Monday, January 11, 2010

Experian, Transunion and Equifax and Their Scams

There are three companies that say how good your credit is; Experian, Transunion and Equifax. These companies have a lot to say about your lives. They, at the drop of a report to your bank, your credit card company, your mobile phone service or your Internet provider can stop you in your tracks; make it hard for you to buy anything, even a necessity for survival.
I don't know when it was that I began to think that “credit ratings” were a bunch of hogwash, but it has probably been ten years, maybe fifteen years, when I ask myself, “Why would I want these three companies to control my future?” On that day a revelation came to me: screw those companies, I don't care what they think of my credit. The best thing I can do, I realized back then, is to get into a position where I don't have to depend on these companies or what they do. They became irrelevant to me, so I made up a few personal rules to follow (I'm sure someone else thought these up, I just appropriated them).
First is to buy only what I need and put the rest in a bank account; the “rest” being whatever remained of my meager paycheck. I've never been good at putting a specific percentage away, like 10% or 15%, but I've been pretty good at putting the “rest” of it away.
Second is don't buy on credit. So, if the only way I could buy something was to make payments on credit, then I didn't need it as bad as I thought I did. So, I didn't buy it. I guess the thing that surprised me was how quickly I forgot I needed something if I didn't buy it. The other thing that surprised me is how quickly my savings account grew when I didn't buy it.
Third was two things. First, if I had to use credit, for a house or a car, then make sure the monthly payment fit my paycheck and get it as low as possible. Second was to make sure there was no “early payoff” penalty. If I could meet these two objectives, then I could probably make higher than minimum payments WHEN I WANT TO to pay off the debts. (You could probably add “no goddamned fees” to this for gravy, too).
Fourth was another question: “What can I do to make good investments to save more?” The answer to this was a long time coming, but here it is: Learn how to read a company financial statement and buy and sell stocks of companies that have good financial statements. I was surprised to learn that you don't need a college education to do this. This ain't gambling. It's saving.
Of all the advice we hear in our lives, financial advice is the hardest to remember. Everyone says, “Yep, that's what I need to do,” but they never do it. This has never been “financial advice” to me. It's about “justice” and “fairness.” Is it “fair” to have three companies control what you do? Tell you what you can and can't buy? Is it “just” for three companies to make decisions about you without knowing you? What about your kids and grand kids? Do you want these goddamned companies controlling them? The answer is “no.”
The fact is that it should piss you off to have three companies control you and your kids. And, that's what makes these simple rules so easy to remember. A few years ago I had the bright idea to put my son and a friend of his in a painting business. They are painters, I'm not. So, I put up $50,000 to start it. I figured that in a year's time we should be making money. (Ha! As an aside, I learned that business people overwhelmed with worry about how to handle all those customer calls that are going to come isn't the kind of business person you want to invest in. The correct answer to all those customer calls you may never get, is don't worry about them. Worry about the customer you have now.)
But, I digress. One of the things that pissed me off about starting that business was Washington Mutual. They insisted we have a “good credit rating” of about 700, which is some concocted number ( pulled from we know not where ) from these three companies. We all know how well Washington Mutual has done in business, i.e., they failed. So, their word, and advice, is about as good as a pig's ear. So, I asked the clerk, “why are you concerned with my credit rating? If I have $50,000 and I'm going to deposit it in a business account, what's my credit rating got to do with the price of tea in China?” Well, I raised so much stink about this very minor thing, that they brought the bank manager out to talk to me. Finally, I said, “either start the account, or I'll take my goddamned money someplace else.” I had an excellent credit rating, over 750, but that wasn't the point. In the end, the bank opened the account WITHOUT doing a credit check. That was the result I wanted. I wanted to make those three, unfair, unjust companies irrelevant. And, I did. Two things mattered: 1) I had the money, and 2) I would stand on principal.
About a year ago I got a notice from a company, I don't remember the name, that notified me that my “personal data” had been stolen and that the company was going to arrange with Experian to send me credit alerts if and when my credit record changed. The only thing I remember about the company that lost my personal information was that I didn't know how that company came to have my information in the first place. I didn't have an account with them, didn't have a credit card with them and had never, to my knowledge, ever done business with them. Sometimes a good law suit is appropriate.
So, now Experian sends these monthly alerts that usually say “nothing happened,” even though I use my credit card, transfer money and generally buy stuff. Except yesterday. I bought a Nexus One Google phone with a T-Mobile plan and T-Mobile checked my credit. I don't know the result, but that simple credit check caused Experian to say, “SOMETHING HAPPENED! SOMETHING HAPPENED!” Awh, go fly a kite if that's what you alert on. I'm more interested is some jerk creating a new account with my SSN or using my card with a different shipping address than I am for a company checking my credit. Screw you Experian, trying to make yourself more important than you are.
So, what prompted me to get on this tangent? Aside for Experian alerting me to something that's no more important than a hill of beans, I happened by that place of infinite wisdom the other day, The Village Barber Shop. It was full of waiting patrons and one chair in a corner was the only one left, so I took a number and sat there. The chair was far from the magazine rack but a very lonely and isolated bookshelf containing several books of various titles sat in the corner beside this last chair. I picked through the books and chose a small book entitled “Monday Morning Leadership” by David Cottrell and began reading. I managed to read the first chapter, “Be a Driver, not a Passenger.” Cottrell told of being in mid-life crisis where he seemed to be lost and he asked the advice of a man wiser in experience about what to do. The man's advice, not on any particular problem Cottrell was having, was to “stop being a passenger. Be a driver.”
I knew that. That's what I decided to do years ago when those three, irrelevant companies got caught in my craw. I'd just never heard it put that way. Aristotle disagreed with those other philosophers who suggested controlling emotions was a better way to go. Aristotle said, “Emotions can be good. Take anger, for example. Misdirected anger is not good, such as vengeful anger, but constructive anger against injustice and unfairness is good anger. It is the anger that corrects wrongs and rights grievances.”
So, is this financial advice? Nope. Make this advice stick in your craw. Make these companies irrelevant by 1) putting yourself in a financial position to not care about what they say and do, and 2) keep doing it. Be a driver, not a passenger.
And, by the way, being a driver adds to your responsibilities. You can't, for example, be tempted to take in the scenery when you're driving. You need to watch the road. You're responsible for your passengers, so that means you need to step up to the plate for your family (and perhaps your neighbor, too) who, out of necessity, need to ride with you for part of their trip. Think about that, too. But, that's a whole 'nother subject.

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