Thread by @ideafaktory

Interesting lesson today on how our society works. Having always lived in the city, I never needed a car, until my Great Escape into the burbs. Today, I drove out of a dealership with a new car, without handing them a penny. They checked my credit & knew I was good for it.

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Credit
I've worked for some of the biggest consumer credit companies in the world but never had a moment where I felt the disparity between myself & countless others who could never walk out of that dealership without deposits, high interest rates & punishing monthly payments.
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It hasn't always been this way. My immigrant parents never had credit & hated any kind of debt. They saved & paid cash, always. Not only did that mean crappy lemons like the Ford Grenada, but constant deprivation. It sucked then. Today, I see delayed gratification as a virtue.
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For years I volunteered at Junior Achievement, teaching 9-12th graders business & finance skills. Not only was it shocking how little they knew about basic finance, but how little their teachers knew. Even the textbooks were useless. I had to make up my own lessons.
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The most useful one is creating a link between careers (average earnings), desired lifestyle (itemized costs) & life choices that needed to be made for one to make the other possible. THEN link it to saving/borrowing/investing as facilitators.

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Fast forward to millions of people struggling. Earning minimum wage, supporting kids on one income, coming up short for bills, paying late, having no hope of good credit, if any. Certainly not driving out of a dealership, like a robber baron.

Is there hope for them?

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Maybe. I wish we didn't treat poverty as a disability & the poor as victims or infants. Many adults have been beaten up by life, want help & are willing to learn, change. And their kids lack the discipline, right education & role models to develop financial discipline.
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We can pretend an army of government do-gooders will swoop in to rescue them, wrap them in TARP, like a failed mortgage lender. No. Help isn't coming. It never was. Just empty words. How do I know? Look at where we are. Look at the # of poor & distribution of credit scores.
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Previous "solutions" had government setting usury laws or max lending rates. The result was fewer people qualifying for credit.

We've also tried low interest, govt-backed loans that never scaled, or in the great recession, scaled so big they almost took down the economy.

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The reason these never worked is the same reason lottery winners' lives often fall apart.

Imagine never having financial knowledge or discipline, being surrounded by others who don't, then getting millions? It's like going from crashing a toy drone to flying a 747.

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So the solution lies in mutual benefit, not charity or govt largess.

Countless countries exited poverty by becoming essential goods/services providers in the global economy, not from having crates of rice dropped on them.

The same must happen here: 2 sides must profit.
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Credit card companies, credit bureaus & other lenders must do what defensive driving courses do - rehabilitate people's records & give them access to an essential service: credit.
This means...

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A sustainable credit rehab plan might include:
-online financial education (adult+kid)
-offline curricula (train teachers)
-opt-in peer support model (people can vouch for others or act as guarantors or accountability partners)
-progressive credit score & line increases
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This might be a startup opportunity. Think Spotify for credit. A single credit rehab provider working with multiple establishment players.

I need to think about this more, but thought I'd use this thread to kick off a deeper brainstorming.

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