There seem to a number of people who for one reason or another are unable to grasp simple financial concepts and who are consistently getting themselves into various financial binds like bankruptcy. You know the types... They think as long as there are checks in the book, there is money in the account.
At some point (after bankruptcy at MINIMUM), a judge needs to be able to declare a person who has exhibited such financial recklessness, "financially incompetent", and have this posted to their credit report, basically saying, "if you issue credit to this person, then you are dumber than him/her and you deserve to eat all losses incurred from transactions with this person". They could even assign the person's financial matters over to a trusted and competent manager (who in turn could be legally obligated to simple specific fiscal practices with the person's finances).
This would stop the creditor's predatory and usurious habits they practice on these individuals that have no business having credit in the first place.
To be fair, there would have to be some means of redemption whereby the person could undergo training and after judicial review be able to remove the incompetency label from the credit report.
I agree
No opinion
I disagree
Add your comment
I suspect the problem lies in the US bankruptcy laws - in the UK if you have lent unsecured, or with insufficient security, and your debtor goes bust, you lose.
If you go bust it is essentially impossible to get credit on your own account for several years.
My gut view is the US is too lenient, and the UK too harsh.
Good idea in general, though I think people should be better educated before they are given the chance to screw up and be branded incompetant. That is the theme behind, my defensive credit idea.
Shouldn't these types of education be done at high school level? Having gone through life, I feel the education system (in most countries) is deficient in this respect. They are very noble in their mission on providing knowledge, but very limited in most respect of real life experiences.
Unfortunatly to your "financially incompetent" list of people who had bankruptcy you would have to add Abraham Lincoln, US Grant, Mark Twain and many other "incompetent" leaders and innovators. In addition include all others who had a major illness, uninsured loss due to fire or theft, etc.
I agree with your idea because people who are terrible with money are annoying and also part of the reason the rest of us pay so much more than we probably should... But... isn't you're point of labeling their credit the purpose for a credit score to begin with... if the number is low... it pretty much says the same thing as being financially incompetent. And... lenders know their risks, it's the opportunity to make money they're after, if the slightest chance is their, they'll take it. I hate to say it but I can't see anyone stepping in to say "I'll be responsible for this person with no common sense, for nothing, until they figure out this whole money thing."