Why Credit Scores Are a Scam

Credit scores are a ubiquitous part of American life. Try to do anything at all – get housing, get a car, get anything that requires a loan – and you’ll be assessed based on a three-digit number that most people recognize as arbitrary and dumb. So what’s the origin of this weird system? Law professor Chase Madar explains the sinister trends behind the rise of the credit score.

Thank you!

0:00 What are credit scores?
1:51 A journey to the '70s
4:32 Enter the '80s
6:57 Creating "debt-prone consumers"
11:00 Credits

[spartansfan]

I took out one loan my entire life, for my education, and paid it off well ahead of time. I busted my ass for that. Earlier this year I tried to bump up my credit score a little by trying to finance a new phone to replace the one I've had since 2015. Trying to make small steps to raise my score to hopefully get a good rate on a mortgage someday.

I got denied. My credit score was too low. Too low to make three payments of $170, they apparently thought. After paying over $600 per month for years to repay my student loans. Of course it was a hard inquiry, so it dropped my existing credit score.

Fuck. Credit. Scores.

[greenleafyman]

The most scariest part is there are still a huge amount of people believing that American system is still the best system in the world.

[jazzsocietyofecuador]

The Gravel Institute is providing a wonderful and important public service. Mike Gravel would be proud of you.

[gweegoop]

It’s insane that our credit rating agencies are for profit companies.

[crustjunkie]

I tried to follow the conservative talking point "Just pull yourself up by your bootstraps, " "Become your own boss", and start my own business but was denied a loan because I had numerous surgeries due to a life threatening illness that lowered my credit score to 500.

Now I'm physically disabled, can't work, and all I got out of it were more medical bills, lower credit, and infinite debt.

[MGC-]

I used to volunteer a lot at homeless shelters and found out that the main reason they couldn't get apartments wasn't because of lack of money. It was because of a bad credit score, which was a result of using credit cards (and getting in endless debt) due to some sort of emergency.

[Kinography]

It’s so wild that people are like “haha social credit” when we have this ridiculous system

[Blaze]

Credit score actually makes a lot more sense if you imagine it not as "how financially responsible you are" or "how creditworthy you are", but rather as "how much profit can the bank milk out of you". If you see it this way, it suddenly makes sense why paying off a loan lowers your score: by paying it off immediately, the bank can't profit from the interest on the remaining payments or the potential late payment fees.

[Justbemyselff]

Your organization is what is keeping knowledge of these events alive and showing people that a different reality is possible. Thank you.

[marz]

It’s interesting to see a bunch of memes about the Chinese “social credit” system being pretty normal and acceptable in internet culture.
And yet, “credit scores, ” which have a similar name, function, level of influence, and are even more predatory, exist here in America and nobody seems to question it. Very fascinating video.

[racewiththefalcons]

I would love to see a companion piece to this video that discusses how the wealthy can take out loans against their investments with super-low interest rates, no credit check, no timeline to pay back the principle, and no taxes on the loan. It's called "buy, borrow, die" because they only have to pay the interest, which is actually tax-deductible. And if the investments borrowed against pay dividends, those dividends can pay for the interest, so it's literally free money given out to those who are already wealthy with essentially no penalty whatsoever. There is not even a penalty when the borrower actually dies, because their children can inherit the assets "stepped up" and sell the appreciated value of the investment incurring no capital gains tax. The whole system is designed to benefit people with money and punish people without it. It's inhumane and purely evil, and rewards selfishness.

[reggiep]

Credit scores are a sign of how easy it is to dupe people into getting into more debt than is viable for them.

[HeckaLives]

"Wouldn't it be dystopic if we had to live under a system like the Chinese social credit system?"
*Yeah, wouldn't having to rigidly adhere to a number, which socially constrains you, suck?*

[TIENxSHINHAN]

"Wells Fargo called the ghetto loans... referred to the individuals... as mud people"

Honestly racism be so insane and cartoonish at times, I can't help but laugh. Like I've never heard white people say this to my face so to hear how racists talk when they're alone can be a trip.

[AllTimeScary]

Fantastic as always. Credit scores are such a rigged and awful system for most.

[landon.packrat]

When I paid my house off, my credit score dropped 40 points. Worth it.

[Thommyn]

A friend of mine was able to buy a house cash upfront (probably one of the few millenial generation people I know who’s able to.) Far from anything grand, just a tiny little out of the way fixer upper with enough space for their dogs.
Their credit score went down. For being able… to actually maneuver… through this predatory economic system… they were punished for it.

[GhostOnTheHalfShell]

Debt has been used to exploit people for centuries. “I owe my soul to the company store” is an old lyric.

[megaclodsire]

I am full of rage, but in a very chill and nonchalant way

[noax]

A credit score doesn't determine how trustworthy you are, its a way for financial institutions and businesses to let eachother know how much interest they can sucker out of you.