Matthew Dunaway December 2018 · 205-705-3590

December 2018

A NEW PERSPECTIVE Can We Quit Financial Meth?

Recently, I sat down with a client who reminded me about how terrible the idea of a credit score is. He is a single dad, working as a fireman to raise two boys on his own. This client is a super nice guy who was struggling with miscellaneous debt from credit cards and the like. He was thinking about filing for bankruptcy, but the main reason he came to my office was because he wanted me to help him fix his credit score. When I asked why he wanted to fix his score, he told me it was so he could buy something on credit. I told him that was a bad idea. As a bankruptcy lawyer, I have a big problem with the myth of the credit score our society has been sold. How do you get a “good” credit score? You get a credit card, take on different loans, and keep old lines of credit open.

Basically, you get yourself into debt. In the end, you’re rewarded with a big number that just allows you to get into more debt. Be careful, though; if you cancel all your credit cards and try to live without debt, your credit score will go down! A credit score is basically financial meth — once you start, you can’t stop. Yes, credit scores serve to help us accomplish other goals. Good credit can help you start a business or buy a new house. But how often do you need to do either of these things? Most people never start their own business, and buying a house only comes up two or three times during our lives. Sure, there are ways credit scores impact our insurance rates or job applications, but these aren’t the main reasons people care about improving their credit scores. Ninety-nine percent of the time when someone tells me they want to fix their score, it’s because they want to buy something on credit. This is because, at its core, credit only exists to put people in debt. The credit score is a red herring. It’s an invention to trick us into thinking debt is a good thing. In school, if kids are taught about money at all, they’re told they need to have a good credit score. How do they do this? Why, they just go out and get a credit card, of course! We are telling teenagers they need to be in debt to credit card companies before they’re even out of high school. This is not a good thing.

When you break it down, the problem with the credit score system isn’t that it allows us to buy things. The problem is that if you want to buy those things, you need to stay in debt. Once you’re in debt a little and you have that score, you need to stay in debt in order to keep it. With the credit score system, we are literally punished for wanting to be debt-free. What can we do about this? First, our society needs to change its perspective on the value of a credit score. We need to acknowledge that this number is not a reflection on the quality of a person but rather serves only to put us deeper into debt. Then, we stop using this number to justify getting into more debt. We need to say things like “I don’t want a Target card just to get 20 percent off this purchase and boost my score with a new line of credit,” or “My car is perfectly good. I don’t need to take out a loan for a new one.” Debt is not our natural state of existence. Let’s stop pretending that credit scores make sense and take steps to free ourselves from the cycle.

As a bankruptcy lawyer, I have a big problem with the myth of the credit score our society has been sold.

–Matt Dunaway

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