I have seen that the current banking system is making it too expensive to be poor. I also wonder who went up with this credit score system to ensure that when you are poor, you stay poor, and when you are rich, you visit the wealthy.

At first, it seems unfair that borrowers with the least money to spend must pay higher interest rates. Does it make sense for them to pay less so that they can afford to pay back? That sounds good from the borrower's perspective, but you play by the lender's rules when you borrow.

To lenders, it is all about the return on investment. The primary purpose of charging borrowers with lousy credit ratings a higher interest rate is to offset the higher default rate — not to make more money and beat down on these borrowers. However, it does happen to a small degree since borrowers with bad credit have fewer options and are more vulnerable. Please note that my argument above excludes predatory lenders such as payday loans.

Comparing Borrower with Good Credit vs. Bad (http://www.moolanomy.com/)

Let's look at 2 lending portfolios using a straightforward 1-year non-compounding interest loan and assuming default happens immediately. In reality, interest would be compounded, payment amortized over 3 years, and bankruptcies can happen at any time during the life of the loan.
  • "A" credit rating loans that pay 6% and have an average default rate of 1%
  • "D" credit rating loans that produce 12% and have an average default rate of 10%

Which one pays more? The "A" loans are 6%,, and the "D" loans are 12%. If you don't factor in the default rate, it appears that the "D" loans pay more. Now assume you make 100 loans at $25 each:
  • "A" loans = Invested R2,500, and 99 good loans return $2,624 for an ROI of 5%
  • "D" loans = Invested $2,500, and 90 good loans return $2,660 for an ROI of 6%

As you can see, the bad loans portfolio has a higher return rate for lenders, which is typical. The higher interest rate compensates for the default rate and other related expenses when lending to high-risk borrowers.

Cost of Loans with Bad Credit (Source:http://www.creditinfocenter.com/)

To illustrate our point, let's take two fictitious people, Bob and Nancy. Bob has a FICO credit score of 720, an excellent credit score, whereas Nancy's FICO credit score is 650, a fair to poor credit score. 

Now, let's look at a scenario where they both buy a car for $20,000 on a 60-month loan.
  • Bob takes out a 4 percent interest loan; his monthly payments will be $368.33.
  • Nancy takes out an 18 percent interest loan; her monthly payments will be $507.87.
  • Nancy will end up paying $8,672.40 more for the same car.

Let'slet's look at another example where Bob and Nancy buy a house for $150,000.
  • Bob'sBob'srest rate is 4 percent, and his monthly payments will be $716.00.
  • NancyNancy'srest rate is 10 percent, and her monthly payments will be $1,316.00.
  • Nancy has to come up with $600 more monthly for the same house.