The colours are the wrong way round
Paying other people money on a predictable schedule raises your score.
Did what I do, pay your bills and don’t think about it.
Unless you’re poor enough you have to think about it. Poor enough you need to cancel some things this month. Poor enough that one little thing like a car crash or covid infection means you can’t pay shit this month.
Then borrowing money is something you should, in fact, consider carefully.
Cool, but what if I just want to rent an apartment? Under 600 you just do not get housed.
Housing should be free. If you want something nicer then you can pay for luxury.
Agreed. A 1/1 with simple standard shitty apartment line kitchenette should be free for individuals, maybe something bigger for groups; polycules, breeders, etc.
But credit score is used to deny housing. Rental housing. This is real. This is the real world. Credit scores should not exist.
Credit scores should not matter to housing.
True. They shouldn’t exist and housing should be free.
And yet, they do.
The system makes no sense if you try to optimize it to get the highest score possible, you will find the differences in a single point have no logic behind it. But banks also typically do not care if your score is one point lower or higher. The number is just a quick reference point to make sure you aren’t someone in financial ruin, and if the score is at least mid then they will factor in things like your current income to debt ratio more than the score. If you are a normal person taking out a single loan for a house and probably a car and you know you have stable income to afford it, then you probably don’t need to worry about your credit score.
Credit score = milkability score.
I follow the old-fashioned idea of buying things with money I have, debit instead of credit.
My credit score is nearly 800 and I’ve given credit card companies $0.00 but they reward me with cashback for using them. Its basically debit with rewards and more protections but you do you king
I understand that you can benefit if you play it correctly, but can you deny that it’s designed to fuck people over that don’t? Idk at least to me thats why i don’t even want to be part of it, even if i am doing fine with money and would net benefit, probably. I just don’t want to be part of that predatory system.
Edit: of course i am also talking as someone who grew up not exposed to credit scores at all and only ever paying debit.
Cashback and protections paid out of higher transaction fees, merchant raises prices to cover those costs. It’s not just a magic money machine; the consumer is subsiding significant card company profits. If we all just agreed to forgo the rewards and protection there would be fewer middlemen to pay, but I don’t blame you for acting greedily (I do the same).
Its a very complex system of math and rules, but it isn’t impossible to … raise your credit score.
Closing a loan or credit line actually often lowers your score because it lessens the total amount of credit you theoretically could be using, if you maxxed everything out.
Your ‘Credit Utilization’ is what % of your total maximum possible credit you are using.
So, when you finally pay off a huge loan of some kind… well, that account closes, and now your relative credit utilization probably goes up, because the system is now only looking at say your credit cards, instead of your credit cards + your big loan.
If CC Balance is 30k / 50k Max,
Big Loan is 5k / 500k Max…
You’re at 35/550, or 6.3%, very good.
Pay off Big Loan?
30/50, 60%, pretty bad.
Theres no like, reward mechanism that you get in the system, for paying off a large loan successfully, beyond all those payments toward it counting as on time payments.
So basically, you should actually never close down a credit account of any kind, after you fully pay it off, to the extent that you can do that.
Just… use it sparingly and make regular payments, or put the card in a safe, destroy it, who cares, as long as the account still exists.
(big asterisk on that: unless it has some kind of regular due payment just to even have the account, even if you’re not using it at all, have no balance on it at all.)
Thats also true because another big factor in credit scores is how long you’ve had the accounts you have.
It literally does just take time to build up that element of it, time of you making regular payments and never leaving a balance that rolls over into the next month.
I’m not trying to defend this system, its horseshit, truly evil, a mandatory labyrinthine scam that everyone is forced to participate in, which almost everyone loses.
I’m trying to summarize useful advice.
I was homeless for 2 years.
When I finally got a bit more stabilized, I had scores around 520, because yeah, I spent money I didn’t have so that I could eat, and not sleep outside in blizzards and heatwaves.
Its now been about 2 years since that point, and I’m up to between 670 and 710, the 3 agencies still considerably disagree as to which accounts I even had… as I got mugged and had my identity stolen multiple times, and I was only able to convince different agencies of different amounts and extents of that… and also crippled by those muggings…
But the point is, its not impossible to rebuild your credit, even while you’re living off of only SSDI as I now am.
Its exceedingly dfficult to do so, but not strictly impossible.
You can find real, in depth guides on how all this shit works, but it’d probably take most people a solid week or two of studying it to fully grasp it.
So what do you do when you pay off a CC to improve your utilization, and they close the card without warning, and your score drops?
No CC gets instantly closed when you pay it off. I pay my CCs off every single month.
If they close your card without warning, well, then you can’t really do much about that.
There’s probably some other factors that went into them deciding to do that, late or missed payments, something lile that.
So… I think Kikoff and Kovo both offer variations on this idea, but I’m familiar with the Kikoff one:
You pay them $10 bucks a month. For a year. At the end of that, you can eithet renew it, or l, they just give you $120 bucks, they give you your money back.
While for most people this is probably pointless, if you’ve missed a lot of payments, doing something like this can help chip away at improving your on time payment record.
Kikoff also has another thing where you can pay them various amounts of money a month, there are multiple tiers, the highest is $35… and they basically set up what appears to credit agencies as a credit card, but you can’t actually use it as a credit vard.
But, if you have very little existing credit lines, it can significantly increase that ‘total available credit’ number, and the various tiers also give you differing levels of access to challenging items on your credit record you think are fraudulent or wrong in some way, gives you access to something lile Aura or DeleteMe, where it periodically checks for and tries to delete your data from data brokers.
That also takes a while to complete, but the point is that you can do this setup too, and it boosts your total available credit, and of course also counts towards your count/percentage of on time payments.
Kovo apparently also has some similar types of things like this, but I have not used them myself.
EDIT: Oh right and Kikoff also just tells you your credit scores, updates maybe once or twice a month, forgot about that.
I live in Canada and I once went to a job interview. and in the application paperwork they asked for my credit score. I put the pen down and walked out of there. That was literally the only time it ever happened.
It was an American company…
I feel like that’s the type of thing that should be illegal to ask
Easy. It’s a scam to screw over anyone they feel like.
It stopped being a can the applicant afford their current outgoings and afford this loan type system a loooong time ago. Now it’s a noose round the neck of anyone that has ever lost a job and missed a couple of payments or got screwed over by a company changing billing software. The number means nothing, I’m sure on some kind of grading curve it averages out but so would throwing darts at a board and assigning scores that way.
The rich fail up and everyone else has to play by the rules or get fucked over.
/Rant over
The rich fail up and everyone else has to play by the rules or get fucked over.
You’re playing by their rules, and it only matters as long as we allow them to not play by the rules.
I bet they’d stop doing it if they got literally ripped into pieces by horses. Or a horse’s solar-powered motorized equivalent.
I bet they’d stop doing it if they got literally ripped into pieces by horses. Or a horse’s solar-powered motorized equivalent.
Idk man, Luigi happened and look what that did to insurance overall (spoiler: nothing). Yes I know that’s insurance and not banking, but the idea is the same.
Luigi (who I am not convinced actually did it) only stopped at one.
I bet if we kept going, things would change pretty substantially.
It was never a system that existed to just verify the ability to get a loan. Banks were the ones who did that.
The credit score was always a measure of how individuals took on an paid off debt in a way that the creditors wanted for maximum profits. That’s why it wasn’t something individuals even had access to until they came up with a way to have people interested enough that they would pay for the privilege of being able to see their personal debt monkey score.
It has always been a shit system for the average person.
The credit score was always a measure of how individuals took on an paid off debt in a way that the creditors wanted for maximum profits.
This is demonstrably bullshit.
Someone who maxes out a credit card, and then only pays minimum payments, and always makes them late, is, via interest accruing and late payment fees, making the lender basically the maximum amount of profit possible. And yet doing this will result in a garbage credit score, because using every penny of your credit limit is very detrimental to your credit score, and not making payments on time is extremely detrimental to your credit score.
Meanwhile, take me, someone who never pays a cent of interest, because he pays off his card every statement cycle (and on time, naturally), and because of card rewards, I’m the one profiting, the lender is literally the one paying me, and ‘yet’, my credit score is in the 800s.
So how do you reconcile that with your assumed truth quoted above? It’s very hard to understand how anyone can arrive at the conclusion you did, while also knowing (as I assume you do) that late payments simultaneously hurt your credit score and increase profit for the lender, just as one example.
Credit scores are used to tell companies how much they can earn on lending you money.
Paying back quickly reduces the amount they can earn, lowering your credit score.
Not paying it back obviously lowers the score.
The way I understand it, to raise your credit score you need to slowly pay back your loans, so you pay back maximum interest.
Note however that I am just a cynical IT guy in Sweden with zero actual exposure to US/UK style credit scores, and that I may be talking out of my ass.
Hmm, I don’t think so. I’m in my 60s and I’ve always paid my credit cards in full each month when they’re due. Until very recently, I did have a mortgage and paid the regular payment (with occasional extra payments for principle), do they did make money off of me there. My credit rating has pretty much always been at or near the highest it can be.
Your ass is speaking truth
100% spot on.
It’s absolutely a scam designed to extract even more wealth from the poors.
No joke, I’ve had a car dealership tell me they can’t sell me the car I want because my credit score was nonexistent (no credit history in 7 years). I was paying in full, in cash, literally in an envelope in my hand.
Grand total of 8k, all in 100s, super easy to count.
But no, I didn’t have a “good enough credit score” so I couldn’t buy that car from them, despite having the money to do so.
Mental gymnastics on that one.
No joke, I’ve had a car dealership tell me they can’t sell me the car I want because my credit score was nonexistent (no credit history in 7 years). I was paying in full, in cash, literally in an envelope in my hand.
There are car dealers (especially at the low end of used cars) that don’t make money selling cars. They make money with horrible debt and payment terms trying to trap vulnerable people. The worst of these dealers may end up “selling” the car 2 or 3 times repoing it each time when the buyer can’t pay.
So its first possible that this dealer didn’t want to sell you a car for cash because its against their business model.
Grand total of 8k, all in 100s, super easy to count.
$8k in cash is super sketchy for a single purchase. Its untraceable and that sets off fraud alarm bells. The dealership also may not be set up to deal in large sums of cash like that lacking the security to do so. Lastly there are laws at the state and federal level called KYC (Know your Customer) for some transactions that require the seller to verify the money is legit. With cash, thats nearly impossible.
You might have had more luck showing up with an $8k cashiers check or offering an $8k wire transfer from your bank. Both of these are exempt from lots of regulations (because there’s a paper trail) where cash would not have that luxury.
But no, I didn’t have a “good enough credit score” so I couldn’t buy that car from them, despite having the money to do so. Mental gymnastics on that one.
I’m guessing that was just an excuse to not sell to you because either they’re the sketchy dealer (that likes to sell loans not cars) or they thought you were super sketchy as a buyer.
I think you just got a shitty dealership. “Legal tender for all debts public and private” means just that, they aren’t allowed legally to refuse dollars. My cousin also successfully did what you are describing.
Not necessarily a shitty dealership, just one with low margins.
Cars are generally sold by sellers with incredibly low margins (talking like a few hundred dollars, max). They make their money through the financing. They probably didn’t want to sell the car in cash, because some other chud will come along and buy it on credit and get them a higher margin.
Pro tip - always get your own financing when purchasing a car, don’t get it through the dealer. But don’t let them know that, look over their finance package when signing the paperwork, try to negotiate out any origination charges, etc. then simply pay the loan off immediately with your private financing.
That’s not really relevant here yet. GP doesnt have a “debt” before the transaction takes place. Nothing about that statement forces a business to do business with you. They are perfectly within their rights to only agree to do business with you if you pay in chickens.
That isn’t how holding a business license works.
Sure everybody has the right to refuse service, but they can’t offer service only through one means of pay.
https://www.federalreserve.gov/faqs/currency_12772.htm
Is it legal for a business in the United States to refuse cash as a form of payment?
There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.
A few states have introduced bills to require taking cash (Idaho, Mississippi and North Dakota), but as far as im aware none have ever actually passed into law.
I think you would be surprised how many states already have laws like that on the books. Mine does.
They can easily refuse cash. It’s not a debit until you owe them money. If they decide not to sell you a car then there’s no debt. You aren’t obligated to see someone a car if the manner of the sale isn’t to your liking.
You are correct. What they can’t do though is only allow you to buy the car with one method of payment, which is what is being described here.
Here in Sweden, that would also have been rejected, most stores won’t accept cash at all.
I had to pay for my car using a wire transfer a few days before I picked it up.
I do think that it would have been funny to just use tap to pay, but apparently that would have increased the cost by a lot.
I think there has been some EU-wide regulation that you can’t pay more than 10k€ in cash or sth, it’s to prevent money laundering.
That’s insane to me.
I have money to buy something, and I’m being refused the sale despite this money being legal tender.
In the US, it is legal tender to pay off all debts. But merchants can refuse to give you debt if you are paying cash. Thus have no obligation to accept it.
I get what you mean, and agree to some extent, but the reality is that handling cash is expensive and dangerous.
Back in the early 2000s, there was a large wave of high profile armours car robberies in Sweden.
Some even completely blew up the armoured car.
This lead to a debate and a deliberate effort to reduce the ammount of cash used in Sweden.
I remember reading something about 97% of all transactions inside Sweden are now done electronically.
This has lead to banks having offices that don’t handle cash, and that banks are looking at cash deposits with suspicion, since you can’t trace cash.
This, as usual, only really affects normal poeple, and criminals have ways around it.
Just imagine paying for a car with something like an SJ credit card and get the motherload of priopoäng!
(For the non-Swedes, SJ is a train company with a version of a frequent flyer miles point system, and they like most of those have a credit card where every SEK spent earns you 1 point. A trip from Malmö to Stockholm (600km, ~4,5h) can be bought for some 12-16000 points. A new car costs anywhere from 300000 sek up to a million and beyond.)
No joke, I’ve had a car dealership tell me they can’t sell me the car I want because my credit score was nonexistent (no credit history in 7 years). I was paying in full, in cash, literally in an envelope in my hand.
The dealership wanted you to finance so that you’ll pay them interest, because they make more money that way. If they completely refused, what’s most likely is that the car was being sold at a price that gives them zero/negative profit margin, so without financing, they’d literally take a loss selling it for straight cash.
Paying back a loan quickly will not lower your credit score. If you have a line of credit that closes as soon as you pay off a loan (eg a car loan) your score can go down if it changes your utilization rate (how much you could take out in loans vs. how much you have taken out) but paying off a loan early won’t impact your score.
You can look up what things are factored into a consumer credit score. You can see for yourself that early payments are not part of the formula.
I always pay my loans back on time and every now and then the bank rise my credit limit. I think it’s because I also have a bank account with them and they can see I have the money ready to go. I don’t make much money for them, but I do make a consistent amount and the banks like that too.
The way I understand it, to raise your credit score you need to slowly pay back your loans, so you pay back maximum interest.
I got an 800 credit score by just using credit cards and paying the balance each month. Lenders made literally no money on me.
There must be something else to it. I’ve never paid any interest on my credit cards and I paid off my mortgage early; by your logic I should have a low credit score, but it’s actually in the “Excellent” range.
You have great interest paying potential because of your reliable handling of finances, so your score is high to make it easy for you to take on a lot of debt down the road.
Yeah paying back early doesn’t affect it as far as I can tell. Lenders just want to know if you’ll leave them in the lurch or not. If you pay back early that just means they can reinvest the cash sooner.
There must be something else to it.
Massive understatement—it’d be more accurate to say they’re completely wrong, lol.
Well the back need some safe bets as a baseline.
In another comment, someone mentioned that it’s not just repayment of interest that profits credit card companies.
Even if you pay all debts monthly before interest can compound, the CC companies still charge processing fees to merchants on a per-transaction basis (which merchants either pass directly to consumers or indirectly through higher prices). They still get their cut, even if you don’t see it on a line item.Recently I had house work done. The contractor offered to charge me 5% less if I paid with cash or check instead of credit card.
Credit scores are used to tell companies how much they can earn on lending you money.
This is demonstrably bullshit.
Someone who maxes out a credit card, and then only pays minimum payments, and always makes them late, is, via interest accruing and late payment fees, making the lender basically the maximum amount of profit possible. And yet doing this will result in a garbage credit score, because using every penny of your credit limit is very detrimental to your credit score, and not making payments on time is extremely detrimental to your credit score.
Meanwhile, take me, someone who never pays a cent of interest, because he pays off his card every statement cycle (and on time, naturally), and because of card rewards, I’m the one profiting, the lender is literally the one paying me, and ‘yet’, my credit score is in the 800s.
So how do you reconcile that with the assertion quoted above? It’s very hard to understand how anyone can arrive at the conclusion you did, while also knowing (as I assume you do) that late payments simultaneously hurt your credit score and increase profit for the lender, just as one example.
Paying back quickly reduces the amount they can earn, lowering your credit score.
Straight-up lie.
The way I understand it, to raise your credit score you need to slowly pay back your loans, so you pay back maximum interest.
You don’t understand it.
There’s also an element of whether or not the lendee can reliably make payments. Always having late fees doesn’t show that you’re able to reliably make companies money. And when you’re making payments on time without fees, they still get money from the fees they charge the business. So using and paying back is still good for them. It’s still all about the money, because it always is in the US.
Paying back quickly reduces the amount they can earn, lowering your credit score.Straight-up lie.
No, it doesn’t fit the definition of a lie, I didn’t know any better, so it was ignorance, not a lie, it would be nice if you could edit and correct this line.
The way I understand it, to raise your credit score you need to slowly pay back your loans, so you pay back maximum interest.You don’t understand it.
I wholeheartedly agree with you there.
Overall you do seem to know the subject better than me, so I will mostly defere to your judgement (apart from the thing about me lying).
EDIT: Thanks for the edit! (:
You are entirely incorrect. The credit card company makes most of their money from the fees paid by the merchant. They make money when you, the customer, spend money because the merchant gives a chunk of it to them, usually with an additional flat fee. (Different merchants and card processors have different payment structures. A grocery store is more likely to pay a much higher fixed daily fee to avoid unpredictable transaction fees on small purchases)
They don’t lower your score if you pay back early. People get confused because they see their score drop after going from $10k credit card limit with $800 in monthly usage paid on time every time and a $500 balance on a $25k car loan that’s been paid on time every month to just the credit card. The reason it went down is that the number of regular timely payments went down, which means fewer trust signals, and credit utilization went up. (3% to 8%). It doesn’t however snap down as though you hadn’t just made a bunch of good payments, it just doesn’t boost when you’re done.
The credit card company makes the most money when you make a huge number of modest purchases and then immediately pay them back. When you have credit card debt their money is sitting in the merchants account. They want to minimize the time they don’t have their money so they charge you based on the risk that you never pay them back, after a grace period. (You have usually a month before any interest acrues).
It’s why as you get better credit scores the credit card company starts offering you increasing incentives to buy things. Bonus cash back on purchases at places that tend to be frequent, smaller purchases without bulk processing rates and so one. They’ll refund you on purchases in a dispute with the merchant and then figure out the merchant dispute independently (usually by just dropping it because they don’t care about $124.99 in potentially substandard curtains or whatever they just want the customer to keep buying curtains and the merchant to keep thinking it’s a net positive). You’re a walking $0.25 + 3.0% per purchase. Making you regret spending money is the last thing they want.If you’re talking out of your ass, I’m impressed
Thank you, I have been training daily
I’ve had a consistent score of a little over 800 before and after purchasing my house by paying off my credit cards ahead of time. I had no major long term debt other than a mortgage either. That said, this is pretty much the equivalent to that Chinese social credit score crap but it’s real in this case. It just means you’re ranking high in some opaque game on your financial prospects that the banks are playing.
I’m Australian, and this post prompted me to research the US Social Credit system. The score can determine whether or not you’re accepted for home rentals, and even determine whether or not you qualify for medical treatments
You need to engage in having debt and credit in order to appease the score.
I bought an apartment recently, and I’ve never had a credit card or debt of any variety. When I was younger my bank would dip into negatives or reject a payment fairly regularly. In the US that could probably cost me a place to live.
And apparently the entire credit score is built up and perpetrated by these massive corporations? Like Credit Score is not even anything to do with the government, and yet it has such a pervasive effect on people’s lives and their behavior.
It’s straight up creepy. Dystopian vibes. How do Americans tolerate this?
Remind me, were we supposed to be disgusted and afraid of the Chinese social credit score system because it included woke BS like how nice you are to others, and how things you do improve society, rather than just laser-focusing on the only important thing— whether your existence can be monetized by rich assholes?
No, because the writing was weird and foreign.
You were supposed to he disgusted at the other stuff.
“Weird and Foreign” has entered the chat. 👀
Well that’s why you’re supposed to be afraid of it.
There was some conservative user a while ago on lemmy that thought I was a “Chinese Bot”/“Scammer” because of the “Asian Writing” in the username, I’m an American citizen lmfao
Fucking sinophobia lol
I’m so sorry people are that stupid. Do you need a hug? Or an axe?
I need a Glock
Rooftop Korean are my idols
There was some conservative user a while ago on lemmy that thought I was a “Chinese Bot”/“Scammer”
Clearly they were an idiot too because if they knew anything about China, they should have seen the Taiwanese flag and known were you not from or supportive of the PRC. Seriously, people need to pick up a history book now and then. There’s a good chunk of American history mixed in there too with how Taiwan came to be (or stay being a nation).
Oh I mean I am from PRC, that’s more like an opposition thing I do because I don’t like the 5 star red flag since its associated with ccp, so I use this flag in the ROC context.
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They’re right, quit simping for the aristocracy you delusional peasant
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My original comment points out the social credit system is something that doesn’t really exist but was used to scare western capitalists. I’m merely saying that non-existent Boogeyman is actually being used through a financial lens in the US instead.
It was definitely pitched in western media as something we should all fear. I just found it funny that everything that they tried to scare us with (“it might be used to determine whether you get a job or can rent an apartment!”) applied equally to our credit scores.
E: So, yeah, completely agree.
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Credit just isn’t my thing. It feels like a scam
Not really. Credit can be an incredibly powerful tool in right hands. It’s just that a lot of people are greedy and get lured in by banks that do
GET ALL THE MONEY RIGHT NOW
pay twofold in a yearOn the other hand, banking system in general is very much a scam.
Because it is. The rules are written so only the rich can navigate it intuitively
I’m Australian, and this post prompted me to research the US Social Credit system. The score can determine whether or not you’re accepted for home rentals, and even determine whether or not you qualify for medical treatments
You need to engage in having debt and credit in order to appease the score.
I bought an apartment recently, and I’ve never had a credit card or debt of any variety. When I was younger my bank would dip into negatives or reject a payment fairly regularly. In the US that could probably cost me a place to live.
And apparently the entire credit score is built up and perpetrated by these massive corporations? Like Credit Score is not even anything to do with the government, and yet it has such a pervasive effect on people’s lives and their behavior.
It’s straight up creepy. Dystopian vibes. How do Americans tolerate this?
To be fair, the fact that you haven’t heard of any Aussie credit is because companies keep it private to themselves. They definitely have financial information on you and utilize it to decide the interest rate on your loans.
Much less horrible than the US dystopia for sure tho
Yeah, I would consider that somewhat “acceptable” usage though. It’d be irresponsible to approve a large loan to someone who’s already extremely overindebted, for example.
Sweden’s system doesn’t have a specific number like the US, but mostly just shows economical health. How many active loans you have, income over the last few years, and if you’ve had loans go to the enforcement agency. But we have the same sickness as America: if you have had something go to the enforcement agency within the last 3+ years, it’ll be basically impossible for you to rent an apartment (as if it wasn’t difficult in the first place).
First off, it’s not a social credit score, it’s a financial credit score, we’re not talking about the system China has for it’s citizens.
As with many of these deep dives on Americanisms, what you’ve found is generally worst case scenarios and also not universally applicable. Some states have restrictions on what your credit score can be used for and how it can impact you, car insurance and rentals being a prime example.
Also, by simply having a credit card (and not using it!) and not having any lapsed debts (collections or reported unpaid bills) you will easily have a score in the mid to high 700s. If you carry a balance month to month but regularly make your minimum payments you will have a credit score in the low to mid 700s. Hell. my wife had 5 bills in collection and still had a 650 before I met her.
As far as credit score applicability, it’s often referenced by businesses as a measure of risk. If you have a 650 instead of a 750 your car insurance might be higher because your risk of payment is higher, but we’re only talking about 10-15% more per year (US south east). Same with with rental, if you have a bunch of bills in collection or default your score will be bad, but a rental provider will be less willing to provide you service if you have a history of not paying your bills. You should still be able to find a place to live, but it will likely be more limited (for example if you have a 400, but not if you have something like a 650) or you may have a larger security deposit.
Overall your credit score likely won’t be an issue 95% of the time, but if you habitually don’t pay your bills then your score will go down and businesses that check your score won’t want to do business with you. I can’t make this clear enough, you have to be deliberate in your actions if you want your score to be low enough to cause a problem. My wife had $15k in student loans, $10k in credit card debt, and 5 unpaid bills that had been sent to collections and she still was in the 600s. The score system exists for a reason, I would argue that it should be a bit more forgiving, but the reason it exists is fair.
Non US citizens might have trouble relating to this, but people in the US take blatant advantage of systems a lot of times. I have a coworker that moved for a new job, but he didn’t want to sell his house because he got it at a good rate and time. He listed his house for a decent rate and his first tenant stopped paying after the second month. He waited until 4 months hadn’t been paid to take them to court and it took another 6 months to have them removed. Just before they were going to be escorted out by the sheriff they paid him the entire back rent in cash to try to prevent the eviction (they had the money the whole time!) After they were evicted he reached out to the local municipality for the water account and they found out the tenant had bypassed the water meter (basically they were stealing). The municipality then said he had to pay to fix the bypass, penalized him for the stolen utilities, and said that for any future tenants he would have to keep the account in his name rather than having the tenants file it.
American credit score systems suck, but they are generally fair and they prove themselves necessary because a certain percentage of Americans seem to have fundamental problems with following common and decent rules of this world.
I just read an article the other day that said Gen Z has the highest rate of credit card fraud ever seen in US history. As a group they just don’t see any issue with ordering something online and then saying it never arrived and reversing the charges. I’m all for saying fuck the system and down with corporate interests, but it’s hard to have a functional modern society that casually commits fraud and theft.
Back in my day we just wrote bad checks! (I’m kidding, I’ve never even owned a checkbook unless it was a starter pad that came with the account)
Good old check kiting, the respectable fraud!
It’s so much worse than I think you even realize, but you definitely nailed some of the key pieces.
It’s correct that we don’t opt in, that it’s strictly private companies (3 of them), and that modern life in the US makes it impossible to avoid playing this game.
Some additional details:
- the 3 companies each keep their own records - usually they match each other closely, but not always
- wrong information in the consumer’s credit report is arduous to correct and basically 100% the consumer’s responsibility - too fucking bad, whatever outcome this may cause
- the only way to know if our info is being used to fraudulently open accounts is to periodically check these reports (noting the difficulty in correcting them)
- malicious use is such a problem that all 3 “services” (“extortion rackets” is literally more accurate) recommended “locking” one’s credit with each of the 3, so no accounts may be created at all
- many stories of kids finding out their parents loaded them up with debt, very difficult to overcome
- the score is a measure of how much lenders can expect to profit off you - financial decisions that are good for the individual are not necessarily good for the score
- evictions, like other records, stay active for 7 years I believe, and having an eviction on one’s record makes every part of renting worse and harder
And nothing I’ve said is even recent insanity, all of that’s been true a long time. It’s really staggering just how effectively the US has systematized destroying our working class. We’ve been the global leader in innovating oppression for decades, it’s been interesting watching the rest of the world start to catch on just how severe it is here.
How do Americans tolerate this?
Brainwashing. Americans don’t realize they live in a Dystopian shithole where, since the 80s, the rules are made by the rich to keep the common person down.
We’re coming to the end game of this now.
because you deeply misunderstand it.
it basically lets lenders know if you have a history of paying back your loans or not.
it’s that simple. and in the USA medical treatment often requires loans, just like buying a house or car does.
missing a single payment does little to nothing to your score. missing several payments, and defaulting, tanks it.
Then why do you need to engage in having debt and using credit cards to have a good score? If having no credit score is nearly as bad as having a bad credit score then something is wrong.
when i hire someone for a job, how do I know they have experience without being able to verify they have held previous employment in a similar position?
the point of the system is to show you have experience and you pay back your debts. it’s not that anything more than that.
a lender doesn’t want to give someone a big loan if they have no experience. just like i won’t hire you for a senior staff position fresh out of college. those things take like a decade or more to develop.
my credit score at 18 was like 500. and my credit limit was $250. now it’s 830, because I’ve paid back all my debts in a timely manner and have access and have six figures in credit available to me.
if you want a a good credit score, go take out a card, make small payments with it, and pay them back.
it’s not a conspiracy anymore than the fact it takes years to get promoted at a job.
The cultists at Experian sacrifice a black goat and interpret the spatter patterns
I think it’s more likely that they reach out to the people buying their leaked data on the black market and request feedback on whose profiles they were able to use to gain access to credit or not. Those profiles obviously must have good credit so they bump up their scores.
Never owned a credit card, never will
“But how will you raise your credit score without accruing debt?”
I’d rather fucking die than spend my time participating in a system which wants to grade my Credit Utilization Normalization Tier (CUNT).
In my area it can be very difficult to get an apartment unless you or someone you’re renting with has a decent score. Participating in this bullshit isn’t a choice for some people.
I mean, good for you, but most people will need to go into debt for something at some point in their life.
Most people, no. Need, no. Many will want to, for various reasons, yes.
(Unless China and India come up with some sort of mandatory debt. Then yes all the way.)
Ok sure, I guess I don’t “need” anything apart from food and water and oxygen. What I really meant was, they will need to go into debt to finance the life they want to live, which for most people includes going to college and buying some type of property (not to mention other things like starting a business, supporting relatives, etc)
well from a capitalist viewpoint credit scores measure how good an investment you are. you are a good investment if you are reliable to pay back your loans at maximum interest. the more likely you are to pay back your loan at exactly the right time (measured by how often you’ve already done that) the more the banks trust you with their money.
you are a good investment if you are reliable to pay back your loans at maximum interest.
That sentence is correct only if you omit the last three words. The credit reporting agencies don’t even know what the interest rate is on a given loan. Also, your credit score goes up from paying a credit card off (i.e. down to a $0 balance) every month, which means you’re paying literal zero interest.
The exact same as the Chinese “social credit” system that people whine about, except this one is capitalism based, so it’s ok.
many different names for the same but different system that is all about control and sugation of the masses.
Mine doesn’t go down when I call the government a bunch of cunts.
And the Chinese one still goes down if you’re poor.
100% correct.
Your government would just imprison you and/or deport you instead.
How do you think “social credit” would be handled if the US were a socialist/communist country?
1:1 same as credit score - in the worst possible way
Is that relevant to anything? Credit score bad. Next.
Credit score bad. Next.
Nah, it’s good for me to know the risk before I lend to someone. Only bad borrowers are against their reputation re repayment history not being public.
Without credit scores, nepotism and bigotry are what decides who gets loans, since lenders will have nothing but ‘vibes’ to go off of. No thanks.
Huh?
In my country there’s debt registries (that you can only be put into when you’re late enough on a payment) and lenders will usually ask you for proof of income and list of obligations, or account statements for the last 6 months, to determine if you’re capable of paying back.
The disadvantage is, they’ll see your account statements. The advantage is, you don’t have to have a credit card, or any sort of debt, to build credit. You don’t need credit history. If your income is high enough and your expenses are noticeably lower than your income, and you don’t have an outstanding debt registry entry, you’re eligible for a loan.
Our mortgage delinquency rates are lower than in the US. And home ownership rates are pretty high so it seems people are getting mortgages no problem
In my country there’s debt registries (that you can only be put into when you’re late enough on a payment) and lenders will usually ask you for proof of income and list of obligations, or account statements for the last 6 months, to determine if you’re capable of paying back.
So you have a system that’s only different than the US’s in the minutia—fundamentally, it’s still lenders using information from the to-be borrower’s past to try and determine how risky it is to lend to them.
Which is what the person I was replying to is saying is a bad thing for lenders to have access to. Your country’s debt registries are functionally equivalent to negative marks on a US credit report, so I think you’re actually more on my ‘side’ here than the person I replied to.
If your income is high enough and your expenses are noticeably lower than your income, and you don’t have an outstanding debt registry entry, you’re eligible for a loan.
This doesn’t protect lenders from people who are plenty capable of handling a debt with the income they have, but don’t, because they’re irresponsible with that income. But that may be more of an issue in the US than in your country overall, culturally.
Our mortgage delinquency rates are lower than in the US.
What’s your rate, if you don’t want to reveal your country of residence directly? I’m curious of the gap, and also want to make sure you’re not using figures from around the 2008 scandal (primarily caused by a bunch of lenders giving mortgages to people who shouldn’t have qualified); It’s 1.78% in the US presently.
And home ownership rates are pretty high
Define “pretty high”, so I can get a better idea; it’s 65% in the US presently, for reference.
If you’ve never fallen behind, or it’s been over 5 years since you paid off your delinquent debts, there’s no record. There’s no need to play around for a good credit score.
The country is Estonia. Mortgage delinquency rates are 0.17% over 60 days late as of last year.
Home ownership rate is about 80% and a lot of those are mortgaged.
There are good reasons to avoid delinquency. The bailiffs can get your bank accounts even in other EU countries arrested if you keep refusing to pay. Also the debt registry system is fairly effective. You won’t be getting any major credit for at least 5 years once you’re in on it.
Banks are also willing to work with people on alternative payment schedules if they get in trouble. I’d wager that saves everyone involved some money and time too.
If you’ve never fallen behind, or it’s been over 5 years since you paid off your delinquent debts, there’s no record.
It’s kind of similar in the US, negative things are gone 7 years later, regardless of whether they were resolved.
The country is Estonia. Mortgage delinquency rates are 0.17% over 60 days late as of last year. Home ownership rate is about 80% and a lot of those are mortgaged.
I’m seeing about 20% of homeowners having mortgages in Estonia, I wouldn’t call 1 in 5 a lot. It’s more like 60% in the US.
Also reading up on this, it looks like some post Soviet-era policies gave a lot of people the ability to buy their homes outright for a fraction of the cost in the 90s, so it seems a lot of what you’re saying is the result of inertia from that. From what I read, it also seems Estonians are more likely than Americans to ‘live within their means’ as well, being much more averse in general to going into debt. That’s definitely going to contribute to that low delinquency rate.
There are good reasons to avoid delinquency. The bailiffs can get your bank accounts even in other EU countries arrested if you keep refusing to pay. Also the debt registry system is fairly effective. You won’t be getting any major credit for at least 5 years once you’re in on it.
This all sounds pretty similar to how it is in the US.
Banks are also willing to work with people on alternative payment schedules if they get in trouble. I’d wager that saves everyone involved some money and time too.
This is also true in the US.
Overall, from what I’m seeing, I don’t think any of the significant differences you’ve mentioned between Estonia and the US can be chalked up to how our credit score system works versus how it is there—you honestly describe a very similar system, and there are much more obvious reasons for the differences that I saw in the bit of research I did.
Who are you lending to?
Credit score bad. Next.
I started paying cash for everything about 30 years ago. Haven’t needed my credit score since so I froze my credit score access. There have been no downsides.
Chuck it onto the stinking pile of insurance and privatized healthcare.
