'Credit-score company encouraged me to borrow again when I was nearly debt-free'
Credit Companies Want You to Borrow More. This Is What They Do. Here's How to Think About It.
What Happened
A person reported that a credit-score monitoring company encouraged them to take on more debt when they had nearly paid off their existing obligations. The BBC is covering this as an example of how credit companies operate.
Historical Context
This is standard business practice for credit companies - they profit from interest payments, not from customers being debt-free. The average American household carries $6,194 in credit card debt as of 2023. Credit utilization ratios between 1-30% are considered optimal for credit scores, meaning the system is designed to keep people perpetually borrowing small amounts. This dynamic has existed since consumer credit became widespread in the 1950s-60s.
What's In Your Control
• Whether you take the company's advice to borrow more money
• Your own financial education about how credit companies make money
• Setting up automatic payments to avoid carrying balances
• Choosing whether to use credit monitoring services at all
• Your spending habits and budget discipline
• Whether you close credit accounts or keep them open with zero balances
Does This Require Action?
This requires awareness of how the credit industry works, not outrage. Permission granted: You can be unsurprised that companies try to make money from you. The real action is in your own financial decisions.
Source: BBC