A man and two friends are sitting in a beat-up blue economy-size car when the driver starts singing: "Well I was shopping for a new car, which one's me? A cool convertible or an SUV - too bad I didn't know my credit was wacked. 'Cause now I'm driving off the lot in a used subcompact."
The commercials for FreeCreditReport.com stress the importance of knowing one's credit score. According to the research of Assistant Professor of Communication at the University of New Hampshire, Josh Lauer - the, hopefully, three-digit score reflects more than just the financial habits of a person.
"Students should be aware of their credit scoring - it could affect their life chances and future opportunities," said Lauer.
Lauer's research, from which he is currently basing a book upon, examines credit reporting and the roots of financial identity. He argues that the moral fibers of an individual are reflected in a credit score - and, unfortunately, in the financial industry there is no separation between one's financial and personal tendencies.
"Credit ratings can be used for employment, renting and auto insurance," Lauer said. "It can affect interest rates and risk assessment."
A credit score is a raw number that ranges on a scale from 300-850. An individual's credit score reflects late or timely payments on loans, credit cards and other borrowed means. One's credit score is also determined by the length of their credit history.
Lauer explained that the economic condition the country has found itself in today is due not to credit scoring but a lack of a credit screening.
"The economic downfall demonstrates that there needs to be some form of assessment in the credit industry," said Lauer.
Tamy Chung, 21, Business Administration major and senior at UNH knows the importance of her credit score. Chung admits to signing up at least once a year for the 30-day trial websites that give out credit scores in order to evaluate her financial progress.
"I'm organized and responsible, and I always make my payments on time," Chung said. "I don't wait for my bill to come - I just pay it."
According to Lauer, those qualities would be reflected in her credit score and make her a good borrower for a bank and a dependable tenant for a landlord.
Mackenzie Smith, 21 and also a senior Business Administration major at UNH confessed to not knowing her credit score, but recognizes its significance.
"This is why we're in this economic situation today," said Smith. "People don't understand finances and were over-lent to."
Lauer said the downfall of financial institutions came when lenders only required proof of the borrower's employment - no credit scores and no personal assessment. Because of malpractices within the lending industry credit score numbers that used to be sufficient are holding less weight in today's financial markets.
And while banks are commonly known for their bottom line agendas, the character components of credit scores have proven to be indicators of an individual's likeliness to payback what they have borrowed.
"It's a little bit like a game," said Lauer. "There's a grey middle ground that numbers don't reflect, but the advantages of being assigned a number is that it democratizes the process."
Lauer suggested credit scores, while raw and unimpressionable, are not subjective. The use of both character and number within the financial industry is a best effort at an imperfect system. Neither components will assure payment, but they typically compliment one another.
The confusion in the lending industry has led to the popularity of sites like FreeCreditReport.com. Their catchy lyrics remind viewers to know their credit scores and ultimately to make their payments and monitor their finances responsibly - or else one could "end up selling fish to tourists in t-shirts" or worse, living at your dream girl's mom and dad's.
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