REID: Credit where credit is not due

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For nearly all my working years I have been considered a poor credit risk.

This goes all the way back to when I bought my first pickup truck for a mere $1,500, a used six-cylinder, short box, step side Chevy with very little rust. Despite that now seemingly low amount of cash required I had to have my dad co-sign a loan at the bank for me to make the purchase possible.

In my early farming career I was turned down for several loans. That was during a time when you almost had to prove you didn’t need the money before you were even considered for a loan.

Proving that I didn’t need the money was something I couldn’t do because in fact I did need it desperately. Eventually I built up enough equity that I was able to acquire a large enough loan to purchase some land and equipment.

Over a fairly short period of time it was proven to me that I in fact couldn’t afford to pay 24.5 per cent interest and the bank had been right when first suggesting I was a poor credit risk.


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Fast forward to today and the effort it takes to acquire credit. In short, it doesn’t require any effort.

Seemingly every other commercial on television is an open offer to people – having admitted openly that they are a poor credit risk – to  borrow whatever amount of money they require to purchase whatever it is they want.

The ads of business owners selling automobiles are the most aggressive. One in particular caught my interest recently.

It features a middle age man with a slightly remorseful look on his face indicating he feels some regret for having not honored previous debts. While trying to look serious and maintain eye contact he admits to having a bad credit rating.

But in the next breath he reveals his wish to have a nice truck to drive, not just happy with any truck, one like my $1,500 used truck, but a real nice truck that history has shown he can’t afford.

No problem.

The people dolling out the credit give some to him and away he drives in his nice truck to whatever forwarding address he has provided I suppose.

When I think back to all the various approaches I practised in front of a mirror or with an equally credit-challenged farming friend of mine just to obtain money for a rusty old cultivator, etc., it all seems so unfair. And almost beyond my comprehension.

There was a huge amount of effort on my part in becoming mentally prepared for approaching a loans officer or any bank official willing to talk to me.

I practised all the dialogue for the “buddy approach” with a loans officer, suggesting we would be making a purchase of equipment together for our mutual benefit. We would be sort of co-owners that would give us something in common to talk about if I were to be invited to the annual bank picnic/customer appreciation event.


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That never happened or at least I never received any such invitation. Maybe there never was an annual bank picnic.

There was the casual approach where I tried to pretend I didn’t care one way or the other if I was lent the money because there were other sources who would lend it to me. As mentioned previously that never worked well.

Loan officers always seem to keep it so warm in their confining office spaces which didn’t help with pulling off the casual approach either.

After a few uncomfortable questions on cash flows and current liens the casual approach was most often quickly abandoned for emotional pleading that led to the also previously mentioned desperation and finally a slow dejected walk back to the bank parking lot, sans cash in hand.

It is often suggested that one can learn as much from failures as from a success. I discovered that sage advice could be applied to obtaining a bank loan.

I had been rejected for a loan to buy a New Holland small square baler by the manager of the particular bank I was dealing with. He pointed out several flaws in my proposal which I made a mental note of.

Also becoming aware that he would not be at work the following regular work day, I came back to the bank the next day and asked to speak to a loans officer. Turned out he was a younger man in a secondary role and perhaps less experienced in spotting a poor credit risk. Apprised of the flaws that had caused my previous application to be shot down like a paper airplane in flames, I had massaged and manipulated the data to create a brighter outlook toward a more prosperous future etc., etc.


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I was successful in getting the loan and the small square baler was in my yard that very afternoon less there were any unforeseen circumstances arising from the bank’s perspective at a later date.

I share all this information to give some indication of just how hard it once was for poor credit risks like myself to get any cash. If my introductory statement on sitting down on one of those uncomfortable chairs in the loan officer’s cramped quarters was admitting I had a bad credit rating – game over, tilt, don’t pass go, don’t let the door hit your butt on the way out.

And on top of all the effort required to get a loan, we anxious borrowers would agree to pay interest rates that were usually around 10 to 12 per cent and rising. Today money is being offered like party favours at miniscule rates of interest and sometime at no interest at all. Hard to imagine.

I can’t help but wonder if I was the same young farmer starting out with the same low equity and high expectations today, if I too would be welcomed with open arms and bank vault doors. Where would be the challenge and the creativity required in that?

The current easing or elimination of credit qualifications reminds me of lyrics in the song “Money for Nothing,” by the pop British band Sultans of Swing, ironically sung during a time when credit was hard to come by:

“That ain’t working, that’s the way you do it.

Money for nothing and the chicks for free. “