Day: October 18, 2011

The other day I run into someone I know and they are in a surprisingly chipper mood.

HUGE SMILE, I mean HUGE SMILE on her face.  So I ask what’s up and she tells me how she talked to the credit card company which she’d been ducking calls for months and told them that she wouldn’t be paying her bill. 

The person from the credit card company said that they would need some payment and she replied that she would pay them $8000 out of the $18,000 that she owed them OR ELSE she would file bankruptcy and they would get NOTHING.

They accepted her offer and she is going to walk away from OVER HALF of the money she borrowed.

SMILING…NO REMORSE…NO SHAME WHATSOEVER…IN FACT I SENSED A FEELING OF PRIDE IN HER ACCOMPLISHMENT

So I asked her about her credit and wasn’t she worried that her credit would be ruined.

She turned and lifted up a stack of credit card applications telling me that she could get $100,000 in credit right there in her hands with all the credit cards that the companies are trying to give her even though they know she has horrible credit history. 

I sat there flabbergasted.

Now you can’t tell me that these credit card companies aren’t aware of the horrible credit score of my friend.  You can’t log onto the internet without some company offering you complete credit score information for like 29 cents.  It’s readily available.  This girl’s credit scores must have had a gazillion red flags.  Yet credit card companies are still willing to lend her money.

Can we pass a law that says if you can’t pay off the debt you already have and are in default for months that you are not allowed to sign up or receive more credit without putting up some hard assets to back it up?

…and a corollary law that says if you are a lending institution and you make credit available to someone who knowingly has more red ink on their credit statement than a Target Flyer then your lending institution gets ZERO an I MEAN ZERO help in a bail out.

Is this not a monumental failure to asses risk, especially given that this person’s credit scores and default information is readily available with a few strokes on a keyboard? For the cost of an $8 credit report you mean to tell me the credit card company looks at that brutal pattern of abuse of credit and are still willing to lend $20,000 on a signature?

Are these the same banks offering this credit that are going to get bailed out because they are too big to fail?

WHAT PART OF THIS EQUATION MAKES IT TOO DIFFICULT TO UNDERSTAND THAT THERE NEEDS TO BE CHANGE IN THE WAY CREDIT IS ASSESED AND LOANED?

Read this-

Nice job on 20/20! I recently completed a year long collection of credit card applications. I have kept track of every offer from April 05 to April 06 and I received 141 of them. I regret not keeping more specific data but I’m attaching a couple of photos and a chart. Feel free to use this material in any manner you wish.