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Unpopular opinion, not really opinion but…
Credit score system is designed for the people with money to allow you to borrow that money. It’s based on a curve system so… If your at the bottom of the list is because 99% of the population is better than you at learning how to play the score system. Tldr: the score system was not designed with me in mind.
I don’t know if it works differently in the US but the best way to build your credit score is to not take on debt.
Keeping your credit utilization low and not missing any payments is the key. It’s an indication of how likely you are to meet the payments.
If you max your credit cards out and just pay the minimum amount, carrying thousands of dollars of debt and as a result can’t get a mortgage or a car loan because your credit score is shit then the system is working as expected.
I don’t know if it works differently in the US but the best way to build your credit score is to not take on debt.
The best way to build a score is to take out small amounts of debt and repay them in a timely fashion. But you’re still better off with a car note than without. You’re still better off with a credit card than without. You want an optimal number of data points for the system to track. And you want a history clear of missed payments.
Without that data history, it becomes very difficult to secure apartment space or access anything other than student credit. And, because you absolutely need a car and an apartment if you want to exist in America in anything close to comfort, that means you functionally need a credit score.
Yeah I want to emphasize this too. It doesn’t “require you to take debt”, it checks to see if you pay your debts on time. If you carry a $5 credit card bill and pay it next month that has a positive effect. If you don’t pay that it doesn’t matter how much it is, you missed a payment, that’s a negative. You don’t have to have a bunch of loans to have a good credit score, you have to pay your bills.
Thats why having a credit card can be good for your credit score because you are effectively borrowing money until the end of the month, then paying it back. That signals on your credit score “hey this person borrows $1000 a month, and pays it back every time. They’re a reliable borrower”
Unpopular but very truthful.
Idk, doesn’t seem like magic to me. Just pay your bills. Grow your existing credit cards. Spend responsibly. Keep below 30% utilization of credit limit of each card and overall.
Start early (when you are 18) and by the time you actually need to use it (car or mortgage products). Then you will be gucci.
It’s a shame basic financial literacy is not taught in schools.
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yeah but if you’re responsible enough to only spend money you actually have, you’re fucked
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Abolish currency, revert to trading sheep and goats.
But I have noting of value to barter, except this ass…
And you’ll go to jail for it. Slavery for you!
Based
By “arbitrarily take on debt for years”, are they referring to myth that you need to carry a balance on a credit card to help your credit score?
If you aren’t aware, that is very much incorrect. All you’re doing is lining the pockets of the credit card company. Pay your credit card statement in full each month and don’t carry a balance to avoid paying interest.
There are certain exceptions, but I’m considering them out of scope for this case.
You need to have a form of credit, like a credit card. Even if you pay it in full every month, that’s still debt. In my native country almost nobody owns credit cards, just debit cards. I’ve been living in the US for 12 years now, building credit wasn’t that hard, but it took several years, I have almost perfect score now and own a house, but the whole idea was dumb to me too when I started. And I still need to remind my wife that the money in our bank accounts is not really how much we have, because we need to subtract credit card balances out of it.
Are we from the same country? Debt is something I don’t understand unless for a home or a car. If I have money to buy a tv, I pay in advance, or I wait until I have the money. I am not judging different points of view, just this is how I was raised
If you have $500 for a few TV, and you want a positive credit score, buy the TV with a credit card. Then, before the interest kicks in, pay off the credit card.
Rinse and repeat.
It’s a stupid fucking game, tho.
I live in a place where I don’t need credit score, luckily…
But it’s free debt. You’re losing money by not using a credit card. Points
Well, this it ignores the external costs. Companies are charged by the credit processors and those fees get passed to customers. Some vendors will explicitly charge more for credit, but most vendors just raise prices for everyone. The amount of money you get in points doesn’t cover the added costs.
You’re not wrong… but as you said, those are external costs. While it’s fine to wish for a simpler, more equitable system, given that the prices are mostly the same no matter how you pay, wouldn’t you rather be part of the group receiving the benefits? Paying with cash or check or a non-reward card is leaving money on the table. The cost of handling cash and checks isn’t necessarily any lower than credit card processing fees and people don’t have much tolerance for strange new forms of payment, which leaves merchants without much leverage to push back against rules which prevent them from passing on the higher costs of the reward cards to those using them.
I’d rather see all companies pass their fees only to those using credit cards. Then there are no external costs and everyone is in the clear about what’s going on. I like the convenience of credit cards, and sometimes I’d be happy to pay the extra fee. Other times I don’t. I suspect many people are the same eay.
In the US it was ruled that card companies cannot stop vendors from passing on costs, so you see a lot more of that now. By raising awareness of the issue, it will continue to progress toward that system. It will also foster competition, where card processors will be inclined to lower fees because customers will see the charges, whereas before they were invisible.
I’ve seen “cash discounts” in many places but that’s a bit of a false economy as cash can cost just as much to handle as an average credit card in the form of security and “shrinkage”. I’ve never seen a business charge a higher rate based on what kind of card you use, which is what it would take to have an impact on the rewards system.
Carrying more debt (with the ability to pay it ) does in fact raise your score.
Are you confusing debt with credit line/limit, or am I misunderstanding your comment?
If you are referring to debt, could you provide me with a source for your claim?
I linked to myfico.com in my previous comment which is run by FICO - the company behind the FICO score. I think they would know a thing or two about what affects your credit score.
read your credit report for proof
I refuse to participate in this and I have no idea what my credit score is.
I bought my land and house through owner finance, my debt was to a single individual. No banks involved, no credit check. Obviously this isn’t always an option, but it still is an option in some cases, and it’s a damn valuable option when it does present itself.
I buy used cars only, either through owner finance or paid in full. No banks.
I have never had a loan from a bank.
I bought my land and house through owner finance, my debt was to a single individual.
That’s cool and all, but it isn’t practical if the person selling you the house also has a mortgage they need to pay off before moving. Shy of paying in cash, there’s not a home in my city of Houston I could have managed that with.
I buy used cars only, either through owner finance or paid in full. No banks.
I mean, that’s totally cool. But, again, it requires you to have a significant amount of cash on-hand and someone willing to sell a decent vehicle at a reasonable price. Possible, but certainly not trivial. And with the sheer number of dealerships and resellers and outright scammers in the business, its a minefield.
I have never had a loan from a bank.
Its certainly nice to have enough cash on hand to manage this trick. But good luck going to college without a parent’s savings. Even city colleges charge you far more than a part-time high school diploma job brings in.
I did know a couple of people who were born into relative poverty and managed to be totally unbanked while having a relatively easy time of it. But they were both sex workers. Not a career for the faint of heart.
I mean, again, obviously it’s not an option all the time. Just use common sense
As for the other points, I don’t think this comment really required someone to come through and cite it and break it down like I was some sort of Jordan Peterson esque life advice coach. I was giving my personal experience on not using the credit system, simply explaining how I personally have avoided the subject, and making the claim that there are other avenues. It’s not an essay, my dude. I’m not trying to sell anything to you. Again, just use common sense.
I just proved its possible, not that it’s feasible for YOU. Again, not trying to sell you anything
Just use common sense
I don’t think the issue is an absence of sense. What we’ve got is a massive asset bubble that benefits the financial sector. Very often, there simply isn’t a good choice to make. You’re either living in a slum at inflated costs or you’re stuck living way out in the exurbs (where you’ll be burning through your expensive car) or even potentially homeless.
You can be up to your eyeballs in debt despite making the “savvy” move at every turn.
Okay? Again, I’m not trying to sell you anything, dude.
Kinda sounds like you live in a high cost of living area and are mad about it, and aren’t smart enough not to go into debt trivially.
Also, my just use common sense comment was about you and your reading comprehension, it’s a bit off today.
A lot of people think social credit scores are something society can’t function without, but they only started in 1989.
tell me you’re ignoring how the adult personal financial world works in the west since 1989, without you, know telling me
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I don’t think you know what social credit score means.
This thread is full of people who don’t know what they’re talking about. I mean the whole thread is based on the implication that the credit bureaus are a government program.
At one time you walked into a bank, showed how much money you made, and got a home loan.
But that allowed too many Black people to buy homes, so credit scores were invented as a way to discriminate against people using a black box with no real published metric.
Yay for redlining under a different name!
You’re showing way too much faith in the institutions that invented the red lining in the first place to imply that the ol’ boys club system wasn’t waaaaay more rife with systemic racism.
The post war recovery laws were literally lobbied to specifically exclude black folks, but sure, home buying was easier for them then than it was post credit scores.
My dude, you’re missing about thirty years of history.
Redlining was made illegal by the Fair Housing Act in the late 60’s. It may have still existed in some fucked up form but it was no longer the standard by which lending was done. There’s a reason the rate of home ownership among Black people has steadily risen ever since, and yet it still isn’t close to any other group of people.
The whole system is fucked and it’s largely set up to fuck Black people because some mayo motherfuckers still want to own humans.
It might have been “illegal” but lenders were still basically doing it anyways, just calling it everything else imaginable. Shit they still do it when they think they’ll get away with it, folks have actually tested it, real estate brokers list houses shown by white “owners” at higher values than those shown by black “owners”
Don’t forget about Homeowners Associations! Redlining in another form.
It’s funny how the other person who replied to me said credit scores are actually the solution to racism. I think you’re the one who’s right it’s just funny. I’d like to take this opportunity to say it’s retarded that you can pay rent for years but not be approved for a mortgage with equal or lesser payments.
Nobody said credit scores were the solution. They were merely a step forward.
Young liberals: “It’s not good enough or fast enough! NOW!!!”
I’ll take what I can get, even if it takes some time.
“Young liberals” are why we got the fucking civil rights act, ya fuckin’ dink.
It’s you who has held us back, with your obsession with capitalism as a just and fair ruler.
Nobody fucking cares how many black people buy houses. They only care about making the most profit.
Idiots like you are why systemic racism persists.
Fuck off.
I certainly have problems with the way current financial institutions operate, but prior to the credit score there wasn’t a standardized, scientific way to assess lending risk. It was left to a good ol’ boy process rife with racism, classism, and sexism. Sadly, we’re better off with what we have now, as flawed as it is.
Yeah. It’s really changed a lot…
there wasn’t a standardized, scientific way to assess lending risk.
Neither is it now. You forgot the ‘hidden from public’ part.
They tell u what affects your score right on the credit report! Hahaha What the fuck are u clowns talking about.
If you don’t take credit facilities but pay for your expenses in cash, you are considered a risk. Credit scoring based on credit card purchases is akin to being required to be spied on every step of the way just so you can access what you practically can without the credit in the first place. I don’t have a problem with people who are fine with that kind of behavior. But there should be a way of fair assessment even if you pay in cash.
If it was a publicly available algorithim, then Id believe you. But it ain’t, so I’m suspicious.
We don’t know the algorithms specifically, but we have enough information to have a pretty good idea how it works.
It’s better than what it was. High time to take another look, but it’s far, far better.
There still isn’t a standardized and scientific way to assess credit risk. There are three major companies, several minor ones, and all of them offer multiple products.
IT’S ALL A FUCKING SCAM. We just blindly accept random institutions compiling all of our data and telling a bank whether or not we should be given a loan regardless of our ability to pay it back. It has little to do with income anymore, which should be the only allowable metric. Don’t want the risk? Get the fuck out of the mortgage business.
What about those that have sufficient income, but don’t pay their bills and have defaulted on previous loans?
Mortgages were, prior to assholes screwing the whole thing up with mortgage-backed securities, seen as one of the lowest risk things banks could handle.
If you default on a mortgage the bank forecloses and auctions the home. This was QUITE rare before the housing crash. The problem was that the banking industry became so lax that they were giving loans to people that actually did NOT have the money to pay for them, figuring that they could just seize and sell the home as they always had. The problem THEN is that mortgage-backed securities were a thing by that point and every foreclosure caused another domino to fall over.
It became a shitshow because banks fucked themselves over being greedy pieces of shit.
which should be the only allowable metric.
Why? Income is a terrible metric. Regardless of how much money I’ve made, I’ve always spent within my means. I’ve never carried debt, but always has my cc to build the credit score.
The idea that some bozo who spends more than he earns has a better credit score than me just because he makes more money makes absolutely zero sense to me.
Income is a terrible metric.
I suggest you lie on a few credit applications (not really). You’ll be amazed at how readily you get approved just because your income crosses a certain threshold, even with the same score.
Several years ago I was looking to add a couple of cards, primarily for emergency reasons. I apply for a card and get rejected. Six months later I get a new job that’s promising me a significantly higher income but I haven’t started receiving more money yet (contract work is fun). I apply for the same card, same information, knowing my credit score had not changed, the only difference in my applications was my income (that required no verification) and that time I got approved.
So apparently the banks have a different thought process than you.
And what the fuck is wrong with you that you even think about someone else’s credit score? Are you also mad that your neighbor is gay?
Don’t answer that…
I never said it wasn’t a factor, only a terrible one that shouldnt be the only one. Also try improving your credit score and see the better rates and cards with better benefits open up to you.
And what the fuck is wrong with you that you even think about someone else’s credit score?
Considering you think I spend time thinking about people’s credit score because I think it’s better metric for getting credit, this question is all but a straight up admission that you spend a lot of mental energy thinking about the income of other people.
Are you mad that your neighbor is straight too?
It was so much better before! When being a woman, or god forbid, being black, counted as serious criteria. Oh, and you best be friends with the banker. (Read the part, again, about being a white man, who was well accepted in the community.)
It’s not a scam, it’s a step forward. Time to take the next step.
i dont see the problem with improving your credit score by sacrificing a virgin to the volcano every year, at least anyone can do it instead of just the well accepted white men
im being unfair of course, unlike modern credit scores tossing a virgin into the volcano doesnt still put minorities at a disadvantage
How do you know that those aren’t factored in still?
Because there are standard metrics for where the score comes from. Each of the big three has slightly different weighting, but it all broadly comes out the same.
The numbers aren’t made up. You can look at your credit report and see what is affecting it.
You think the people that scream about credit scores have ever looked at and analyzed their credit report lol
Yes, you brown-nosing corpo-slurping bootlicking twit, I do in fact keep a pretty damn close watch on my credit score because suckups like you will fellate and propagate any capitalist horseshit you can so I have to rather than just NOT WORRYING ABOUT IT and only applying for lines of credit in line with my income levels.
Instead it becomes this stupid game of laddering where you can apply for an increase now, but you can’t apply for new credit, but also you need a new loan to maximize your score, no not that kind of loan, no also don’t pay off the loan that’s bad too, why did you need more credit again?
Anyone ignorant enough to support this needs their own separate financial system that caters to their intrinsic need to be a sub.
The numbers are made up, unless you can actually prove your original statement.
Edit: oh, and since proving a negative is essentially impossible, you can’t actually prove your original statement, so I would recommend not making statements like that, and try to rephrase.
No you can’t. When you look at your credit report you see a lot of “MAY” and “COULD” and “MIGHT.”
This is horseshit.
Yep it’s not a mystery at all if you care enough to read about it. All these “capitalist dystopia” complainers sound like what I probably thought about credit scores when I was in my early 20s and had terrible credit from being irresponsible with credit cards. My credit score is 800 now because I simply pay my bills on time and have an established history of doing so.
Yeah, it’s not a perfect system and I would welcome increased federal oversight and greater transparency because it does have the potential for abuse.
That said, it’s not numbers made up to keep the little guy down. Lenders want to lend money because they make money off it. The whole point is to determine whether or not you’re a safe investment.
We could have a discussion on the merits of modern usury, which can be deeply predatory and abusive. It’s not the credit score that’s the problem.
Just because it was worse before, doesn’t mean we can’t also make the NOW better, again.
Found the 550 guy lol
About 780 last I looked. Utilization went up when I decided to do some travel this year. But go on thinking that the only people that want a system reformed are the ones that don’t know how to work it.
I’m sure that’ll get you far in life. All the way to brown-nosing middle management.
This is the internet. I, along with everyone else here, don’t give two shits about your score or opinion bud.
And yet your cunt ass cares enough to post.
So you’re a hypocritical cunt, not just a normal cunt.
It seems to me it doesn’t count risk. It counts profitability. It’s why it drops when people pay their loans early.
Why would you be better off? In the rest of the world you just have to provide proof of income and proof of savings and debt and banks can calculate how much they are willing to loan you for the purchase of a house. Seems to work fine, and I don’t have to have pay interest on meaningless loans just to prove that I can.
The problem is that just having the income and savings doesn’t necessarily guarantee that you’ll be as good about paying back a loan as someone of your same income and savings.
That’s supposed to be where the credit score helps, but the current system is so shady that it basically just reads as the ol’ boys club system but asking pretty please to pretend there’s a formula and method being used.
I think there are plenty of failsafe mechanisms. But most importantly, if you fail to pay your mortgage, the bank has the right to take possession of your house. Those forces the bank to do it’s due diligence with regards to the value of the house. Also, if a bank has been too lenient with its mortgages, it can get into serious trouble - the government here enforces pretty strict rules to prevent people from getting in over their heads.
And now it’s time to nix what we have for something better, just like we did before.
You don’t actually need a good credit score to get a loan. The only reason FICO scores exist is to reduce the amount of work banks have to do to investigate potential customers. However, many smaller banks are willing to do a manual underwriting, where they look at your history and make a decision based on that instead.
Obviously if your credit score is low that is indicative of poor borrowing habits which will probably be corroborated by manual underwriting. However, if you have no credit history at all, you will probably get a better outcome than if the bank only looked at the FICO score.
Look for community banks, which are very small banks that serve your local community. Those banks are far more willing to give customized service like manual underwriting.
They may do that for an extra percentage point of interest.
Better credit scores will definitely net you a lower interest rate, though. Zero credit history is a major liability for lenders, so even small banks or credit unions with private investors will want some kind of benefit or incentive for taking on an increased risk of default.
The real fucked up part about credit scores is that it seems like it should be something the federal government regulates, but they don’t. For-profit companies do. And when they get hacked and expose all of your data so scammers can assume your identity for eternity, they can’t be held liable or responsible. All of that just so lenders can feel safer about who they give money to.
I’m actually part of a credit union and would recommend it to many people. The credit union didn’t get interest rates as low as what the big banks did a few years ago, but they’re also not as high as the big banks are currently.
One thing I really liked about the credit union was that they didn’t use my credit score when deciding my interest rate, they only checked it to make sure it didn’t have any glaring issues. Also I like that the credit union doesn’t sell my mortgage to a third party.
I also would recommend credit unions over banks. I have a local one that I use but I also have an account with PenFed, which is open to the whole nation and is one of the few places that offers a 2% unlimited cashback on everything no-fees card.
Regulate how? It’s a tool for lenders to decide if they want to lend or not, and on what terms. If the government was to make one, banks would still make their own because it’s for them to decide how to do business.
What would the government do? Prevent banks from using tools to make decisions?Regulate how? It’s a tool for lenders to decide if they want to lend or not, and on what terms.
And also a tool for landlords to decide whether or not to rent to you, for insurers to decide what your rates should be, and employers to decide whether or not to hire you. It isn’t just about bank loans.
What about transparency? Sure, you can request a free copy of your credit report… once per year. Any more often than that and you have to pay. How do I dispute errors or inaccuracies on my report? How do the big three calculate my credit score? Why do each of them come up with a different number for the same individual despite sharing a similar set of parameters, and which one is used against me if I am denied for something on the basis of poor credit? What happens when they mishandle my sensitive data like my Social Security number, and what kind of legal options do I have to seek recompense?
You might be surprised to learn that the government does in fact regulate consumer reporting agencies. Ever heard of the Fair Credit Reporting Act? A lot of those rules came about from the systemic abuse of the clients of these credit reporting firms, including institutional racism.
The question is, why are these firms still allowed to operate as independent agencies and not as an apparatus of the state? What is the value of having these entities be private?
I don’t disagree that these services are necessary for our economy to function, and we can’t just tell people that they can’t come up with a system to determine loan risk for their clients, but there are some serious problems with the way credit scores work and how they are used in making certain decisions that should, in my opinion, be handled by an entity not concerned with making a profit off of their mostly unwilling clientele.
Lots of good points you’re making there.
I think the way it could be approached would be for a government agency to start doing their own, force company to report the information to their service, and to provide the service free for individuals, and cheap for corporations.
It would then be relatively fair for individuals to be allowed to deny these companies the right to get their data
This way, the credit agencies would be free to do whatever they want, but they would have to step their game up, or just get obsoleted.
usually I love to shit on muricans, But Germany has something similar. A private company called “Schufa”. This private company secretly calculates your credit score (no one knows realy how they calculate it) which determines if you get an apartment (for rent) or not. Living in the wrong street already kills your credit score here.
If the Schufa doesnt have information about you, it counts as negative.
Credit scores are the West’s social credit system.
If we value our freedom from a controlling, oppressive system, then we should penalize the creation, selling, buying and usage of credit score data. And we should keep on top of it to include any emerging attempts to re-establish an equivalent system.
I wish we Americans had more backbone to push back on corporate enshitification in general.
As someone, who loves dunking on the Schufa, as any good German should. The Schufa-Score isn’t nearly as insane as some American credit score systems. Having an registered checkingsaccount & no outstanding bills or debt payments is enough data to have a high score.
You don’t need to repay debt to show, that you are able to.
So instead of being racist to just Americans, you’re being racist to both Americans and Germans?
Let me guess, you are a murican?
Why yes, I am a proud american. Why do you ask?
Neither Americans nor Germans are a race.
Living on the wrong street? What does that entail?
Drug dealing, wrong skin colored neighbors, rabid squirrels stealing food from your kitchen… you know “the wrong street”.
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Doesn’t the Chinese system also limit access to social services in addition to loans?
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So basically you don’t know how the Chinese system works but the American system is worse? Because America == bad? Nice in-depth analysis.
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Yes, the Chinese social credit system is a government created thing that’s more a way to punish people who don’t do what the government wants.
The American one looks dystopian at first glance, but it’s privately created by and for lenders so they all have a shared understanding of the optimal amount and rates to lend to someone. If you or I sit down and make a spreadsheet ranking houses we might buy or quality of restaurants near us, and then give them to a friend so they don’t have to create their own from scratch, we’re doing something not that far off from what credit scorers are doing.
They’re both stupid.
When Equifax had a major leak exposing personal information of millions of Americans I sent them a notice to permanently remove my data from use. To be clear, my Equifax score IS NOT frozen, it doesn’t exist altogether.
has that affected you at all?
Yes. I was rejected from an apartment complex a few years ago. Otherwise, nothing at all.
I’m still fucking pissed about that. All of their equipment should have been confiscated, securely erased, and melted down. Then we should have sent them a bill for disposing of that data securely, and a massive (like billion dollar) fine for fucking up that badly.
What I hate the most is how your score goes down for paying off a loan early. Getting penalized for actually being financially responsible is infuriating. I paid off my car less than 2 years into a 5 year loan and my score went down a couple dozen points. Just because they couldn’t get more money from interest.
Damn that’s really dystopian. It’s a credit score that directly measures how profitable you are to others as a human.
Since all money has switched to credit, “credit score” is the same as “money score”, and “worth” is the same as “con artist ability”.
That’s not why it went down…lol.
Tell me u don’t understand how credit works…
Enlighten us
I did below
Not just paying a loan off early, even having the loan eventually drop off the credit report completely. This month the only change was an old, paid-off mortgage and line of credit dropped off my credit report. My credit score dropped substantially.
The specific rule you point out is stupid but easy to hack. Your score didn’t go down because they lost the interest you’d have paid. When you pay off a secured debt, the loaned amount is deducted from your total credit potential, which increases your utilized credit percentage. The hack is to open a line of credit against the secured asset before it’s paid off or another line of unsecured credit. Your credit utilization will drop, thus increasing your score.
My score is over 800 and has been for over a decade. I have like 12 credit cards but only use 2 and pay them off every month… Costco for the store and gas and a high cash back card for everything else. The others I keep open with 1 small purchase each year. Every store wants you to have one, so they’re easy to get. I have added and paid off multiple small to medium (10-60k) secured loans over the years and my score only fluctuates a little for a few weeks then goes back because my total credit with the dozen credit cards is so large.
I like video games, and the challenges they provide.
The game you’re playing is stupid, and no one should have to install that shit.
Good on you got doing it I guess, but it continues to persist, which is problematic.
It’s not a game u fucking moron it is a measure of responsibility.
Just admit you’re irresponsible and can’t hack the most simple math required to determine risk.
Fucking assholes blaming the ruler cuz they can’t measure. Lmfao.
No, it’s a game.
And thanks for making it personal. Even tho it was entirely unnecessary.
Dick face.
It’s not really a game, more of an exploit.
But most people won’t need to do that any way, it’s overkill for like 99% of people.
If you have a credit card that you use and pay off regularly, a couple of paid off car loans or something like that and no overdue bills on your history, you’ll be absolutely fine.
Eh.
Exploits A) often benefit the player by letting them skip a lot of work with big rewards, and B) usually get fixed real fast.
Now if doing this meant you never had to work a job in your life again and you could get actually make significant income, sure, I’d consider it an exploit.
I can’t agree with you on this.
Where would one look to find a high cash back card? I’ve been wanting to improve my score by switching to using a credit card for primary shopping that I pay off, but I can’t seem to find any good offers/deals/contracts/whatever term you’d use for a credit card. Probably my score though.
Discover and Amex pay most statistically but some.places don’t accept them for that reason
For simple cashback without yearly fees, 2% on everything or 5% on some things is about as good as it gets. I do everything on chase for simplicity and I’ve been reasonably happy with them. Twice now they have detected someone trying to use my credit card number (not sure how they got it), stopped it, and alerted me instantly. I mostly use the freedom unlimited card which was one of the better cards when I got it a few years ago.
Nerdwallet has a ranking of credit cards based on categories (travel, cash back, etc.). You can try checking it out.
Interestingly our poster here has put the reason, I hadn’t thought about it that way, but how valuable you are to creditors is what the score is. Paying off early losses then some money, so score goes down. Hilarious. What an amazing system! ☹️
The system isn’t for seeing how responsible you are, it’s for seeing how reliable you are.
They seem like similar ideas but they are quite different.
Responsibility is something capitalism can’t afford.
Fair enough!
Oh goody. Just thought of another amazing use for ai! You could use it to figure out the maximum length and interest a single borrower would be expected to pay and set the terms on that! Wunderbar!
You know there are people in bank and credit institutions that have been doing this for centuries? Probably millennia… EU explicitly requires that some of this is done by what you call AI (i.e. mathematical models) because they are fairer than humans and safer for customers and society
Check basel III for an intro on the topic
Just a small correction because I worked around that area (not for loans but for investment), it’s all Algorithms rather than AI.
Algorithms are basically mathematical formulas turned into code, whilst AI is a totally different beast that can produce quite different results on slightly different inputs and it’s not really made by turning mathematical models into code but rather it’s trained with real world data containing inputs and outputs and “somehow” finds the patterns in that data and can predict the correct outputs if given fresh, never seen before inputs.
AI is probably used for fraud detection (and I expect nowadays it’s likely used in algorithmic trading to try and predict market movements) but unless a lot has changed since I was in the business, it’s not used for valuations.
It was just to give an idea that what OP mentioned is already an established thing, fairer than alternatives.
Most of the time trivial linear logistic regression is used in this context. Nowadays decision tree ensambles are pretty heavily used, which are ML. Simply they perform better with fewer data than neural networks on structured tabular data.
What you refer to as AI is probably methods based on deep learning. The truth is that they work exactly as any other algorithm that you are referring to. They are used for regression and classification, same way as a standard linear regression. The difference is that the models are non linear, and their complexity is so that a lot of data are needed to train them.
But conceptually one can absolutely create a credit score with deep neural networks. It is just an overkill, for performances that are likely worst than a random forest on relatively small training datasets
Neural networks-based methods are indeed used in fraud detection
Well, I learn something every day!
Cheers!
No probs :)
Ummm… no. Not in tune with that, so interesting to know that I’m not the first! Haha, thanks!
We don’t need more discrimination in loan approval. A few years ago, Amazon built an AI that would look at resumes and rate how likely the candidate would be hired. The AI trained itself to recognize female sounding resumes (went to women’s only college, is involved in women’s organizations, does not use manly enough language) and flag those as undesirables.
https://www.reuters.com/article/us-amazon-com-jobs-automation-insight-idUSKCN1MK08G
We don’t need but we’re going to get!!!
Jesus christ that’s dystopian
It’s not so much dystopian as it is just buggy software
When buggy software is used by unreasonably powerful entities to practise (and defend) discrimination that’s dystopian…
Except it wasn’t actually launched, and they didn’t defend its discrimination but rather ended the project.
Ah ok. I don’t know much about it, but I’ve heard that AI could sometimes be negative toward commonly discriminated against groups because the data that it’s trained with is. (Side note: is that true? someone pls correct me if it’s not). I jumped to the conclusion that this was the same thing. My bad
An AI is only as good as its training data. If the data is biased, then the AI will have the same bias. The fact that going to a women’s college was considered a negative (and not simply marked down as an education of unknown quality) is proof against the idea that many in the STEM field hold (myself included) that there is a lack of qualified female candidates but not an active bias against them.
what it did it expose just how much inherent bias there is in hiring. even just name and gender alone.
That is both true and pivotal to this story
It’s a major hurdle in some uses of AI
That’s not why it went down. It probably went down because they had less credit extended to them after paying off the loan. How much credit you’re using affects your score.
They don’t care that u paid it off early. They care that your loan to income ratio just took a hit.
That doesn’t really make sense either. Why would a high amount of debt relative to income be a good thing? How does it indicate a person is more likely or capable of paying off a loan? If anything it means the opposite.
Because it’s a racket
A high amount of debt to income is absolutely a bad thing, both in life and for your credit score
Lol 5hey want u to carry a higher balance. It’s not that hard.
Sounds good!
I see where you’re coming from.
Credit scores aren’t about how responsible you are, they’re about how well you can stick to an agreement.
paying off the loan early is a part of any agreement, otherwise it wouldnt be an option
credit scores are entirely and exclusively about how good of a debt slave you are
You don’t understand how credit scores relate to loans then, let me help you.
The credit score is not just how likely you are to repay your loan. It’s how reliable of a borrower you are. They spend resources analysing the transaction, then allocate some funds for you with the expectations that these funds will be returned given a certain schedule. When you repay too fast, it’s not what’s happening.Try to see it the other way around. If you were keeping some funds on-hand to lend, and you spent the whole evening deciding if you’re going to lend me 10k$ for months. You decide you will, and you’ll make 500$ out of it. Not a bad deal: these funds would come at you 300$, so you spent your evening for 200$. Great!
Two days later, I bring you back your 10k and 10$ of interest.
It means you spent your whole evening for 6$…
If I do that to you a few times, I guarantee you that you won’t like me as a borrower.That’s only on the VantageScore - the free score most places show. It isn’t actually used by more than a handful of institutions.
FICO, the system used by the vast majority of lenders, considers closed accounts just the same as open.
“I want your money but I don’t want you to see how trustworthy I am. Just give me money”
Seriously how entitled is everyone these days. It is not a human right to borrow money, you are at the mercy of the banks because your are asking them for a favour. If you don’t like that, don’t ask them for money.
You always have the other option. Build savings instead, but then you have to wait for the things you want and you might have to live with family while doing so. I’m not saying this path is easy, but I’m not the one objecting to a lender wanting to know how good or bad I am with money before expecting them to risk theirs.
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shit credit due to health conditions
There’s your problem: it isn’t credit scores, it’s an abusive healthcare system tanking your credit score.
If everyone should have the same opportunities in life, they should have them despite their health conditions, the opposite is thinly veiled eugenics.
“Not everyone has family they can stay with.” No I know that. Which is why I said it’s not easy to go this path.
"Many have shit credit due to health conditions that are not their fault. "
Which is not an argument for " give me your money without looking at my past" it’s an argument for mitigating circumstances to be better considered.
“Credit checks are increasingly used for apartment leases and car insurance.”
This is wrong. A security deposit is the landlords financial guarantee. I also think insurance should be based solely on driving record, not age , gender or where you live.
“Is it entitled for a person to think they should be able to have a place to live?”
If they expect to be lent money for it, no questions asked them it is absolutely the definition of entitled. You are not entitled to a place to live on someone else’s money. It is your responsibility to provide for yourself and your family. I’m all for expanding welfare programmes, help to buy schemes, rent control etc etc. Those things are something we all pay into and provide us with a safety net is bad things happen. Those things should make sure you are able to have a place to live, but don’t expect a bank to lend you 500k to buy a house without some idea of is they can trust you.
Now in saying some of this I find myself in the dirty position of siding with rich banks. I am not intending to do that because I hate that they make shit loads and squirrel it away for themselves, charge me for borrowing when I’m in negative and pay me back very little for using my money when I’m in positive. This is not about that, I’m only interested in what is fair in the isolated transaction of one party pending another money. Wouldn’t you want to know how likely you are too get back your money if you were the lender? Would you lend money to your friends with a gambling problem? Is the current system of credit check fair? Not exactly. It should be enough to be able to demonstrate financial responsibility. I paid rent for 20 years without missing a payment, but it wasn’t enough to demonstrate financial stability or responsibility and that is plain wrong.
It really is crazy to look at someone’s financial history to figure out how much money to lend them and at what rate…and whether they have any income to pay it back, fucking fascists!!!
At some level, its just another aspect of the surveillance state.
“Oh, you want to buy a car? Show me your credit card statements. Show me every place you’ve ever lived. Tell me the name of your spouse, so I can interrogate that person as well.”
I might not even call it fascist, per say. Its more feudal. Some aristocrat demanding your life story before he lets you onto his fields to work a plow.
And all because these necessities of life are so expensive that nobody can just pay cash in hand for them anymore.
Your credit score actually goes down when you pay off and close accounts. Which would indicate you’re very financially responsible and will pay your debts off.
The reason is because a credit score is not about whether you will pay your debts and are financially responsible. It’s actually configured to be a score of how much money a lender can make from you. If they can’t profit from you, they don’t want to lend to you. So the score goes down.
If it was a score of financially reliable and stable you are, then it would be much more welcomed.
FREE TO PLAY
(*Includes
Microtransactions)deleted by creator
Life is literally just IRL 2007Scape
Life is IRL
No credit. No score. Still bought house. There are ways around the system. Same for my cars usually. Buy them at auction. Ditto for phones. You don’t need that new $1200 iPhone. A used one for $250 cash and holding onto it for 6 years is much better.
Got my house through Habitat for Humanity. (And that’s not a free house program. Ask me if you want to know more.)
I was fortunate, but there was some motivation involved.
H4H works very well for very well qualified and motivated people. Im so glad you were able to make it work.
Yes, having money available so you don’t need credit bypasses the whole system. Have fun buying a house.
I bet you rent. LOL
Bought first home in early 2000s, sold that one and bought another since then. There is no way I would have been able to save up enough to pay cash during that time.
I didn’t claim to have paid all-cash for my house. I had a mortgage, I simply found a predatory by-owner lender and worked through all of his bullshit. They offered my mortgage on balloon, seeing that basically nobody ever managed to get a house paid off during the balloon period. So I did without…basically everything, for 8 years while I put every last penny I had to paying it off before the balloon was due. Lender said he’d been doing this for 45 years and had never seen anyone pull it off and he’d be happy to sell me another any time.
But during this time, I was paying what I would pay in rent, as a mortgage, basically paying MYSELF. Everything I worked so hard for and paid into during that 8 year stint, is STILL MINE. Every penny I paid, I still own. Meanwhile, everyone here sits on renting shit for $2k-3.5k/month and whines about never having enough money for anything.
And if you’re sitting there saying to yourself “30k over 8 years?! wtf that’s not hard?” – well, I was in the middle of my cancer treatments as well, and I can’t work nearly as much as anyone else. So it’s kind of hard to sympathize with the dipshits saying they make $80k/yr and can’t afford a house, when I made it work during cancer treatments and less than $20k/yr.
You’re getting down voted because you told the truth. Shame
What the fuck kind of wankjob is upvoting this boomer-tier “Just don’t buy Starbucks” horseshit?
“Just pay cash for everything on your $25k a year! You can totally buy a house if you save for the next two decades!”
Fuck off.
I make less than $25k/yr, lol - I learned to fix my own beater cars. Bought a 3/2 during the 2008 crash for $30k because it was almost gonna be condemned, and was a by-owner sale - I only needed like 8k down, and then worked on fixing it up myself. It was barely livable when I bought it.
And your dumb ass thinks that buying a house right now is possible on less than $100k a year. Yeah, you’re a fucking moron.
I will reiterate my fuck off.
I did the same kind of thing he did, bought a meth lab in 2011 for 50k owner carry contract, evicted the meth heads (that was fun) then gutted it and spent a few years sleeping on the floor, working full time for $16 an hour at day and fixing up the place at night. Had an electrician and plumber friend come show me how to do stuff and help me out for pretty cheap. Sold it in 2020 for 175k when I got married and used that and the new wife’s credit score to get our family house where it’s safe to have kids
A lot of luck and a lot of work. It’s not easy and there was a lot of luck involved for sure.
100% no argument at all. I feel very lucky that I was able to do it, and very sad that that’s what it takes….
It’s cool that you were able to improve your situation with a lot of luck, hard work and sacrifice but a basic middle class existence shouldn’t require a lot of luck.
You can too - just need to be willing to live in a shithole for a while.
My guy, the shitholes where I live sell for $100k minimum, and come with several hundred a month in lot rent, because they’re trailers. A shitty condo is $200k or more, plus, again, a few hundred a month in association fees. I could move somewhere with a lower cost of living but I’d easily take a 50% paycut, so I’d be in the same situation. It’s not about not being willing to live in crappy places, it’s about even the crappy places being well outside of what nearly everyone can afford without a mortgage.
You really should take advantage of any first time homebuyers programs you have in your state, and talk to a real estate agent to keep a look out for you. Deals pop up all the time, and the reason you’re not seeing them is you don’t have access to the multiple listing network (MLS), while a real estate agent does. All you see on the market is “what’s left”, after shit gets snagged up. You have no idea what’s available out there.
So all people need to do is wait 15+ years until a depression-level market crash. Got it.
I think you mean 1 year. Lol
Well it’s been 15 years since 2008…
I give it 4, if that. I’ve already been though 3 “once in a lifetime” depressions.
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And then live in squalor while you do home repairs yourself what all that free time you have.
Hahahahahaha, “no credit, still bought a house”, ok mr my uncle left me gold bars in his will, the leprechauns showed me the end of the rainbow, hahahahahaha
It’s incredibly expensive being poor, lots of people are poor, there are of course ways to be poor, and without good credit, but everything costs three to four times as much in the end, if you don’t have cash on hand.
The Sam Vimes “Boots” theory of socioeconomic unfairness by Terry Pratchett’s Ringworld comes to mind: https://en.wikipedia.org/wiki/Boots_theory
Can it be done without a credit score, sure, is it incredibly difficult and in the end more costly, almost always
Been poor my whole life. Guarantee 99% of people on here make far more than I do. I can’t work as much as others due to health issues, and I still managed it though cunning, sacrifice, and good timing.
You’re pretty massively understating how much timing played a role in your specific case.
The timing was more a factor of having a real estate agent as a friend. If you’re using bullshit like Zillow to look for properties, then you’re an idiot.
Zillow is not MLS, and most of what people are seeing ‘on the market’ is shit that’s left over from being snagged up. Get yourself a real estate agent that can keep an eye out on property for you, and there are plenty of deals that come across their desks that you could be notified of before it hits general availability. They don’t make money unless they find you something, so they are generally on the ball when it comes to keeping an eye out. Everyone here whining is just showing their inexperience and lack of drive for actually fixing their situation. Instead they just want to be stuck in a rental loop their entire lives.
No, you bought in 2008 when prices plummeted to insanely low levels due to economic collapse that was ALMOST worse than the Great Depression. There were lots and lots of modest or shitty houses like yours available for cheap then, all over the country.
It was 95% that, and maybe 5% your resourcefulness and willingness to sacrifice or whatever.
Buying a house like yours for 30k (even inflation-adjusted) are nearly nonexistent in the vast vast majority of the US at this point. They’re definitely not out there by the hundreds of thousands in lower-middle income neighborhoods like they were in 2008-2010.
For a significant number of people to be able to do the same thing in the same way, there’d have to be a similar cataclismic event again.
https://www.theguardian.com/business/2023/sep/17/bankruptcies-rising-us-small-business – You don’t gotta wait long, I promise you.
Even if true, which is unlikely - point is that you’re not nearly as special as you think you are, and your point sucked.
when you’re poor that’s the only way to do it my man, most of the world is poor, ain’t no shame in it
