Credit Worthy

I like Keith Ellison. I liked him when I met him before his election in 2006. He is a politician, he said what we wanted to hear at a party at Sam Kaplan's home, but it was clear he was passionate, articulate, and for that matter, believed in what he said when he spoke about core principals of compassion, hard-work, decency and integrity.

He is the only Muslim in Congress, and I'm proud I worked for his campaign, and I'm proud to continue to support him. So, fair warning, I like Keith Ellison and I give him immense credit for authoring the 'Credit Card Bill of Rights.'

Recently, my current credit card issuer, a company we'll call "Craptastical One", sent me a letter. "Due to the tough economic times", it said, it was effectively doubling my interest rate from 9.9% to 17.9%, on a card I've held for 14 years with them.

Now, I have a credit card debt equal to about 4% of my gross income, it used to be higher. I also have missed one payment in 23 years of having credit, that was due to a dispute, and a dispute I had resolved in my favor and was removed from my history. Other than that, I've never, ever missed any payment and have ALWAYS paid more, usually FAR more, than the minimum, on any bill from any credit issuer, Sears, Best Buy, etc.. and of course, always paid in full the scheduled amounts due on my car loans, home loans, phone bills, etc... Oh, it's not that I didn't miss a utility bill every great once in a while (maybe 4 or 5 times in 23 years), but of course, I then paid the full amount off, and such was a miss of oversight, not commission.

As a result, my credit rating is pretty strong (my Fair Issac score or FICO is above 800). With Craptastical One, I've paid them, year in and year out, on time, and any late payment of a utility bill of course never affected my credit score as it never was worthy of such notice. So my credit score is pretty well pristine as pristine can be. I also am NOT someone who pays off bills in full, something credit card issuers don't like.

So, I was pretty surprised.

Then, I read an article that said that credit card issuers were going after good credit people who they felt might have the ability to pay more, as evidenced by a couple of factors. One being that they started paying down substantially their current credit card debt. As I'd paid off about 30% of my debt in the past 6 months, I thought, "yeah, that might be it." I also thought, "Well, you also just got a new house with a higher payment, so who knows?"

The point is, I have good credit, very good credit I believe. I also have a solid job that pays me well enough. Why did this happen?

The Republicans opposed Keith Ellison's bill to restrict arbitrary escalation in rates, cryptic reasoning behind such actions, and double-cycle counting. They contend that it will restrict credit to good credit customers, that it will not allow them to offer lower interest rates - something (formerly) known as 'risk based pricing,' but I tell you, that model no longer exists. Credit card companies are going after their best customers, their 'good credit customers' not with lower pricing, but with higher - because, well, they can. They can because it IS a bad time for our economy, and so they feel they can get away with it. There isn't any regard for the credit worthiness of the customer, in fact, the more credit worthy, the more likely you are (it seems) to be hit with an increase.

I contacted Craptastical One and asked if ANYTHING I had done prompted this increase. I was told "Nope, it's just that the market right now is poor, and we felt we needed to respond." "Poor?," I said, "You can get funds for .25% - Fed Fund Target, or .12-.20% if you use the Discount Rate and get the loan from another FI. You're making 20% plus on your average debt, and getting more money to loan is almost FREE!!. Good God, you people have NO shame."

So, unlike what the Republicans say, this isn't about offering risk based pricing. I find it rather offensive that they always seem to come back to the argument that 'We're better than the bad people, and they get what they deserve," kinds of arguments where if you only don't screw up (ever), you'll be fine. But in this case, it is the exact people who don't screw up who are getting screwed. Reps Bachmann and Kline probably even know this, there was certainly ample testimony in Congress about the fact that it was good credit customers who are getting hit, but they still voted against it. The reason of course is that they get massive contributions from credit issuers, whereas Rep Ellison, he gets his contributions mostly from people like me, pretty-average Joe, the consumer. Doubtless Ellison gets his share of contributions from companies too, doubtless Kline and Bachmann get some from ordinary folks as well, but when judging people, actions (such as votes) speak louder than words. In this case, the consumer is getting screwed, there was NO need for this increase, yet of course - they did it anyway. They did it because people like Bachmann gave them the green light by taking no action in the past against this kind of thing. It is time that light turned red.