that you avoid using more than 15 to 30
percent of your available credit (Credit Education). This you can do by either keeping your debts
paid down or by increasing your available limit thus making your percentage of used credit less.
Next you need to diversify. If you only use one form of credit you are limited in the eyes
of the credit industry. Get a vehicle loan as well as a credit card. Use some store credit or finance

your home. By showing you can handle different forms of credit you look more responsible
(Deville, Seigworth 615-629).
Do not close accounts completely as that effects the age of your credit file. The most
important part is to keep your payment history under control. Do not allow yourself to miss
payments or go into collections. If you allow this to happen there are things you can do.
Sometime it is as easy as asking for the item to be removed. Other times you will need to
demand that they prove the item is real with back up documentation. Usually the creditor will not
have this information available and the negative item will have to be removed. Never make a
settlement for a debt owed without first stating that you are not admitting that the debt is yours,
you are just paying to stop the contact from the collector (Credit Education). As you can see
credit is a game, if you do not play it you will loose.
Next we should all lobby our representatives help with legislation to prevent industries
from using credit as a sole source of decision making. Your credit should be come private and
only accessed under strict circumstances approved by you. HIPPA laws were put in place to
protect your medical record and in fact some of the HIPPA laws do help with medical bills on
your credit (Credit Applications). If we can protect you medical records why not you credit
record?
There is little that we can do to stop the proliferation of credit being used as a substitute
for our reputation, yet we need to make every effort to stop it. Face to face is the way we begin to
take back humanity and civility. Stop the text, stop the snap chat, and stop the instant messages.
Lets start by talking to people and taking the time to get to know them, only then can we begin
to see people as people and not just a 2 digit number.

Works Cited
Dwyer, Peter, and Sharon Wright. "Universal Credit, Ubiquitous Conditionality And Its
Implications For Social Citizenship." Journal Of Poverty & Social Justice 22.1 (2014):
27-35. Academic Search Premier. Web. 6 July 2015.
Deville, Joe, and Gregory J Seigworth. "Everyday Debt And Credit." Cultural Studies 29.5/6
(2015): 615-629. Academic Search Premier. Web. 6 July 2015.
"Learning Becomes the First Steptowards Improving Your Credit." Credit Education. N.p., n.d.
Web. 16 July 2015.
"Bad Credit Can Affect Your Job." Bad Credit Can Affect Your Job. N.p., n.d. Web. 16 July
2015.
"Credit Reports Know My Rights." Credit Applications. N.p., n.d. Web. 15 July 2015.