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Anyone want to take a stab at Credit Score?

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  • Anyone want to take a stab at Credit Score?

    Now I understand the relevance of credit scores when applying for loans and such, but why are credit scores used to determine Auto Insurance rates? And now, they're used when considering employment applications.

    Anyone care to explain?
    If I whisper my wicked marching orders into the ether with no regard to where or how they may bear fruit, I am blameless should a broken spirit carry those orders out upon the innocent, for it was not my hand that took the action merely my lips which let slip their darkest wish. ~Daniel Devereaux 2011

    Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity.
    Martin Luther King, Jr.

  • #2
    I guess it might depend on how desperate I was to feed my family, but I would very hesitant to say yes if a potential employer asked to look at my credit history.
    "Jesus said to them, 'Truly I tell you, the tax collectors and the prostitutes are going into the kingdom of God ahead of you.'"

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    • #3
      A cynic would say that it adds to the pool of people who can get dinged with higher rates - not just bad driving, but also credit problems.

      An interesting issue even for those who prefer lesser government intervention. How far can companies go into your personal business, to potentially set higher rates?
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      • #4
        Originally posted by GwynnInTheHall View Post
        Now I understand the relevance of credit scores when applying for loans and such, but why are credit scores used to determine Auto Insurance rates? And now, they're used when considering employment applications.

        Anyone care to explain?
        I know some states out West have laws against requiring credit scores for employment, unless they're related to the job.

        Here's a good reference for you if you need it, GITH: http://www.privacyrights.org/fs/fs16-bck.htm
        I'm just here for the baseball.

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        • #5
          from what I've read, the credit reports are useful in providing facts about previous job tenure and license and phone number verifications, but the credit report agencies insist they don't include credit score numbers to potential employers.

          As far as insurance -- shouldn't an insurance company know if someone can pay their bills? Should they insure someone just because they applied?

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          • #6
            I don't know about other states, but in Nevada, there's a standard release that must be signed when applying for jobs allowing prospective employers to pull your credit report. Though if you're denied employment because of that report, you get a letter stating why from the credit report just like you do when an application for credit is denied.


            It's been my experience that how you pay or don't pay your bills has little or nothing to do with how you do your job or how you drive your car.

            Ed, I know it might be prudent to charge more to someone who might not pay their bills, but with Car insurance (which you are required to have to drive), couldn't the company just cancel the policy thereby revoking a persons driving privileged?

            Thanks Chance, I won't need it, just was wondering if anyone knew the machinations behind the inclusion of credit scores in seemingly non credit score worthy situations.
            If I whisper my wicked marching orders into the ether with no regard to where or how they may bear fruit, I am blameless should a broken spirit carry those orders out upon the innocent, for it was not my hand that took the action merely my lips which let slip their darkest wish. ~Daniel Devereaux 2011

            Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity.
            Martin Luther King, Jr.

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            • #7
              I love how banks manipulate your credit score with their own credit cards... I had a 10k platinum visa for 3years, had about 2500 on it... (7500 in available credit)... BofA lowered my credit limit on the card to 5k so I had less available credit and that lowered my score...
              I always liked Alfonseca and he is twice the pitcher Hall of Famer Mordecai Brown was - cavebird 12-8-05
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              • #8
                I work with a lot of legal documents, and hands down, a credit report is the most inaccurate and most difficult to fix. And it ain't even close.
                “Let me never fall into the vulgar mistake of dreaming that I am persecuted whenever I am contradicted.”
                -Ralph Waldo Emerson

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                • #9
                  the data mining example I've heard was by Progressive. Motorcycle Insurance was an area they didn't want to go into, until they figured out that old guys with high FICOs probably were the best possible motorcycle "risk", ie, lowest. They've survived their 1st 2 years on the bike, and good credit is an indicator of "risk adverse"
                  "You know what's wrong with America? If I lovingly tongue a woman's nipple in a movie, it gets an "NC-17" rating, if I chop it off with a machete, it's an "R". That's what's wrong with America, man...."--Dennis Hopper

                  "One should judge a man mainly from his depravities. Virtues can be faked. Depravities are real." -- Klaus Kinski

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                  • #10
                    Originally posted by GwynnInTheHall View Post
                    It's been my experience that how you pay or don't pay your bills has little or nothing to do with how you do your job or how you drive your car.

                    Ed, I know it might be prudent to charge more to someone who might not pay their bills, but with Car insurance (which you are required to have to drive), couldn't the company just cancel the policy thereby revoking a persons driving privileged?
                    Well, not saying it's right or wrong, but insurance companies price their policies using the "Law of Large Numbers." This means in a given pool, they expect x% to lapse their policy without paying, x% to total their cars, x% to never file a claim, x% to be uninsured. And unfortunately, insurance rates include covering uninsureds and under-insureds.

                    On the surface, it sounds logical that someone who can't afford insurance isn't driving around recklessly, since they likely can't afford car repairs either.

                    So perhaps the insurance company knows, for example, that those people with credit scores between 500-600 will pay for x months before they let the policy lapse, and so they have to charge them more to cover this inevitability. Just a thought.


                    It's been my experience that how you pay or don't pay your bills has little or nothing to do with how you do your job or how you drive your car.
                    Would you take financial advice from an adviser with bad credit, or who has filed for bankruptcy? Certified Financial Planners (CFPs) actually lose their certification upon filing for bankruptcy.

                    Does Nevada require credit checks for all jobs, or just governmental positions?

                    I suppose many employers feel creditworthiness and trustworthiness go hand in hand. As a landlord, I can understand since all the problems I have with tenants are those who can't pay the rent. I usually have asked for a credit report, but recently, I've been going on instinct. So far I haven't gotten too burned.

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                    • #11
                      I understand what you're saying about the car insurance Ed, I just don't agree with the practice.

                      As to the occupational use of a credit report. I can see if the occupation is fiscally connected, but how does a credit score tell a prospective employer how well someone answers phones or serves food or processes documents? Every casino in Vegas pulls a credit report even if you're applying for a valet position. To me it's just irrelevant.
                      If I whisper my wicked marching orders into the ether with no regard to where or how they may bear fruit, I am blameless should a broken spirit carry those orders out upon the innocent, for it was not my hand that took the action merely my lips which let slip their darkest wish. ~Daniel Devereaux 2011

                      Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity.
                      Martin Luther King, Jr.

                      Comment


                      • #12
                        Originally posted by GwynnInTheHall View Post
                        I understand what you're saying about the car insurance Ed, I just don't agree with the practice.

                        As to the occupational use of a credit report. I can see if the occupation is fiscally connected, but how does a credit score tell a prospective employer how well someone answers phones or serves food or processes documents? Every casino in Vegas pulls a credit report even if you're applying for a valet position. To me it's just irrelevant.
                        Maybe because there's a decent correlation in Las Vegas between people with credit problems and people with gambling problems?

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                        • #13
                          Originally posted by B-Fly View Post
                          Maybe because there's a decent correlation in Las Vegas between people with credit problems and people with gambling problems?
                          As much as I disdain the practice, that is a pretty valid conclusion.
                          "There is involved in this struggle the question whether your children and my children shall enjoy the privileges we have enjoyed. I say this in order to impress upon you, if you are not already so impressed, that no small matter should divert us from our great purpose. "

                          Abraham Lincoln, from his Address to the Ohio One Hundred Sixty Fourth Volunteer Infantry

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                          • #14
                            Originally posted by B-Fly View Post
                            Maybe because there's a decent correlation in Las Vegas between people with credit problems and people with gambling problems?
                            Though I might be tempted to agree at first glance--is that really true? I'd be interested to see if it's also a correlative issue nationwide because giving employers permission to access your credit report isn't isolated to Las Vegas, in fact it's becoming a trend across the country.

                            has anyone (here in the bar), who's recently applied for a job, experienced the same thing elsewhere?

                            But yes, I'd wager that there are those in Vegas who's credit woes are tied to gambling problems, but I'd be surprised if it was a high percentage.
                            If I whisper my wicked marching orders into the ether with no regard to where or how they may bear fruit, I am blameless should a broken spirit carry those orders out upon the innocent, for it was not my hand that took the action merely my lips which let slip their darkest wish. ~Daniel Devereaux 2011

                            Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity.
                            Martin Luther King, Jr.

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                            • #15
                              Originally posted by GwynnInTheHall View Post
                              But yes, I'd wager that there are those in Vegas who's credit woes are tied to gambling problems, but I'd be surprised if it was a high percentage.
                              Was that deliberate?

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