Indentured Servitude.

Let me start with a story.

It is the spring of 2006. I have a new job. I work for the United States Air Force as a civil servant. I am an electrical engineer.

After four years of college, seven months of tending bar and a trip through Europe, I have zero debt, and I am sitting comfortably on a nice fat signing bonus. At this time in my life I have job that nets me just shy of double the median income for an adult male in my city (Macon, Georgia). I am considering buying a house, because I expect to be in the area as much as five years, and I know that even if I sell the house at a loss after that time, I will probably still come out ahead over renting. I have spoken to friends and some have expressed interest in living with me, which would make the mortgage very manageable indeed. Bear in mind--I have never had a credit card, signed a lease, or even had a cell phone.

I go to the bank.

Recall, I have no debt. This means I have no credit history.

At all.

I sit down with a mortgage representative for my new credit union, and she is remarkably professional (she doesn't actually laugh openly during our conversation). She calls in the request to see what her loan department can do.

She discovers there isn't even a credit score associated with my name. I am a non-entity as far as lending organizations are concerned.

She describes my situation to the loan clerk at the head office. The clerk's response (and I quote) is "Wow--is he single? . . . but seriously. . .without a number in this box, I can't approve a mortgage."

So there I sit in a bank at the age of twenty two, freshly employed (by an organization from which it is almost impossible to get fired) and with enough money in my account to put a 10% down payment on a $75,0000 home that very afternoon. It strikes me as comical beyond measure that my financial situation is so attractive that a bank employee would consider dating me sight unseen, and yet I cannot be given a loan.

The loan officer is very helpful, and suggests I take out a secured loan against my own money to quickly generate a credit score and improve it.

I take her advice.

Fast forward 18 months.

I am considering house-buying. Again.

I have a number attached to my name now. It is not particularly high.

This is to be expected. The reason is simple: I haven't sold my soul.

Today, while considering whether I should buy a house, I gathered my personal information together and applied for my free credit reports (Georgia residents are entitled to two per year from the major companies). I found them mainly bleak wastelands with few entries, a barren reminder that I only grudgingly took on a loan in the first place, and paid it off in full the day I was approved for a credit card. TransUnion couldn't even get my American Express account number correct, so I could not view my score (yeah, fuck you too).

I even plunked down a few extra dollars to see my VantageScore, the credit score issued by Experian (it was six bucks, and I was curious).

My score stands at 695 right now, on a scale of 501-990. God only knows why they don't use the bottom 500. I guess they want to make people feel better.

This score means I am considered a member of the "non-prime" category.

What really sent chills down my spine, more than anything else I saw today though, was this entry from Experian:

What factors lower your VantageScore:
  • Your report does not show any open, recently reported installment accounts, such as an auto loan. Having open, recently reported installment accounts as part of your credit history can have a positive impact on your credit score.
  • Your report does not show any usable/valid retail revolving accounts, such as a department store credit card. Having valid retail revolving accounts as part of your credit history can have a positive impact on your credit score.
  • Your report shows too few accounts. Having too few accounts limits the amount of information available and negatively impacts your credit score.
  • Your report shows that the time since your oldest credit account or loan was opened is too short. Having credit accounts or loans open for a longer period of time has a positive impact on your credit score.
  • Your report shows one or more inquiries on file. Each time a potential lender pulls your credit report for review, an inquiry is placed on your file. While having inquiries on file does affect your score, the impact is minimal.

Now the last bullet makes a little sense--if I were constantly applying for credit from dozens of institutions, that would be a bad sign, and would appear as a series of constant inquiries into my report, sure.

The one before it makes sense too--it takes time to build a reputation. This is the case in every situation.

But let us talk about those first three.

It has become my opinion that America has discovered a new, 'free', form of indentured servitude, and our middle class has willingly sold ourselves into it.

These first three items are not ways to learn how high of a risk there is that you won't pay back a loan--they are ways to estimate how willing you will be to shackle yourself with debt in order to have things you don't need or want.

How in the hell does a retail store credit card increase the likelihood that I am of solid financial standing and good character? And why, as Americans, do we allow ourselves to be subjugated by this system?

We willingly put our necks beneath the foot of a banking system that has all the benefits of being slave holders (constant income, low cost of maintenance, etc) with none of the responsibilities! If a slave got sick and was near death, it was in a slave-holder's best interest to see to his care out of his own money. Banks have no such compulsion.

And then we stand with our hands on our hearts and sing that we are the land of the free with a straight face. I am beginning to believe that if you can't walk away from every debt you have--today--based on your liquid assets, then you have signed away your liberty.

And for what? A JC Penny card and a late-model Ford Mustang?

In the words of XKCD's Randall Munroe:

Fuck. That. Shit.

Monday, October 08, 2007