How about stimulating the economy by boosting people's credit score?

Question

the government wants to stimulate the economy but if everyone is broke and needs the money to pay bills why not change people credit rating so that those who have poor credit will be changed to a good rating? i mean if my credit score was better and my debt was wiped away i would spend more hence the economy gaining more money and getting better. just a random question but i think its worth a though.

Answer 1

This sounds like a great idea, make everyone have better credit it will get people lending again and the economy will move forward. Although this sounds like a good idea, like why not raise the minimum wage to $100 an hour and everyone could be rich, it doesn't pass the common sense test.

Think about if you were someone who was providing credit and you knew that on someday everyones credit score was going to increase by 50, you would just increase all of your credit score requirements by 50 also. Just changing a number does nothing to eliminate the underlying risk for each borrower. If anything it may have the opposite effect because it makes determining someones credit worthiness even harder and may reduce the amount of lending that takes place. Our credit reporting system is not perfect but it is better than just guessing out of thin air, the government should not take a policy like this, it would not achieve the goals to stimulate the economy and at worst may have a negative effect on lending.

Answer 2

Let me get this right.  Lie to creditors so that they take on high risk customers, so that they can be inundated with accounts receivables that will never be paid.  Seems like just the sound fiscal move that out genius President Bush would whole heartily support. (Especially the lying part) By the way how is this economic package supposed to stimulate OUR economy? We don't manufacture anything here any more, so the only economies being boosted are China, India, and the rest of the money will go to the oil cartels.

Answer 3

You should have used your stimulus money to pay off some bills.

Responsibility is the only thing that will boost your credit score.

Answer 4

That would not work -- in fact, it would be counterproductive.  Credit decisions must be based on sound data in order for lenders to risk putting out money.

Answer 5

FOR STARTERS they should teach personal finances in high school. Most people don't know anything about debits or credits. They intertwine both terms however they're as different as night and day. Debit is something you owe, Credit is something you gain. However, most people equate Credit with Debt.

This would solve SOME of our credit issues.

The other solution - people need to realize that the Joneses are deadbeats and broke so keeping up with them is foolish.

Answer 6

the problem with doing that is that the credit reporting agencies figure out your score based on the indications they have about your willingness and ability to repay your loans.  If the government just lifted everyone's score, that wouldn't change your ability or willingness to repay your loans, at least not right away.  This means the people that purchase the credit reports would just raise their score requirements by the same amount that the government raised your score, to keep the same amount of risk.

If the government prohibited that practice, then interest rates would rise in anticipation of more bad debt.  Higher interest rates slow the economy.

so either scenario would not work.

Sorry

Answer 7

Unfortunately credit agencies have their own criteria and basically the economical system doesn't bode well for low income people. You just have to find more innovative ways of making money. Look online to see what you can do working from home. That is an option.