FICO Credit Ratings | Credit Card Debt

The Fair Isaacs model for numerical evaluation of consumers' borrowing histories was designed just after the second world war as a means for appraising the credit risk for men and women throughout the United States without prejudice or favoritism based upon such criteria as location, religion, ethnicity, means of employment, or even household finances. In the 1950s, the department store charge card and retail lines of credit – based, in tradition and usage, upon the early general stores dating from the earliest days of America, when borrowing and lending were considered intensely personal affairs –faded in prominence. Commercial lenders began exploring the opportunity for all inclusive commercial debt accounts that could be utilized in a number of different stores for a variety of goods and services, and our national predilection for credit card debt sprouted roots.

The Diner's Club Card, grandfather of the credit card debt revolution, was originally restricted to only a handful of the most chic and expensive Manhattan restaurants and boutiques, and their advertising schemes highlighted the convenience of plastic purchasing for aspirational Ivy League grads to the manor born. Once the availability of credit cards expanded from a few thousand successful urban raconteurs, more and more places of business began accepting the cards, and the qualification standards for credit card debt dipped significantly. The importance of credit scores would have seemed impossibly remote those halcyon days of aborning consumer finance, when borrowing without collateral was a blessing restricted to the captains of industry and scions of privilege, but it didn't take long for the lenders to recognize that a poorer client base would appreciate the powers of borrowing upon demand far more.

After Visa and Mastercard and American Express downgraded the thrust of their marketing campaign, eligibility for credit card debt inevitably shifted away from a simple confirmation of financial prosperity and instead centered around the burgeoning middle class whose appetite for consumption was only bettered by an unabashed desire for status symbols and the trappings of success. As such, the new breed of so called super banks that would come to dominate the political and economic direction of the United States government newly prized any practical means through which corporations could easily and accurately (and, most of all, reliably) predict the odds for an untested potential client to satisfy loan balances. By the time of the late seventies, credit card debt had evolved from a plaything of the wealthy and indolent into an accepted necessity to be exploited by anyone wishing to make their way through the modern world.

In just a single generation, the average American consumer blithely traded social conventions of absolute self reliance – believe it or not, in the age of our grandparents, purchasing a home with the partial help of a mortgage loan was judged harshly as a foolish risk – with a carefree and heedless adoption of the purchasing principle. Not only must students attending their first year in college brave an all encompassing marketing blitz, not only will eighteen year olds who've never held a job be effortlessly granted lines of credits for tens of thousands of dollars, their parents may well encourage the new credit card debt as a means of elevating the FICO credit scores for future borrowing opportunities! Without a doubt, our country and our world has been improved by the universality of a credit scoring system blind to color and creed, but the ever looming storm of credit card debt held by Americans has assumed a frightening momentum all its own.

FICO Ratings and the Rise of Credit Card Debt in America

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