The Credit Ratings Scam

This isn’t a purely business topic, but as many of you know, the fact that you have to have your personal credit rated when applying for business credit makes the topic.

When I was controller for a 70 branch consumer loan company when I worked at Ford, we wanted people to borrow money, make the payments and eventually pay off the loan. But we only made money if there was a loan that was being paid. And our ratings reflected what we wanted.

It seems that the Credit Bureaus have lost sight of this basic tenet underlying the ratings.

I recently paid off a credit card and my rating jumped about 50 points. This seems like too much.

My wife, on the other hand, paid off a credit card and her rating, which is much higher than mine, went down.

Both of us have credit ratings at the three agencies that have probably 50 point divergences in them. 5 or 10 points we can understand.

There seems to be so some divergence, because of in credit usage. My usage is higher than my wife’s, but our payment patterns are similar, but my rating is about 75 points lower than hers. One would think that higher usage, with a positive payment pattern, would be more of a positive.

I’m sure you readers out there have some stories, too, and we encourage you to share them. Maybe we can wake up Sen. Warren’s Credit Committee to do some positive reforms.