I’m no financial expert so don’t expect me to explain this current trillion dollar financial crisis, but I do know this – it doesn’t make sense to loan money to someone who can’t pay it back. Anyone with a ne’er-do-well brother-in-law knows that. Yet it seems that after you have cut through all the technical financial talk that’s exactly what the banks did by loaning money in the form of mortgages to homeowners who were not qualified to assume that amount of debt.
I don’t know when the rules changed. Like most people who have reached my age, I’ve bought and sold a few houses and more cars than I can remember in the course of my lifetime, but I can never recall an occasion when I wasn’t asked a lot of questions before my mortgage or car loan was approved. I never resented it. It made sense. After all, the bank wanted to make money from the interest on the loan not by foreclosing on the house or repossessing what would then be a used car. At least that’s the way I thought it worked.
OK, to be honest, there was one time when I was actually approved for credit when I couldn’t really prove that I was a good risk. That was back in the late 1940s, shortly after I had been discharged from service in World War II. My wife and I were living in a small apartment in Ridgefield Park at the time and we owned a somewhat decrepit 1936 Pontiac coupe, which I had bought for a few hundred dollars. One of its biggest problems was the tires. Every time we wanted to use it, at least one of them would be flat. Considering that we were expecting our first child and I would be depending on that car to get us to the hospital, it was a situation that did little to ease the concerns of approaching fatherhood.
New tires, of course, would have solved the problem. But on the $35 a week I was making as a newspaperman that seemed out of the question. At least until I came across an ad in the Bergen Evening Record from Sears Roebuck, as it was known back then.
"We’ll give you $2 for each of your old tires regardless of condition!" the headline read and the copy explained that you could use the $2 as a down payment on a new tire and pay off the rest "on time." So the next morning I pumped enough air in the tires to get to Sears in Hackensack where I ordered four new ones.
We’ll give you $2 for each of your old tires regardless of condition!"the headline read and the copy explained that you could use the $2 as a down payment on a new tire and pay off the rest "on time." So the next morning I pumped enough air in the tires to get to Sears in Hackensack where I ordered four new ones.
"I want to pay for them on time," I told the salesman, not really knowing what that meant.
"Do you have a charge account with us?" he asked, and I told him no and he explained that I’d have to fill out a credit application and take it to customer service for approval.
When I looked at the form I realized that I didn’t stand a chance of getting credit. Personal references? I hardly knew anyone except for my parents and I was sure their own credit rating probably wouldn’t be all that impressive. Name of bank? We didn’t even have a savings account. Credit references? I had never borrowed any money in my life, except maybe until pay day from some of my shipmates. How long have you been employed on your current job? Only a few months. Salary? One week’s was just about equal to the price of a tire.
Frankly, I wouldn’t have given myself credit. So I asked to see the credit manager. I explained the situation, how I had only recently been discharged and how we were expecting a baby and why we needed new tires so I could be sure to get my wife to Holy Name Hospital when the time came.
"How does a guy get started? I asked.
"Just do the best you can with the form," he said.
When I had filled in as many blanks as possible, I handed the application back and under "References" he wrote his own name and he then stamped the form "Approved."
"Go get your tires," he said. That was the beginning of my credit history and I’ve been grateful to Sears ever since for getting me started on the American road to happiness via the installment plan.
Of course, I paid off those tires. My generation thought that was the way it was supposed to be done. But that was before the credit card society and such slogans as "There are some things money can’t buy. For everything else, there’s MasterCard."
Who are they kidding? As we’ve been finding out, when the bill "for everything else" eventually comes due they still want real money.
