Anxiety Over Credit Scores Holds Back the U.S. Economy

Lynnette Khalfani-CoxThere's a lot of talk right now about how to get the U.S. economy back on track.

One big problem is that American consumers have slammed their wallets shut, opting to save more and charge less. At the same time, many credit card companies have cut off access to credit for millions of people.

All this presents a problem for a country like the U.S., where consumer spending accounts for about two-thirds of the economy.

Which leads me to a theory about why some consumers aren't spending as much as they might otherwise be willing to do.

My theory is that as millions of consumers navigate the ongoing credit crunch, and increasingly become aware of the importance of maintaining great credit, many people are paying a lot more attention to financial mistakes that may or may not hurt their credit scores, and this is influencing their spending choices. Specifically, concerns about managing credit wisely often causes people to not make certain purchases.Here is a personal example.

Radio Shack this month offered a great deal on a new iPhone 4. The offer was for just $149, which is a $50 savings off of the $199 retail price if you purchased your phone from Apple. Additionally, Radio Shack offered a trade-in credit of up to $125 for a working 3GS phone, bringing down the cost of getting a new iPhone to as little as $25.

Since my hubby and I love our new iMac and our iPod Touch, we started toying with the idea of dropping our current cell phone carrier, Sprint, and switching to AT&T to get an iPhone.

But one big thing stopped us – at least for now.

If we switch to AT&T, we will be considered a new customer and subjected to a credit check.

That credit check translates into a "hard pull" or a "hard inquiry" on our individual credit reports.

Credit inquiries, under the FICO credit-scoring model, represent 10% of your FICO credit score. Inquiries stay on your credit report for two years, and they count against you, for the purposes of calculating your FICO credit score, for one year.

Some of you may be thinking that one little credit inquiry won't hurt your score that much. And indeed, officials at Fair Isaac -- the company that creates FICO scores -- say that an inquiry typically results in a five-point decline or less.

But many consumers have reported different results to me. And last year, when some company pulled my credit report, that inquiry caused my credit score to drop by 14 points.

Plus, if you have plans for a home refinance, a car loan or anything else more important than snagging a new iPhone 4, this whole credit check business is sure to make you think twice.

In our case, we actually happen to have just applied for a refinance of our mortgage, to take advantage of very low interest rates and more quickly pay off our home.

So for now, that iPhone had to stay at Radio Shack. Now Wal-Mart has a $197 promotion for the iPhone 4, and it's throwing in a $50 gift card too. But we still won't do the deal. Not when a credit check is required.

That means fewer sales for Radio Shack, fewer sales for Wal-Mart, and fewer sales for Apple. Nobody wins. And the little "stimulus" we could have added to the economy, by spending on a product and service we want, has been lost.

How long? Perhaps for a few months, maybe forever.

My husband and I both have perfect credit and we want to keep it that way for things that really matter.

But honestly, I wish the folks at FICO and other credit-scoring companies could distinguish between a credit inquiry that's obtained for the purpose of borrowing money versus an inquiry just to subscribe to a service.

Doing so just might trigger a new wave of consumer spending.

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Do yourself a "HUGE FAVOR" and carefully read this:

The 21st Century Act: Final Amendments to Regulation CC Section:
"Prohibits" reimbursement of Credit, Loan, and Finance Balances to a "Bank Entity" leaving only "Nonbank Consumers" able to receive reimbursement, as specified on Pages 85 and 86.

The 21st Century Act states on pg. 85 and 86 that "Only Nonbank Consumers can suffer losses and File for
Re-credit or Re-claim on any Accounts under the Federal Reserve System" also “Any Second or Third Party Presenters utilizing a Banks Documentation, Contracts and/or Agreements to seek Claims shall be considered to be that Bank under the Rules and Regulations”, the Expanded Definitions also includes Credit Cards and Home Equity Lines of Credit.
Also on Pages 100 and 101 "In any Financial Claims the Indemifying Bank (Parent Bank) must be Identified".

(Left-Click to Search Link)
21st Century Act: Final Amendments to Regulation CC

This Federal Law signed January 1, 2006 makes it "Fraudulent" and therefore "Illegal" for the 3 Major Personal Credit Reporting Agencies: Equifax, Experian, and TrasUnion to allow the Banks and the Banks "Third Party Presenters" to place any claim of "Negative" or "Potentially Negative" Accounts on your Personal Credit Based upon the fact that they have no "Legal Grounds or Claim" to the Money.

This is an "Unfair Practice" that diminishes our Financial ability to support ourselves and adversely affects our ability to gain work in many areas which breaks "Antitrust Laws".

These Rules also back claims of: "Aiding and Abetting" Racketeering and Extortion (of Finance Accounts and Personal Credit Reports), Pandering (of Credit and Loan Accounts, and Conspiracy to wit), Theft, Fraud, Federal Mail Fraud, and Telephone Harassment. Also "Threatening of the U.S. Financial Infrastructure", which is a "Capital Crime".

In order to engage the Federal Trade Commission to act against this injustice we must File many Claims, as these Reports must be Filed by a large number of people in order for the Federal Trade Commission to pursue
"Legal Action".

(Left -Click to engage Email Address)

This is way easier than "Occupying Wall Street"!

March 11 2012 at 4:54 PM Report abuse rate up rate down Reply