Credit worth?!
Can the world’s financial institutions think of a better way of verifying the finanacial suitability of an individual besides owning and using a credit card?
Way before the recent global financial turmoil, the credit card seems to be the only means of verifying financial stability and suitability for a service by service oriented institutions; hotels, car rentals, airline agents, etc. Until debit cards came along, one could hardly transact business online or at hotels. I recall the difficulty of checking in at a Seattle hotel in 2006 even though I had cash to pay for my stay. Though card custodians may be hugely indebted and financially sunk beyond timely redemption, there seems to be a certain degree of self worth associated with the flashing of this piece of plastic. And the banks continue to honor them!
This may seem all well and good but not when it pertains to matters of grave importance such as buying a house or a car. If credit history as determined by the frequent minimum payment to a credit card debt is the only factor that qualifies one for such benefits then we have only seen a tip of the iceberg of the global financial crisis as defined by the wall street. The gross consequence is, of course, that those who have decided to stay debt free – far away from the clutches of the plastic ‘god’ would forever be unable to afford these necessities which hitherto (and for a long time) have been seen by the banks as luxurious.
Do not step close to a financial institution if you are not indebted to it!
Given my understanding that a credit card may only be issued after some security verifications, and that banks have a large degree of self interests and benefits that come with society’s indebtedness to it, it is utterly ironic that debt is used as financial viability.
Couldn’t the combination of ones employment contract, months and months of banking history (and a trend analysis from monthly expenses as defined by this history), an annual or biannual balance sheet be sufficient to determine financial viability? Or some rental agreement, utility bills, etc all strengthen the financial position of an individual?
Financial stability is not determined by the minimum balance paid to a credit card but to the credit worth an individual has. That worth is only known to the individual and the banks should seek better forms of eliciting this worth in order to avoid future global collapse of self worth as recenly (and currently being) experienced.
Murphy Said,
January 8, 2009 @ 18:15
Infact the credit history is based on so many things and not what you only mentioned. It is based on how much have you been working with your present employer, how much is your total package per year. Are you a dead beat Dad? Or what is your current financial standing and how long have you maintain a credit card or credit facilities and the credit card ballance must not be over 60% spent.
All these correspond to how creditable you are. If you don’t have all the above, you don’t have a credit history and there is no Bank that will give you credit card except the one that really want to mess you up or that want to collect insurance money from the Govt.