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The main problem I have with the current system (after trying to clean up my credit), is that you are penalized for paying back old debt.
I had a collection from a credit card I stupidly didn't pay when I was younger. I paid it off recently. My credit score DROPPED because of this, and apparently, the collection account causes just as much harm to my score whether it's listed as PAID or UNPAID.
True, BUT if you have a solid history of good credit and one old collection you will still have a good score. It would hurt someone without much history to offset the derogatory.
You can get "emergency insurance" for very cheap if you are young and have no gaps in coverage. This will protect you from the sort of thing the poster is talking about, that is having huge medical bills in the $100,000 range. Your medical costs are very low and you should have been saving money for them! Its just gambling, people go without insurance, do not save any money towards their health care and then complain when they get sick and have to pay!
Everything that happened to you is your fault, not the "system". You decided to go without insurance, you decided not to get a basic insurance plan and you decided not to save toward health care.
I should point out that not all states have the same plans and competition. In the Northeast, most of the states have regulations which appear to limit the number of providers and have driven costs up.
In my state, NJ, I looked into private insurance when my employer could no longer afford to offer it. For a family of 4, with a huge deductable of $5000, the monthly cost was around $1800 - no oldies, no health problems, no gaps in coverage. The same kind of policy in some other states would have cost me around $300 a month.
So be careful about making blanket statements. Local regulations can bring about surprising results.
When you sign up for the plans you can pick your deductible. If you are young and healthy it makes more sense to get a high deductible HSA plan and save money in a HSA. So there is nothing ridiculously about the deductibles, you are going to pay for it one way or another.
I sure wish they would have had the HSAs 20 years ago when I got into the workforce. I would have a pile of money in there right now.
I am currently in an HSA and love it. No monthly premiums, deductible is $1,900/yr. and employer puts $1,500/yr. into the account. Best thing since sliced bread for someone who doesn't go to the Dr.
I am not going to say alot on this, but I personally feel the entire credit system, FICO, the CRA's are all a complete joke and so are the people who created them. The scoring system software I think is purposely made to look for more of the negative stuff than the positive, and why it takes a century of years to even see a remote improvement in a score, which is why many people either don't bother to try to fix it, or they go the cash route. Its like "What's the point, there's no hope in fixing it anyway so why even bother?" So many people out there have worried themselves to death and even started having health problems due to stress because of that 'almighty credit score'. Give me a break.
I've had many people tell me how they are so fed up with the credit system that living a cash life without credit is the way to go...no turndowns, no financing and not having to deal with the annoying CRA's and creditors. Some people can care less about credit. As much as society says its not a good idea and not advisable to live w/o credit, alot of people who hate credit to begin with could care less and simply live the cash route, which not only forces them to live within their means, but they wouldn't have to worry about any debt.
Auto insurance companies.....they use a so called "insurance score" which is pretty much the same as your credit score to determine what rates to charge you and to whether to even offer a policy. Why use a score to determine that? A person's driving record, claim and accident history should be used to consider whether to offer a policy and at what rates.
And despite what anyone says I think the FICO is being used more as a judgment tool on a person than so-called 'risk assessment tool', and I don't care what anyone says about it. Because to businesses and lenders, its all about numbers, nothing more. Yeah, the credit and lending industry folks out there won't tell you everything about things like that, only what they want the public to hear. There are so many catch-22's in credit its nothing funny.
I know there have been many folks who have and are successful in living a credit-free life. Many have bought cars, homes and many things without using credit at all. If you can't get it right away, then by the time you do have the cash most times something even better comes out. Credit to me is pretty much convenience. It definitely will change the way one spends, but it can be done.
Medical expenses are outta of whack in America.There is no social program here.In Europe people would riot and goverments can not leave them uninsured.Afterall it is the responsibility of whom?I let this to you to think about.Now can anyone tell me what`s the incentive of having credit??To get more into debt and pay more money for money you did not have in the first place?Who is the actual winner of this process?
You or companies?
Of course credit is for the benefit of the companies that are in the business of making money off of interest, and of course the credit scores favor the companies rather than the customers. Credit isn't some sort of natural right - it's a business transaction, and credit ratings exist to help lending businesses assess the risk they are taking when they loan money to someone. That risk translates into the interest rate the customer pays.
You don't have to have a credit rating at all, but when you are entering into a business relationship with a company by asking them to give you money or control over property they want to know what kind of person they are dealing with.
I agree that the system is unfair. Especially if you find yourself in a position where you enter a debt management program.
Even if you pay into the program on time, the credit card companies are so upset that you are paying them back at a drastically reduced rate, that they penalize you with a very low score.
When I was struggling to pay them back with up to 35% rates, my score was between 640-670. Then when I went into the debt mgt. plan my fico score was lowered into the 440ish range.
I wasn't habitually late with my obligations, I just needed some relief from the rates. Also, the credit card companies are so fee hungry, that they slam you with late fees and adverse report on your record for one late payment of even one day.
The era of grace periods beyond the five pm due date are forever gone. Granted, some will refund the late fee if you're not late more than once in a 12 mo. period, but you have to ask for it. I have learned my lesson with credit cards, and will not use them unless absolutely necessary.
I agree that the system is unfair. Especially if you find yourself in a position where you enter a debt management program.
Even if you pay into the program on time, the credit card companies are so upset that you are paying them back at a drastically reduced rate, that they penalize you with a very low score.
When I was struggling to pay them back with up to 35% rates, my score was between 640-670. Then when I went into the debt mgt. plan my fico score was lowered into the 440ish range.
I wasn't habitually late with my obligations, I just needed some relief from the rates. Also, the credit card companies are so fee hungry, that they slam you with late fees and adverse report on your record for one late payment of even one day.
The era of grace periods beyond the five pm due date are forever gone. Granted, some will refund the late fee if you're not late more than once in a 12 mo. period, but you have to ask for it. I have learned my lesson with credit cards, and will not use them unless absolutely necessary.
Your score went down because your payment history showed that you were a higher risk for non-payment than most other consumers. You mismanaged your credit and that is what your credit score reflected.
Location: Moose Jaw, in between the Moose's butt and nose.
5,152 posts, read 8,501,360 times
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Quote:
Originally Posted by sean98125
Your score went down because your payment history showed that you were a higher risk for non-payment than most other consumers. You mismanaged your credit and that is what your credit score reflected.
But the person made a negotiated effort to honestly pay it back and he/she gets penalized for making those negotiated payments?! That is one reason why this industry is nuts and out of control
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