In a testament to how screwed up our financial system is, I’m going to give two examples of how doing the right thing can hurt you financially. In both cases, our credit score will drop. Beware of both if you are looking to increase your credit score, which we have covered is one way to save money on interest without doing a lot of work.
#1 Financing a solar system with a loan
After we got our solar system set up, I noticed our credit score dropped 20 points. I wondered why that was the case. Here I am reducing the amount of money spent on energy and doing the right thing for the Earth. How could our credit score drop?
Common sense would dictate we have become a better risk by lowering payments. The financial system doesn’t have that full knowledge. They only see a $35,000 loan was taken out, the loan payments equals the full balance, and my credit score was checked recently. All those factors would drop our score and that’s exactly what happened.
Our score will gradually increase as we make make payments, the loan balance is less than the loan amount, and as the credit hit goes further back in time.
A just financial system would increase your credit score the more environmentally friendly you acted.
– smilingdad
When the financial system is run by fossil fuel interests, weird things happen. See #Sludge Report – Who is Funding the Fossil Fuel industry? by Cleantechnica. It’s 3 years old. I bet the only thing that is changed is the amount. “A new analysis by The Guardian shows that big banks, led by JPMorgan Chase, have invested more than $700 billion in new coal, oil, and natural gas projects since the Paris climate accords were agreed to in 2015.” That’s a lot of $100 bills.
#2 Cancelling a Chase Amazon rewards credit card
Speaking of fossil fuel king JP Morgan Chase, I cancelled their Amazon rewards card today. This was a long time coming. It took years, way longer than it should have. We had our mortgage, checking, savings, and credit card with them. Moving accounts takes dedicated effort. Banks make it too easy to stay, with a variety of services making life comfortable.
When I cancelled the card, I knew our credit would get dinged. How come? Our credit utilization will increase (amount on our credit cards divided by the total credit limit, which is going down) and the average age of credit will decrease. It’s my oldest active credit account.
I feel good about closing the card. There are new reports that Amazon is cracking down on labor unions. I’m not a fan. Many of our treasured work rights are because of unions fighting harder for the average person over prior decades. I can’t get rid of Amazon, we’re working on that, and it might be impossible. We can reduce our support for their credit card and JP Morgan Chase, who provides technical support for the card.
In an universe that had any sense (I figure this one is a trial run, too many things are screwed up), your credit would go up for being able to go into less debt, not go down because your credit utilization is higher and age of accounts is lower.
Doing the right thing can hurt in the short run. In the long run, small actions add up. Companies will use machine learning and artificial intelligence and adjust. In a time of loose moral fiber, doing the right thing takes courage.
With peace, love, and hope,
smilingdad
smilingdad 