Thought-provoking topic.
@Anonymous wrote:
2. Most people on this forum follow some code of ethics that make the "debtor" the bad guy for trying to remove accurate information from thwir credit report. Seven years is ridiculous ammount of time to report debt. Im 23 years old. 7 years ago i didnt even have credit. People change over short ammounts of time especially in their younger years.
Especially with medical collections. My "risk factor" or score shouldnt be based on how i repay or dont my medical bills. Because me having a medical emergency is not my fault or anyones.
I both agree and disagree to some extent.
I do think medical debt and student loans should be handled quite differently from credit cards, mortgages, personal loans, and auto loans. I'm not sure exactly what I think the solution would be, but IMO they should factor in completely differently. A medical debt just isn't like credit card debt and a student loan just isn't like a mortgage/auto/personal loan.
As you point out, it's true that someone can change a lot over 7 years, especially younger people...but IMO there isn't really a solution to that. Many major financial relationships do last for 7 years, longer, or almost as long. Mortgages are pretty much always 15 years+, auto loans are often up to 5 years, and even credit card relationships, with a relatively faster turnover rate, can still last that long or longer. I think it's quite reasonable for lenders to want to see data points covering the past 7 years before extending major credit.
I'm a firm believer in people making their own decisions and what other people do with their finances is none of my business. That said, while I keep my mouth shut, I always think, "Hmm, really?" when someone under about 30 gets a mortgage or someone under about 24 or 25 gets a car loan. It's certainly their business and not for me to judge, but those are big, long-term financial commitments, and as you pointed out, someone at 23 may not have even had a credit score 7 years ago.
That's also why it's kind of ridiculous how the student loan system works. Should an 18 or 19 year old really being taking out 80K in student loan debt? Even if they're the most level-headed, intelligent, responsible person ever, they simply can't know what their life is going to be like by the time they're 25 or 30 or 35+ - which quite likely is how long that's going to take to pay off. Again, not that I have a solution, short of making college a great deal less expensive and expanding scholarship/grant programs.
Personally I also think there should be a time limit distinction - as well as the credit scoring distinctions already in place - between something like a late/missed payment, versus actual unpaid debt like a collections, lien, or judgement. There's a big difference between being late to pay something versus not paying at all. I think 7 years is much too long to show late payments, but not at all too long to show unpaid debt.
@Anonymous wrote:
3. Quit worshipping Fair Isaac. They are a company paid by banks and you for a "Score" of how trustworthy a person is. They are the enemy. And who made them God to decide what are worthiness is.
Of course you're entitled to your opinion, but I personally don't believe that's an accurate or productive viewpoint. For one thing Fair Isaac is simply providing data, not themselves deciding whether or not to extend credit to someone. However, I also don't think big banks and financial institutions are the enemy. There is no enemy. Just two parties doing business with each other.
I know debt and finances get personal for people. If you're in danger of losing your home or not being able to afford to pay for car repairs, then of course it feels personal...but it really isn't and I actually think it can be very beneficial for people to remember that to a bank they aren't a person and that's completely okay IMO and not something to criticize. I think emotion should be taken out of the equation. The bank isn't trying to personally screw someone over. They're just doing business, and actually I think consumers could benefit too from not viewing banks and financial institions through a personal lens, but merely as an entity they're doing business with.
As consumers people should try to be as unemotional and purely rational as possible when it comes to entering into financial decisions. Naturally emotions will inform and influence financial decisions - we're not robots - BUT while emotions can inform financial decisions I think we should try as hard as possible to prevent them from dictating financial decisions. If a financial contract either isn't a good deal for me, or isn't something I'll be able to uphold on my end, then I shouldn't enter it. That's true even 'if I really want to' or 'it sucks if I can't get my dream house/car/computer" or "I absolutely deserve this thing/trip/experience." All of that's irrelvant and if I mess up and let emotions dictate my decision, or simply make a mistake and inaccurately assess my situation...well that's my fault and I shouldn't blame the bank or the company providing my credit scores.
As I said, that is why student loan debt and medical debt are different. They're a lot less voluntary - even the student loan debt - and people often don't understand the consquences before accepting, or don't really have a choice. By contrast people have a lot more choice about whether or not to buy a car/home/computer. Obviously they don't have a choice about paying for food and essential bills, but there are and should be other options for that including government assistance, and the amounts are drastically lower than something like a hospital stay or 4-year degree and much more reasonably something people can scrape by on by eliminating/reducing other expenses.
Of course those are just my opinions and informed by my own biases, personal history, and world view.
Starting TU: 536
