Here's Why We Have Record Debt:

[VacantPossession]

There's a brilliant site where you can assess your chances of getting easy credit, and the results are very alarming indeed. More on this later but recently I saw a cracking deal on a new lease car. Normally I never buy new (depreciation etc), but this deal for an 18 month lease meant it cost less than buying the type of car I wanted even second hand then suffering the depreciation after nearly two years.

BUT.....the lease company refused my application! Here's why: I haven't been in debt for over 12 years, have never even taken up my overdraft and have no credit card, only a debit card. My bank balance always has a healthy credit and I owe nothing to anyone. Result: Rejected through not ALREADY being in debt.

Please note the credit reference DOES NOT take into account one's banking history, ONLY credit / loan history. You can have a pristine bank record but it makes no difference. Personally I think this is enough to sue all credit agencies for spreading incomplete and innacurate data.

Solution? Simple. I went to my bank and after looking at my account they instantly offered me a credit card, raised my overdraft as well, and advised me to make a couple of cheap purchases on the card then pay off half the account, in order to "prove" to the leasing company that I had taken credit.

I did exactly this, then re-applied for the car lease a few weeks later. Bingo. I was approved.

As far as my bank was concerned I was a model customer. As far as the lease company were concerned I was off the scale of unsuitability , UNTIL I got into debt by purchasing a couple of cheap items on the card.

Now mutliply this scenario a few million times and you see why this nation is in record debt. If you have NO debt you have NO access to credit. If you are indebted up to the eyeballs you are offered even more credit.

Next I went back to this interesting website:

http://www.checkmyfile.com/

....where you can not only check your credit rating held at credit agencies, but you can "experiment" with a credit rating checker for free, by entering hypothetical things like where you live, employment details, age, sex, marital status.

The upshot is that there are a finite set of inflexible rules which credit agencies operate under and a points system accumulates to see if you are credit worthy. A fascinating part of this rating is your post code. I entered mine and it was fairly near rock bottom, being described as an area of "student accomodation", poor terraced housing and high risk occupiers with a low rate of car ownership. IN FACT the road I live in is full of graduates, IT people, teachers, businessmen and a FEW student rented flats. In other words, the credit assessment was COMPLETELY wrong and no doubt way out of date.

The worrying thing is that, clearly, credit agencies operate on a blanket set of inflexible rules which make vast and sweeping assumptions about you and me and almost never allow for individual circumstances. In short, their assessments are woefully inaccurate and based upon a ludiucrous set of rules which actually give little indication at all of credit worthines. YET, we are all subject to these rules.

Discuss.

VacantPossession

[OnlyMe]

VP,

BUT.....the lease company refused my application! Here's why: I haven't been in debt for over 12 years, have never even taken up my overdraft and have no credit card. My bank balance always has a healthy credit and I owe nothing to anyone. Result: Rejected through not ALREADY being in debt.

All part of the revolving credit machine, borrow more to pay back existing credit and borrow more to spend ad infinitum, well until it stops. Totally out of control and seemingly understood by those touting property investment courses but not at the BOE. Financial stability? I don't think so.

[europbaron]

VP,

All part of the revolving credit machine, borrow more to pay back existing credit and borrow more to spend ad infinitum, well until it stops. Totally out of control and seemingly understood by those touting property investment courses but not at the BOE. Financial stability? I don't think so.

<{POST_SNAPBACK}>

Recently I've been reorganising my finances to maximise interest on my savings and equity from house sale. It has been striking the difference in procedures between applying for credit and applying for a savings account. To apply for credit takes 10 minutes filling in a form. Applying for savings requires the same form plus visiting the bank with id etc - all in the name of preventing money laundering in light of 9/11. So it would seem that the legislators don't care if your committing fraud by borrowing under another identity, but woe betide the fool who tries to save under one.

[Justice]

"laundering in light of 9/11"

nothing to do with it, just an excuse to play big brother and make sure you have paid every penny of tax on your stash of cash. You want to try to move more than £10,000 out of the UK and into foreign euro account and then you will know what fun is.

can I be the first in the queue for a silicon chip up my bum please, fame at last

if you don’t fight back then it’s going to be a terrifying world

[europbaron]

"laundering in light of 9/11"

nothing to do with it, just an excuse to play big brother and make sure you have paid every penny of tax on your stash of cash. You want to try to move more than £10,000 out of the UK and into foreign euro account and then you will know what fun is.

can I be the first in the queue for a silicon chip up my bum please, fame at last

if you don’t fight back then it’s going to be a terrifying world 

<{POST_SNAPBACK}>

Agreed - hence the "in the name of". But you can certainly jump my place in the queue.

[VacantPossession]

"laundering in light of 9/11"

nothing to do with it, just an excuse to play big brother and make sure you have paid every penny of tax on your stash of cash. You want to try to move more than £10,000 out of the UK and into foreign euro account and then you will know what fun is.

if you don’t fight back then it’s going to be a terrifying world 

<{POST_SNAPBACK}>

Agreed. An extraordinary amount of big brother type legislation has been passed in the last few years masquerading as being essential for "national security", "data gathering for planning purposes", "anti money laundering", "demographics".

The data protection act, by the way, has been a disaster for the ordinary person. It gives extraordinary power to lawyers, judiciary, police, government departments and corporations to not release what would otherwise be perfectly ordinary information which is useful to us, and thereby a method of hiding behind incompetence, corruption and other chicanery.

The freedom of information act, on the other hand, does not make up for the protections afforded to institutions by the data protection act, and even if it did in principle, why have purchases of shredding machines gone through the roof?

VacantPossession

[Bluelady]

Just did the credit rating thing; mine's five star - 951 points. The thing with credit is that they check your record to see how good you are with paying it; if you've never had any, you don't have a record. Simple as that, really.

[VacantPossession]

Just did the credit rating thing; mine's five star - 951 points.  The thing with credit is that they check your record to see how good you are with paying it; if you've never had any, you don't have a record.  Simple as that, really.

<{POST_SNAPBACK}>

Quite. That was my point. There is an assumption therefore that if one has been careful, never paid for anything one can't really afford, saved cash, never had an overdraft, no matter whether you have a million in the bank, or £500, it makes no difference, you don't get credit, unless you had already applied for it.

On the other hand, as I pointed out, my credit rating magically flew from below 350 to around 700 just by applying for a credit card then buying two items on it.

I take your point, but can you not see a little bit of an odd situation here?

VP

[Bluelady]

Not really, I have a better credit rating than you do, despite having lived my life on the same principles, because I have a credit card which I pay off in full every month and have bought a number of items on 0% credit, having left my money in the bank earning interest for another 9 months or a year. I also have lenders' money in my bank account on 0% deals on which I'm collecting 5%pa interest.

That means I have an excellent record of handling credit and being responsible with it; you don't, which is why my credit rating is almost as high as it can get. I don't believe in using my own money when I can be better off by using someone else's.

[VacantPossession]

Not really, I have a better credit rating than you do, despite having lived my life on the same principles, because I have a credit card which I pay off in full every month and have bought a number of items on 0% credit, having left my money in the bank earning interest for another 9 months or a year.  I also have lenders' money in my bank account on 0% deals on which I'm collecting 5%pa interest.

That means I have an excellent record of handling credit and being responsible with it; you don't, which is why my credit rating is almost as high as it can get.  I don't believe in using my own money when I can be better off by using someone else's.

<{POST_SNAPBACK}>

Well bully for you. I so admire personal modesty.

VP

[Bluelady]

Don't get arsey with me just because my financial management's better than yours!

[FernandoMorientes]

Don't get arsey with me just because my financial management's better than yours!

<{POST_SNAPBACK}>

VP just said he/she only applied for credit just to get credit rating for a particular purchase.

What VP means is his credit rating wa sbasically not rated because it basically didn,t exist, not because his/hers financial managment was bad, in fact if VP,s never used credit then I would hazard a guess VP,s financial managment is rather good......maybe even better than yours?

[Bluelady]

VP  just said he/she only applied for credit just to get credit rating for a particular purchase.

What VP means is his credit rating wa sbasically not rated because it basically didn,t exist, not because his/hers financial managment was bad, in fact if VP,s never used credit then I would hazard a guess VP,s financial managment is rather good......maybe even better than yours? 

<{POST_SNAPBACK}>

I rather think mine is better since I use credit to gain the interest on my money rather than allowing someone else to have it. Added to which I gain 5% interest on credit card lenders' money which I borrow at 0%. Having credit, for which I pay not one penny, means I'm gaining interest all the time - how does that make VP's financial management better than mine? Using credit to your advantage is the smart thing to do.

[VacantPossession]

I rather think mine is better since I use credit to gain the interest on my money rather than allowing someone else to have it.  Added to which I gain 5% interest on credit card lenders' money which I borrow at 0%.  Having credit, for which I pay not one penny, means I'm gaining interest all the time - how does that make VP's financial management better than mine?  Using credit to your advantage is the smart thing to do.

<{POST_SNAPBACK}>

Oh for goodness sake, this thread is not a bloody competition. Give it a rest.

VP

[hra]

I rather think mine is better since I use credit to gain the interest on my money rather than allowing someone else to have it.  Added to which I gain 5% interest on credit card lenders' money which I borrow at 0%.  Having credit, for which I pay not one penny, means I'm gaining interest all the time - how does that make VP's financial management better than mine?  Using credit to your advantage is the smart thing to do.

<{POST_SNAPBACK}>

Are you just looking at the credit rating summary (free), or the full credit report (which isn't)? I think the summary probably doesn't take into account your real credit history at all but only looks at age, postcode, type of occupancy etc.

Incidentally it isn't good news to STRs - I put in 'Renting - unfurnished' for 'less than 1 year' and got 3 stars. I put in 'Owner occupier' for 'more than 10 years' (my status a year ago before STR-ing) and got 4 stars. So they penalise people for making good financial decisions too.

[europbaron]

I rather think mine is better since I use credit to gain the interest on my money rather than allowing someone else to have it.  Added to which I gain 5% interest on credit card lenders' money which I borrow at 0%.  Having credit, for which I pay not one penny, means I'm gaining interest all the time - how does that make VP's financial management better than mine?  Using credit to your advantage is the smart thing to do.

<{POST_SNAPBACK}>

Yep, as long as you do manage it well. Unfortunately many don't and lose more than they gain. I guess it's fortunate for you though because you wouldn't get those great deals unless others paid for it through poor management.