Right for a Credit Score

[merig00.livejournal.com]

Jackals of capitalism come up with new ways how to put down the hard working americans every day! Here for example AP is reporting that

Some homeowners who sign up for the government's mortgage assistance program are getting a nasty surprise: Lower credit scores.
For borrowers who are making their payments on time but are on the verge of default, the Obama administration's loan modification program can reduce their credit score as much as 100 points.
/.../
Housing counselors say it's unfair, especially because the news often comes as a surprise to homeowners.
"Why should people's credit be hurt even worse when they're trying to do the right thing?" said Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group in New York.

Think about it: people on the brink of bankruptcy are turning to government for help, and get an unpleasant surprise - the rating agencies consider in their credit rating calculations, that these people are on the brink of bankruptcy, and they will now be harder to get into debt even deeper! Every day - new horrors!
It's not fair, isn't it? Frankly, it would be much better and fair if to everyone the government gave out a fair credit rating - no less than 750. And if you are a minority - no less than 780, I mean minorities got it hard as it is. That would be fair and truly american!

Thank you for attention.

Comments

[jennem.livejournal.com]

You're missing my point. Even though the same statistics are applied to every borrower, the data used by credit scoring agencies favors lenders over borrowers. I pay off my credit card every month. A credit score doesn't take that fact into consideration because it only cares if you have credit card debt and the amount owed each month. It doesn't consider the payment of the debt in full in it's calculation. So, while it's favorable to a) have access to credit and b) to keep at least a nominal balance with that credit, I don't get any points for using the card and credit responsibly. Same goes with homeowner's insurance. If you take out an insurance policy before you sign your loan agreement, it will lower your credit score and banks will then use that to increase the rates, even if you're doing both things contemporaneously because of the way credit scoring agencies use the input of that information. They might do the same thing to everyone, but doing the same thing to everyone favors the lender over the borrower.

I have good credit, and I'm in the process of making four banks compete for the home loan I'm about to take out, but I would have an even better bargaining position if the credit scoring agencies utilized the data neutrally.