I always assumed credit scores were an integral and historic part of the American financial system.
They were not, they are very recent，most of your parents didn’t have credit scores growing up, and as you can probably tell or at least intuit, it’s mostly just a b******* scheme for those with capital to accrue more capital by invading your privacy.
It’s our version of China’s social credit score.
Not even close 🤣 what an absurd thing to say. You really think following social rules is the same thing as participating and having a financial history of posting back lent money is the same thing?
When I was younger, I was denied housing because I had no credit rating. Not a bad rating mind you, but no rating at all, because I did not use credit cards or anything else that would get me in Experian’s system. I was penalized for never accruing debt. The system is absurd.
Similar with immigrants. We brought a guy over as a software engineer. He was very well paid, stable family life, etc …… and could not buy a car because no credit history, had a difficult time finding an apartment because no credit history
If you ask someone to loan you some money (a line of credit), they might reply:
“Hmm, has anyone else loaned you money before, and you paid it back, showing you can be responsible with a loan?”
Even if it’s just a friend asking for you to spot them $50, you might ask a mutual friend if that person actually pays them back.
It makes sense that not having a credit history is negative for them.
Sure but this person was denied housing because of their lack of credit. Some jobs will also deny you for similar reasons.
You need to think about this a little harder.
The landlords are there to make money and not to offer charity.
They aren’t going to take a risk offering you housing if they feel strongly that they’ll never see a dime from you.
It’s not a hard concept to understand.
I won’t invite you into my house if I think chances are good you’re going to rob me.
There are numerous other ways to determine that like eviction records, references, or reported income. A poor score doesn’t mean that you aren’t going to pay rent and most rentals require a first and last month’s rent to begin with.
Do you think someone who pays all their bills but was the victim of identity theft should be unable to access housing?
If you’re homeless without a job, why would I take a risk? You’re not thinking about it from the perspective of a creditor.
Do you think someone who pays all their bills but was the victim of identity theft should be unable to access housing?
No. But if I were a creditor why would I take a risk on you just because there is a possibility you’re a victim of identify theft?
If the world was ran with your expectations all businesses would be broke because they would be exploited into oblivion.
For every victim of identify theft out there there’s 10 other people happy to take advantage of the situation and never pay a dime.
You’re purely thinking from the perspective of a victim and clearly don’t see that all of this is a liability. It’s not up to a bank or landlord to provide charity.
Do you invest in anything? Would you invest into a stock, a company, or anything if there is information that clearly indicates a small chance on a return of investment? The answer is no. Instead you’ll invest in something else that is proven to be a good return. It’s simply risk management vs opportunity cost.
Yes it’s really the same thing. A basic number to reflect how good of a citizen you are. The metrics used are irrelevant
Exactly. The number is a score of how profitable you are to the system which in the US profitable is the only metric anyone cares about. Seems the same just seems like the difference is the societal preference.
It’s not even how profitable you are. A million dollars in the bank and no debt is worse than 0 net worth, up to your eyeballs in debt, but making all the payments.
That’s just it. Your mil sitting in a bank is not their profit yet.
In Europe this still doesn’t even really exists. You just bring your proof of capital/value/timely payment stubs to the bank.
Oh, in America you still have to provide those things too, AND have a decent credit score.
Most of America doesn’t have credit scores
Omg…
Germany has SCHUFA. Fairly similar to credit reports. Pretty much necessary to successfully rent an apartment (in Berlin at least).
Though, there isn’t the expectation that you have accrued debt in order to have a good score, like in the US.
Seconded. If you dont have your SCHUFA proof of employment, and original Mona Lisa, you’ll never get an apartment in Berlin
Except we don’t get the free housing and tuition, the cheap and efficient mass transit, or the retirement at age 55.
There’s no such thing as “China’s social credit score”. All of thar came from small local projects and miss translating articles.
Your social score has increased to: 🌟🌟🌟🌟
Thank you for your continued support in defense of this system. Your alliegance has been noted.
That is not true. I have had Chinese friends tell me that for example you cannot fly on a plane if your social score is too low.
He gave you any proof, or just told you? Care to share it?
But what does Mr. Translating have to say about the situation?
He can’t be arsed to care at all, frankly.
Are you sure it’s 10,000? That sounds like a lot.
The 10,000 part is a reference to this XKCD comic
The whole financial system is only about 50 years old
In Norway having loads of credit cards is negative for getting a house loan as it is potential debt that goes against your payment ability for the house loan.
Meaning we do have a credit score system for getting loans and more stuff on various credit solutions, but credit cards works against larger loans.
Which can be a pain in the ass when you want to buy a house/apartment and have credit cards that might deny you the last bit of money to win the bidding war…
That seems like a reasonable approach though, unless I’m missing something. If you need “loads of credit cards” then you’re already but living within your means.
If you have a bunch of recently opened cards with like $500-$1000 credit limits, that’s not great, but if you have several high limit cards that you are only using a small percentage of that limit, that is good.
I have loads of credit cards with only one or two that ever have a balance on them though…
What’s the point of that?
Store offers 0% on items you need, appliances, bedroom furniture. You’re going to spend thousands and they let you pay that shit over the course of 12 or 24 months. To me it’s a no-brainer. Only downside is I can’t use my Raynour & Flannigan card at Best Buy or Home Depot, so I need their cards too.
I hope this is satire… because that’s not how you are supposed to use credit cards if you want to have a good credit score.
It was a response to someone asking why one would accumulate multiple cards. It’s a reason. I’ve done it. I have 800+ credit score. Guess it worked out. I think the most important factors are paying your shit down fast and maintaining a good ratio of high available credit with low usage. At this point I’m at three or four cards and one or two other lines of credit. In the past, it’s been more of each.
Basically, you don’t get a good score by not using credit.
Nothing wrong with having 3 cards, in fact that seems to be the sweet spot. Closing cards is never good so you don’t want to just go around willy nilly opening up cards.
You are absolutely right in that you have to use it to have a good score, but you have to use it wisely. Maintain a low balance, don’t allow cards to go dormant, keep requesting increases to available credit every 6 months so that your utilization will be minimized, and diversify your portfolio with three cards, and at least one line of credit that you never use, and a revolving account like a car or home once you are ready. Sounds like you figured out their formula, congrats on the 800+.
I was 812 until I bought a house, and that knocked me down to 760. Everything I read indicates that It will take at least 5 years of making extra payments on my house for me to get back to 800+, not that it really matters because the only reason I needed a high score in the first place was to get the house.
Lol why not? I did the same thing when I bought a washer and dryer and my score is over 750. I had the cash to pay it outright but why spend it when Home Depot will finance it for free?
Lol this is such a load of bs being taken at face value. No, having credit cards in Norway isn’t bad. They judge your rating by your debt, and responsible credit card usage does not create debt. This reads like it’s written by someone who doesn’t understand how credit works, regardless of country.
Maybe this explains further https://lemmy.world/comment/7822919
I have to imagine credit ratings are fairly ubiquitous, since banking is international, and who’s giving the money out? Would make no sense to penalize someone for having a lot of available credit. Maybe if you have 10 cards with low available credit, and they’re all maxed out and you’re just paying minimums, that’s bad. That’s bad in America too. Amount of available credit less amount of credit used seems to be a big factor.
Not sure if you misunderstood the post. What they write is how it works in Norway. If you have two credit cards with 50k credit limit each, then that count as 100k debt when the bank calculates your ability to pay off a loan, it doesnt matter if you haven’t used them.
Correct. Credit scores are bullshit.
The idea is fine, but when they’re run by the credit bureaus, they’re subject to extreme corruption. Even if run by the government, as they should be, they’d be subject to extreme corruption.
Can you elaborate? And excluding all the bullshit with leaks, that’s obviously an issue but I’m not sure it’s related.
My score for the credit agencies is in the negatives. You should trust me of course, and no, you cannot see the algorithm I use.
They are new in the rest of the world. But we don’t Need them. Thanks please.
What will blow your mind is that there is now an insurance score that insurance companies use similar to a credit score.
Probably a good thing. I have a relative who claimed in her homeowners insurance for all sorts of things, then just shopped companies when they raised rates. Definitely an abuser of the system.
Meanwhile I tried asking mine for guidance on when to make a claim and it sounded like “any time you want, then we’ll accept it or not and decide how much to raise your rates”, and I was warned by friend they may track questions like that to use against your claim or to raise rates before a claim. So if each, abuse all around
What’s it used for? Determining how much you use the insurance you pay for? Any more info?
As far as I understand it, yes. It’s used to determine whether you’re insurance worthy and at what rates you will pay.
So we invented social score just before the 90s, and everyone just shrugged and said okay. I guess that’s cool. But we freaked out when china did the same thing a decade or two later, not realizing we’ve had it the whole time.
Chinese social credit can be deducted for associating with people who shares opinions the state disapproves of. Thereby weaponizing social ostricism for control.
So can credit, and especially the lesser talked about insurance scores.
Gonna need a source for that one. I’ve said some pretty awful things about the government but my credit score is all me.
I didn’t say anything about the government, credit scores are private. It’s irrelevant though who the boot belongs to.
It’s difficult to know just how much data is aggregated through these as they are completely private and only traded via data brokers.
I think it’s naive at best, willfully ignorant at worst, to deny that these scoring systems are in place and use a vast array of data including very detailed spending habits.
Or your medical score. That one’s a real hidden bitch
You’re telling me your insurance score will go down if you like a post on Facebook that is critical if the US government?
sure. it likely puts that person in a riskier category than someone unwilling to protest in any form.
This is a good point, although you can still legally buy plane tickets 10 to 10 public events or go to school regardless of your or your family’s credit score in the states, which is not possible in China
Yeah, theirs is more intense, I agree. But we definitely have one. It’s your good little capitalist score, and if you don’t have a good score you can end up homeless bcz nobody will rent to you or sell you a house.
Or buy a car. Or start a business. Yup.
I think you missed my body text, I am totally on the side of credit scores bring utter bullshit.
1989? Blame Taylor Swift
Credit scores have existed for decades, as the article states. It’s specifically the FICO system that was started in 1989.
Yes, credit scores have existed for 150 years.
But the system of predetermining how deserving you are based on your race or b other circumstances beyond your control centralized within a few firms making money off of that data? That’s new and that’s b*******.
Did you mean bullshit? Are you 5?
bAnANas
Shut up mom i HATE you
Yes. No.
I tried to open a bank account at a credit union while homeless. Had $42k on my direct express card, finally on SSI, lump sum was for the previous year while unable to work.
No debts, never used a credit card. Couldn’t open a bank account. Had to go thru a program that assigned me a fake credit card debt that I had to pay off for 6 months to get my credit score high enough.
Credit scores are a scam.
This is my point, thank you for sharing your story.
If you are injured, not lucky or born into less fortunate circumstances, this credit system will stop you from taking control of your life.
Indeed. As evidenced by the fact that doing things that are money-smart (in general, stuff that amounts to avoiding debt) is actually harmful to a credit score. The powers that be want you to consume on borrowed funds.
To be fair I wouldn’t loan money to a homeless person either.
He wasn’t getting a loan
It’s depressing what happens when we give corporations the leeway to do whatever they want, isn’t it?
Sorry but that credit union sucks and you needed to move on. Credit unions should never deny someone an checking or savings account if they do not have a history of abuse.
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comma splices are neat; but have you heard of other punctuation?
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credit scores are a neat way to make a game out of blaming regular people for the continued collapse and bail-out of wall street and banks.
- Clearly I should take advice from the pedantic grammar fanatic, your people are universally admired, and appreciated.
You have a but there.
Aren’t you supposed to exclude those when using a semicolon instead of a comma?
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Remember when there wasn’t a proprietary algortithm giving everyone a social credit score and instead you had to get a letter from an existing member to signify your trustworthiness?
I dont like the proprietary nature of credit algos, but I’m not a fan of the letter system either
I prefer the occasional letter to the constant, invasive proprietary algorithm.
Problem is when you move to a new country and can’t open a bank account because you dont know anybody
Does opening a bank account generally require a credit check?
I remember when I started my first job back in 2003 it was extremely rare to have someone pay with a credit card.
Where did you work? What kind of Boomer clients did you serve?
I worked fast food in '03, it was closer to 50/50.
I did. I’m near 40 was about to enter college and credit and debit cards were everywhere. I’ve never handled much cash my entire life.
Huh, I worked a convenience store/gas station in the late 90s and credit cards were at least half of the sales. Heck, it was kind of funny when someone used a card for candy bar that cost less than a dollar.
I worked at a movie theater and credit cards could only be to purchase tickets and not concessions so that may have had something to do with it
Of course having a limitation on card usage would reduce how often they will be used…
Weird, about half of the sales during that time period for me were with plastic, but I lived in a city, so maybe that’s the difference.
Back in the seventies/early eighties, I remember my grandmother getting financial privilege by showing the check numbers in her checkbook, which were in the high thousands.
If you ran around bouncing checks, you would get cut off long before that and have to start over at the dreaded check number 101.
Such simpler times.
ahhhh so thats why in the late 80s you could start your checks at 1000+
Imagine someone handed you check #001 for $1000…would you really trust it?
Knowing that you can order checks with any number you want printed in them. I would trust it as much as i would trust a check with any other number. Maybe actually a little more than check #69420 or #58008.
It’s a silly system but really not that hard to do well. Put everything on credit card and set everything to auto pay the statement. That alone will give you good enough credit with little effort.
The hard part for me is maintaining income.
Managing money is dead easy. Acquiring money is the problem.
“High functioning” autism. Kinda like a high functioning tricycle on the freeway.
There’s plenty of people not even on the spectrum unable to acquire enough money to get by, too.
Remember you class solidarity: we’re all fucked together!
Right, but in order to have “good credit” others must have “bad credit”. There has to be a frame of reference to create a risk profile on a person. Capitalism is a zero sum game. If everyone is paying their bills on time and never missing payments and leveraging themselves responsibly, but you are $1 less leveraged than your neighbor, your neighbor will have a better credit score than you.
the system is build primarily around whether you pay back your debt or not.
if you have debt you can’t pay… you have bad credit.
good and bad credit have like 300 point spread. not 3. nobody cares if your score is 810 vs 812.
You forgot the most important part: never have an unexpected expense, like going to a hospital or your car breaking down.
We got a new card, no interest for a year. Put our entire kitchen reno on it. Credit score went down 47 points altogether. Paid it all off, credit score went up 17 points. All of this inside 6 months. It doesn’t make sense lol.
High utilization affects your score. For example, if you have a credit limit of $1,000 and have a balance of $900 when reported to credit agency, your utilization will be 90%. This will negatively impacts your score even if you pay it off on time. It is possible to avoid this by paying off purchases immediately, since your balance is only sent to the credit agencies once per month. Also if your limit was $10,000 the same balance would only be 9% utilization which is a lot better.
Oh interesting. A friend is a financial advisor and had told me that he often just pays his card immediately after making a purchase. That must be why.
or it’s just because he doesn’t want to pay interest payments.
Interest or not, you should never carry a balance on a credit card. You should also never have more than 10% utilization.
Looks like you probably did three things which hurt your score… having a new account, carrying a balance, and possibly having more than 10% utilization.
I know the whole credit score thing seems stupid, but if you know how their calculations work you can get a high score in just a few years of doing everything correctly.
right, the thing that idiots do is load up their card once they get one and then make minimum payments… tanking their credit. and instead of paying it down… they open up a new one.
Yup, and pretend that your credit card is your debit card. I never pay for anything with my credit card unless I know that I can clear the balance immediately after if I had to.
