Credit Scores


Mar 03

As that famous humorist and social commentator once said: “Everybody talks about the economy, but only a Republican will pick it up and beat you to death with it.”

Maybe I got that quotation wrong, but we do (and I’m including you) feel that an economy that doesn’t serve everyone isn’t much of an economy, or as Joseph Stiglitz said, “The only true and sustainable prosperity is shared prosperity.”

One of the things that is killing the masses are credit scores, and hopefully this piece will bring out how they do that while asking, can we just get rid of them?

The really interesting thing about this paper is that everything in it came from Twitter. The hub around these tweets is a young, brilliant man by the name of Umair Haque.

Aschleigh Jensen:  “Credit scores” are the biggest scam, yet another thing that just needs to be abolished.

Umair Haque: Canceling student loan debt would basically make the whole difference in the US. That’s what gets most of us.

Lauren McKenzie: America… where your credit score says you can’t afford to pay a $700 mortgage so you pay $1200 rent.

Lauren Elizabeth Rose: My score once dropped 22 points because I paid my balance in full.

Umair Haque: “Credit scores” are like if someone designed a tool absolutely perfectly to ensnare a society in what Marx called immiseration. You’re supposed to have lifelong debt you can never pay off, but never miss a payment on, either. It’s designed to produce a class of neoserfs.

immiseration: economic impoverishment

Umair Haque: I think “credit scores” are one of the single most anti democratic and democratic poisonous institutions I’ve ever seen. They need total reform or else debt and fascism continue their suicide pact in America and around the globe.

Fabiana Cecin: The completion of the dystopia that is a debt-based and scarcity-based economic rights tracking system.

Umair Haque: The secondary effect of “credit scores” is that America became a society which couldn’t afford public goods, because people were trapped by lifelong debt and servicing it. They’re one of the key ways America collapsed.

Manu Chatterjee: OK but what do you recommend instead?

Umair Haque: Bankers who do their jobs by getting to know people? Banks who can actually judge risk without pretending algorithms can do it well, which they don’t, because they need to be bailed out every few years?

Or better yet, have a society where people don’t need to be in perpetual debt just to afford the basics, from utilities to houses. “Credit” is a terrible way to build an economy, it just means “you’re not paid enough to live.”

Ronnesia Gaskins PhD: Totally. Punished for having too much debt. Punished for having too little debt. Punished for not enough kinds of debt. Garbage fascism paraded as things to aspire toward (good credit score).

Umair Haque: Have you ever wondered why it takes an average person say a whole lifetime to afford a house, as in just a place to live? Come on now. Our economies are built in totally backwards ways still, where the very basics are things we have to fight for.

You see how if these jokers can’t make progress on the minimum wage we are never ever going to get reform of even deeper institutions like credit scores. Capitalism just wrecked America, left it for dead.

It’s not really a huge surprise we’re lapsing right back into fascism when you connect these dots of subjugation and immiseration. The average dumb fuck gives up on life and just wants someone even more helpless to punch down on.

Daniel Plainview: Capitalism has beaten us down. People in other countries strike and protest to demand higher wages. Americans just sit back and take it.

Umair Haque: Yes, that’s true, but how much profit a bank or hedge fund can wring out of the average person is not a principle to design an economy around.

Lucinda Catchlove: It’s capitalism AND individualism AND racism, individualism is how capitalism dresses up to seduce you. People need some sense of social solidarity and collective good to fight together for collective rights.

ブラックハット: I agree that housing is too expensive. However, at least in the United States, this problem is compounded by people’s inability to live within their means.

Umair Haque: Completely false. The prices of basics like education and food and education have risen by thousands of percent over the last few decades while average incomes have fallen. People don’t have “means” anymore.

All this nonsense of “credit scores” and “debt” is premised on artificial scarcities. There’s no shortage of homes. The shortage of money that keeps everyone in debt for life that has to be “worked off” is a fiction, a social choice, capitalism in a nutshell.

Because this cycle of immiseration—you working your whole life at some miserably low wage to pay off the “debt” of a home or basics—goes on, what is there left to invest in the planet, nature, democracy, future, each other? Nothing. So everything is falling apart.

The way our economies are designed is that capital cycles back from people who never even have enough of it to pay off their “mortgages” and “credit cards” aka “debt” to banks, who keep them poor for just that privilege. It’s completely insane and stupid and Marx come true.

Our economies are a stupid shell game. They’re designed like this, we work our whole lives to afford the basics, right up to a house. Basically we have neoserfs and the ultra rich: So we never really have enough to invest in the bigger challenges at all.

For me these fatal economics are at the root of the dark age that is now so obviously falling. Why keep people even in rich countries trapped in cycles of debt for basics? It just means society can never progress at all.

Everyone needs to know who Umair Haque is. He is the director of the Havas Media Lab, blogs in the Harvard Business Review and is author of the book The New Capitalist Manifesto: Building a Disruptively Better Business. He was educated at London Business School, University of Oxford, and McGill University. His blog is called: Eudaimonia & Co. Eudaimonia is a Greek word often translated as “happiness” or “welfare.” It is also “flourishing,” “prosperity,” and “blessedness.”

He’s brilliant and I have been honored to find him on Twitter.  @umairh