Credit Has Been Discredited
May 21, 2008
Post Tags: Credit , credit-crisis
If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
Lots of rhetoric about why people can’t afford a home now that credit has tightened up. Guess what, credit now is what it always used to be before credit became so easily abused.Credit is not a basic right of life. Credit used to be something hard earned. It has been disparaged and soiled and let’s face it made cheap to get and of little value.
Credit used to be responsibility to pay it back. Now credit is a loose term for how much I can borrow and still make the minimum monthly payments. By the way, did anyone every explain to you that only making the minimum payments will never pay off the debt.
Remember when the phrase, “I’ll give you credit for that” or “This work is for extra credit” actually meant something.
Credit for fogging a spoon isn’t credit. It is a hook to get whatever money can be extracted from you.
We might have thought it was a great thing at the time to be able to borrow so much money without proof you could every pay it back. Hopefully, we are all waking up to the realization it isn’t.
Credit needs to get it’s reputation back. It won’t be easy. It might take more than a recession or depression to get it back. It doesn’t have to, it depends on how it is used or abused or protected in the future.
Two things come to mind while thinking about credit.
First, a famous quote from the land of point. “A point in every direction is the same as no point at all.”
Second, an idea from Juan Carlos Ortiz “The captain goes through the ship telling the passengers, ‘Do whatever you want, eat whatever you want. If you want to throw the deck chairs off the ship do it. If you want to raid the refrigerator, do it.’ The passengers think the captain is a great guy giving them such freedom to party and do whatever they want. The captain didn’t tell them the ship was sinking and soon they would all be dead.”
If any of this makes sense to you I’ll give you credit for it.
May 29th, 2008 at 10:11 am
I think part of the problem is the credit card companies. Look at their marketing and tactics. B of A made billions in profits from late fees…which they set out to do. They want you to be late and to get more credit. So its so surprise that the attitude fostered by the credit card companies spilled over into the mortgage industry, which is mostly controlled by some of the same companies.