Credit Bureaus, A Necessary Evil?
Tim Williams
January 29, 2010
Today, there is no greater hindrance to the United States economy from moving forward than the three credit bureaus. They are empowered with decisions that can make or break economic expansion. From individuals, to entrepreneurs, to business owners these agencies continue to thwart economic expansion when we need it most.
What transpired this past year because of the financial sub-prime crisis the United States Government had to intervene and bail out our financial institutions. With-out the governments intervention our whole financial system probably would have catapulted the United States and the rest of the world into a Depression much worse than the Depression of the 1930's. What was supposed to happen after the financial sector was infused with emergency capital from the United States Government banks and financial institutions would now be able to resume lending to individuals, homeowners, entrepreneurs, small businesses and large corporations to ensure that economic momentum would now continue to escalate.
The biggest reason why our economy is still floundering is because of the three credit bureaus refusal to ease their criteria in established loan requirements. In fact, they have increased their requirements and have made it all but impossible for the majority of homeowners, entrepreneurs, and business to receive the capital needed for economic expansion. This is after the United States infused the financial sector with the capital needed for these same financial institutions to resume their lending practices.
What ever happened when banks and saving and loans much like when George Baily in "It's A Wonderful Life" was debating the virtues of having a savings and loan compared with the Potters who control big banks and financial institutions so that any individual who needs a loan or capital to start or expand a business and to secure a mortgage the decision was based solely on character, a sound business plan, income or ability to repay, and collateral for the reassurance of assets to secure a loan. Any of these factors provided the savings and loan institutions and the banks the criteria needed for issuing the capital needed.
These three credit bureaus started out with good intentions. Using a scoring system on individuals so that the higher the score the easier it is to receive the largest less costly { as in interest rates } amount of capital. This system now only favors the wealthiest of individuals and the largest corporations while leaving the majority of individuals and small businesses having to pay more interest rates and receiving not enough capital to begin with to ensure that they will have the ability to pay back the loan. This has stifled economic expansion for the majority while creating a vast gap between the wealthiest few and the struggling majority.
What is needed now is to either eliminate the credit bureaus altogether or reform the scoring system and integrate them into the lending institutions so that fair non-partial decisions based not solely on numeric value but take the time to interview each applicant to access and receive accurate information that is needed to coordinate with the lending institutions their ability to repay any loan. In this way more individuals will be able to receive the funds that are so desperately needed to stimulate our struggling economy.
What transpired this past year because of the financial sub-prime crisis the United States Government had to intervene and bail out our financial institutions. With-out the governments intervention our whole financial system probably would have catapulted the United States and the rest of the world into a Depression much worse than the Depression of the 1930's. What was supposed to happen after the financial sector was infused with emergency capital from the United States Government banks and financial institutions would now be able to resume lending to individuals, homeowners, entrepreneurs, small businesses and large corporations to ensure that economic momentum would now continue to escalate.
The biggest reason why our economy is still floundering is because of the three credit bureaus refusal to ease their criteria in established loan requirements. In fact, they have increased their requirements and have made it all but impossible for the majority of homeowners, entrepreneurs, and business to receive the capital needed for economic expansion. This is after the United States infused the financial sector with the capital needed for these same financial institutions to resume their lending practices.
What ever happened when banks and saving and loans much like when George Baily in "It's A Wonderful Life" was debating the virtues of having a savings and loan compared with the Potters who control big banks and financial institutions so that any individual who needs a loan or capital to start or expand a business and to secure a mortgage the decision was based solely on character, a sound business plan, income or ability to repay, and collateral for the reassurance of assets to secure a loan. Any of these factors provided the savings and loan institutions and the banks the criteria needed for issuing the capital needed.
These three credit bureaus started out with good intentions. Using a scoring system on individuals so that the higher the score the easier it is to receive the largest less costly { as in interest rates } amount of capital. This system now only favors the wealthiest of individuals and the largest corporations while leaving the majority of individuals and small businesses having to pay more interest rates and receiving not enough capital to begin with to ensure that they will have the ability to pay back the loan. This has stifled economic expansion for the majority while creating a vast gap between the wealthiest few and the struggling majority.
What is needed now is to either eliminate the credit bureaus altogether or reform the scoring system and integrate them into the lending institutions so that fair non-partial decisions based not solely on numeric value but take the time to interview each applicant to access and receive accurate information that is needed to coordinate with the lending institutions their ability to repay any loan. In this way more individuals will be able to receive the funds that are so desperately needed to stimulate our struggling economy.