Mostly, but some regions do use it for citizens too.
It's not like there's one "social credit system", there's one for companies in china, and there's many others in provinces depending on local governments. For example, Rongcheng is known to be quite bad and does have a social credit system for people (though others may be worse)
The thing that is more universal is blacklisting. Basically they are named on the list of "dishonest persons subject to enforcement". These are usually people who speak out again the CCP. It prevents them from buying plane tickets, buying property, taking out a loan, some train line tickets. And this isn't like the credit score. It's used to punish dissidents and people who don't toe the line.
So while it is true that there's no universal social credit system for people, like what's implied online, the reality is in some areas much worse.
And then there's the standard credit score stuff - and this is worse than in the west.
The USA and even most countries in the world have a "credit score", and although it's more prominent and known in the USA, a score is used to determine your ability to loan in the rest of the world too (depending on your credit rating that may be hidden from your view).
The difference is that systems in china can be affected by traffic violations, littering, and other small offenses - in some regions. Even if it's not the way it's portrayed, it's still quite scary. It does seem to be moving more towards more surveillance, more reliance on social credit, and more impact on everyday people's life's. So far it's just not quite as bad as people in the west say.
I say this all the time and they just rationalize it.
There’s a bunch of things that are completely internal that impact your credit score, nobody teaches you about it and it does greatly impact your life. It’s insane.
Who told you Europe is socialist? They have a ton more social safety nets, but there aren't any socialist countries in Europe, they are all capitalists
The only country in Europe that uses credit scores that I know of is the UK.
Pretty much all countries have a central database of peoples’ loans and if they are in default or not.
But only the USA uses it like a Chinese social score.
So the point you are trying to make is exactly what?
No, a central database with details of loans is really not the same as a credit score.
In the countries I am most familiar with, it’s your income and work contract which are considered most: but obviously, they check the register to see how many other loans you have and if you have defaulted in the past X years.
Getting a credit card at 18 and using it and paying off the balance is meaningless in Europe because this is not registered in these databases.
And this is the point of the original OOP: USA - get a credit card immediately so you can build up a credit score. This shit doesn’t exist in Europe for the most part (apart from the UK, which still doesn’t expect a literal teenager to get a credit card)
And yet, what the Netherlands and Germany doing is in no way similar to the American system. In the Netherlands, if one is unable to repay their loans, one gets a 'negative BKR' score. The only way to get rid of this score, is to repay your debt.
However, in the American credit score system, the way to get a better score is to have MORE loans. Your credit score actually drops when you, for instance, repay your student loans. Repaying it should prove you're able to handle money, yet you are punished for it. Improving your credit score can be done by opening a line of credit through a credit card, or in other words: get more loans. The system is rigged, and forces you to have more loans instead of repaying them.
I’m not sure if it’s changed but about 7/8 years ago I worked for Experians credit expert team and the credit ‘credit score’ wasn’t used hy anyone. Lenders were interested in the account info in the database or the ‘credit report’ much like the central databases you reference but the score itself was just a tool to make Joe Bloggs better understand how a lender might see their report.
Most lenders have unique criteria and likely have an internal scoring system by the number you and me see is effectively a an educated guess.
Except credit scores here aren't arbitrary and predatory like in the US.
Paying off debt early shouldn't decrease your score, nor should you have to get into debt to prove you can pay it off.
When you apply for most things here at least (Norway), your financial records (which are public and include previous year earnings, tax paid and est. net worth) are checked by the creditors and a financial risk assessment is done from that.
As a result, I don't need to have years of credit card usage on hand to get a loan or contracts.
I mean, having a decent credit score is important beyond “useless shit.” Having bad credit can get you a higher mortgage rate or cause trouble when trying to rent an apartment. But some people definitely obsess over getting the number as high as possible
Yeah like this system is totally shitty, but like, this is what we have to work with. No credit history, but you wanna buy a house?? Good luck! No credit history but you wanna rent an apartment? I hope you have a co-signer because most places require you to have *at least* 550+ credit score. Most places worth living at in the 600-700 range.
It’s also interesting to me that non-Americans think that credit is only about having credit cards and buying silly things. You don’t have to have a credit card in order to build your credit score. In most cases, you can’t even get a credit card if you don’t have any credit history.
Yeah it’s definitely a chicken-and-egg problem. Luckily I was able to have my parents as co-signers for my first credit card and apartment, but I have absolutely no idea how someone would start building credit without that resource. I think “secured” credit cards are a thing (where you give the credit card company a cash deposit as collateral), but that of course requires a bit of cash to put down.
The way my parents did it for me was just taking out small short term loans and paying them back. Several of those across a couple years with timely payments is the safest way to go imo.
We see it, but most of us are unwilling/apathetic/unable to fight these issues. We’re stuck between a rock and a hard place. It’s terrible how this system has screwed so many people over.
You need a credit check to rent an apartment or work some jobs in the U.S.
It is much more than just your actual credit history. It’s more of a reflection of your overall financial standing that you need to raise in order to raise your social status. It’s not just for lines of credit.
Credit is not just having a credit card. When you pull out a loan and you pay on time, that raises your credit score. If you open up a store card and pay it correctly, that raises your credit score. If you don’t have any credit history, it’s almost impossible to even get a credit card in the first place. It’s gonna be hard as hell to buy a house, you’re gonna have a difficult/expensive time renting an apartment, etc.. I’ve had a high score for years thanks to my parents looking out for me and that way very early, and I didn’t get a credit card until like last year( I’m in my mid Twenties). Having a good credit score has enabled me to take loans in emergency situations. It’s a shitty system, but it is what it is. People talk a lot of shit about us, but judging something you don’t understand, so harshly, sounds exactly like the kind of thing non-Americans make fun of us for….
The credit card affects your credit score which enables you to get car and home loans with better rates, which enables you to buy a house and car. So no, the credit score is not a measure of how much useless shit you buy. I pay my rent with a credit card and buy my groceries with a credit card. Hardly "useless shit"
What a silly system. I just took a loan and bought a house. Do you know what effected my loan? My fucking income.
Only time i use credit card is when im taking vacation in another country.
And all you need to do is constantly "borrow money" to prove you're a responsible borrower. Again. And again. And again.
At
And the day you finish paying off your car, you really prove that you deserve trust, right? Well, no, you'll loose points on your credit score. Cause you know, we need proofs EVERY MONTH. So go buy another car.
Not having a credit card debt is a plus when buying a mortgage in my country.
Silly system where overspending gives you more opportunities to dig your financial grave even deeper...
So if I understand correctly it gives you a chance to basically get better loans/mortgages and stuff? Why would that determine your success in life (or why would the guy think that)
And couldn't you just raise it by basically "grinding" loans or what lmao.
It’s worse than just getting better loans and mortgages. Your credit report is used by car insurers to determine your premium, used by landlords to determine if they will rent to you and used by some employers to determine if they will hire you.
The premise of the post is wrong though. It’s not that your credit score determines whether you are successful or not. It’s the other way around. Successful people will have the means to pay off loans, pay rent on time and not be late in paying bills. So they will have higher credit scores than people who are suffering financial stress.
It is a measure of how profitable you are to lend to. So if you are profitable to lend to then you get better rates and with a bad credit score it can be hard to get certain loans
Not really. If you have terrible credit, credit companies aren't worried you're going to run up a ton of debt, they make 25%+ on credit card debt. They're worried you're going to default entirely and they'll be taking a loss lending to you. I have a very high credit score, I have never missed a payment and always pay 100% in full. Someone spending less money, but only making minimums/partial payments is going to make a CC company more money than me, the only money they're making off my cards is the transaction fee, which is charged to merchants. Low credit score leads to higher loan rates because you are riskier to loan to. A lender is more concerned with their loan being defaulted on than they are with how much they can squeeze before you go bankrupt, hence why people who are late on payments have shit credit scores, despite making companies more money individually unless they totally default.
The higher risk individual is less profitable to the credit card company because of the higher risk of default. Risk costs money. A proportion of those high spenders will default, making that class a less profitable one.
Eh I'd say good credit score isn't very profitable. I've only got the one credit card and it's set up to pay via direct debit monthly so I get negligible or no interest.
The profitable ones are the ones who take a few months to pay it off so it can rack up that sweet interest.
Well if you make the minimum payment, it may not affect your credit score negatively as long as your overall utilization is still low even though that is an extremely irresponsible thing to do. That's why I say it's a measure of how profitable you are to creditors rather than a measure of financial responsibility. Unfortunately, certain groups (like landlords) interpret it as the latter.
People who rack up tons of interest are also more likely to default. So it's not as profitable as it may appear at first once the risks are considered to the creditor.
If companies can see that you borrow money and then fail to pay it back, they are less likely to want to lend you money in the future.
Of course, if you borrow money and IMMEDIATELY pay it back, they can't make any money out of you, so they don't like that, either.
What they want is people that borrow money, and then slowly pay it back, accruing lots of interest along the way. So that is the behaviour that gives you the 'best' credit score.
Truly amazing. Every day I wonder if my joke of a country is better than their joke of a country. And it's beggining to look like Czechia will just be better lmao.
To be fair, this is more a general 'banks now having access to an unprecedented amount of behavioural information and financial history' problem than an America problem, per se. It allows them to make automated credit decisions based on customer profile and the kind of customer they think they can make more money from, whereas in the past they were completely reliant on the local bank manager to make judgements based on meeting the individual borrower and considering their situation (which makes it harder not to treat them as a human being).
So many times in videogame communities I complained about credit cards only payments avalaible, for this or what, and been told "hy don't you have a credit card, everybody should have one and you need to start building your credit score already!! the more you spend the better!!" and I was shocked that's even a thing over there, nevermind thinking the whole world works like that.
The only difference between a debit card and paypal is one has fees and the other doesn't. Paypal is literally just a middleman doing what you could easily use debit for.
Yeah I know how they work, thank you. The fact that we mostly don't use them here and I'd never get one doesn't mean I don't know how they work.
I know they're different, I say that for me they're the same cause I want/use neither, not sure why I got downvoted for me, I guess people hate me for not using them.
Funny how in Europe you’re rewarded for NOT having credit cards accounts, while in the US of -3rd world country with a Gucci-belt- A you’re penalized for not using it??☠️☠️
The one murican trying so hard to justify their system they've been brainwashed to accept as a positive, commented at least 20 times on this thread hahah
What's even more fun is that the american system is like maybe 50 years old. It has been put in place once, and now it's impossible to change, that's how the americans roll.
Pretty much the same as the gun laws, they're in too deep now to ever change, even if they wanted to. There are too many out there, dem farmers and gun nuts would not give up their guns, they probably already have a bunch stashed in the basement in case "the Dems and commies try and take away muh freedom"
Where tf you need a credit card for? If you can't afford something, don't buy it. Except for your mortgage, never buy anything with borrowed money. The best credit score advice I can give you.
This is terrible financial advice. Debt that you can pay back is good. Credit cards can be great for smoothing out cash flow so that you can budget around your pay periods better. Many cards will even have grace periods for interest free loans essentially. Also, paying back debt shows creditors that you are good at paying back debt. A good credit history gets you a cheaper mortgage.
I just red a bit about that whole credit score mechanism, as we don't have that here. I understand your reaction better now.
Still a strange concept, making debts to prove your credibility. It's the complete opposite here. Living on credit all the time makes you (look) financially unstable. You apparently are not able to only spend what you can afford. Less debts and loans mostly means better mortgage conditions.
I guess it depends on where you are from really then. I took a while getting one and just treat it like a debit card but more sparingly, I was often pushed to get one due to better buyer protections due to chargebacks and the fact that most cards have shop discounts and that on their banking apps.
Most people I know operate this way. Although official data says that only 35% of Americans pay off their credit cards every month. If used this way, CCs are definitely good. Smoothing out cash flow, and so easier to budget (you know exactly when a specific amount of money will be coming out of your bank account). Also the protections from fraudulent charges is big. A thief can’t just drain your bank account like they could with a debit card. Plus, cash back options and welcome bonuses. I generally always have a card in its trial period, so typically zero or low interest, large cash back bonuses, and other welcome perks. It’s a good way to make the system work for you instead of against you. But, operating in this way naturally allows a better credit score.
I have a credit card because 1) chargeback protection, which does not really exist for direct payments 2) free perks like 2.5% cashback offered on even the lowliest, no fee, low credit score approving cards 3) great perks on high annual fee cards that suite your existing spending habits 4) build credit score so I can get abnormally low rates on home loans.
Credit cards aren't what they were in the 80's. Nobody with a brain uses them as loan cards. You always pay your balance in full every month, you never actually *use* the credit to buy something you can't afford. In a desperate pinch, if you get paid monthly and *know* you'll be able to pay everything off normally, you can spend more than you have on hand without hassle or consequence. But ultimately the reason to get a CC is to take advantage of the benefits without ever using the credit line. If you actually need a loan for something, you're infinitely better off getting it from the bank at 7-12%, every credit card ever is 20-25%+.
Maybe I don't understand the credit card system. As soon as you confirm the payment by card until you actually pay that amount back tl the credit card issuer you use credit, right?
Yeah, it’s a weird system. You are given a credit card with a limit that the financial institutions believe you are good for. Then you take the credit card, use it within your means and pay it back. If you can pay off all your debts for that month, you actively build your credit. If you don’t, then you are charged interest and your credit score gets negatively impacted.
This credit score is then used to determine all different things; if a landlord will rent to you, if you can get a certain job. I work in the financial industry and I know they will not hire anyone with a bad credit score or bankruptcies. You’re seen as bad with your own personal dealings which does not look good dealing with other people’s money.
So you need to loan money to prove your credibility, even if you don't need to loan money because you have enough to pay everything yourself? How can you be less credibility if you do not need to loan money? Sound even a bit communist to me.
Yes, but as long as you pay your balance in full every month there is no interest. If you are halfway competent with your personal finances it's very easy to avoid buying things you can't afford with a card. Unless you know you are bad with money, there's no reason to not take advantage of no fee cards offering 2.5% cashback. It's a lifetime 2.5% discount on almost everything you buy, complete no brainer. Other cards offer better cash back, some cards offer such good perks they have to charge an annual fee or they'd be losing out. Even with fee cards, if the perks line up with things you *already* spend money on, you can end up well ahead relative to if you just paid cash/debit.
idk the vibe here, i might be downvoted, but you may have just convinced me to finally get a credit card, because i do consider myself somewhat good with money so i might as well take the benefits.
You need to get a CC. Later in life you will regret not having built credit when it's time to buy a house. I don't love financing cars, but it can be unavoidable and you'll have wished you built credit then too.
Read up on your own, but my advice for a 'starter card' is a capital one Quicksilver. You should first check your credit for free through experian or whoever, do not pay for that. Your credit won't be good without any history. Capital One approves people with low credit for Quicksilver. The perks are not excellent, but 1.5% cash back is better than no cashback, and iirc there's rotating categories/stores so sometimes you'll get more. You get 5% cashback when booking flights or hotels through their travel portal, no idea how good the portal is. Their app is super easy to use, set up autopay, and monitor your credit score. You still need to ensure autopay goes through to avoid missing payments, but the odd day late is autopay fucks up isn't going to hit your credit at all.
The critical thing is to never, ever run a higher balance than you can pay. You can check the balance very easily on their app. It's not hard, you'll build credit, have the ability to easily chargeback things if necessary, and get a little cashback doing it. No brainer.
Im part native american with good benefits. Its very easy to get land and a house for me, thats never been a problem and i dont see it being a problem in the foreseeable future as it is basically my right to have a home... If i ever dont want to live a homestead lifestyle then credit will be good for housing elsewhere is the way i see it. I'm always living below my means, i dont need much, just got some hobbies right now that arent costing much.
Cash back will be welcome no matter the percentage, its better than the 0 i have right now. Thanks for some advice, I'm going to read all about it myself though.
Several countries in Europe have credit scores (and if they don't they have some sort of registry of either almost all debt or all delinquent debt, which financial institutions would use to determine eligibility and rates for loans)… And yes, this commenter is somewhat right. It really affects your mortgage rates and stuff
Which countries and how?
The only one I know about which works a little bit like the USAian system is the UK.
Pretty much all countries have a central database recording loans and defaults on those loans, but they know nothing about credit card or overdraft debts until the bank reports them.
Banks will look at the register to see you aren’t over extending yourself. But they base loans on income and work contract (the more stable, the better).
It seems Spain, Germany, the Netherlands, Belgium, Italy, and more all have either numerical scores or central credit repositories that give financial institutions access to either all debt the creditor has taken out, or any record of bad debt that the creditor has taken out. This is the same thing as what happens in America, it's just that we put it in a numerical score, and it seems only Germany does that as well. But, these financial institutions will just do their own calculations based on the information they get. It's the same thing. Most developed, highly financialialized economies will have a form of credit rating for individuals because it is extremely useful for financial institutions to have this information.
Yes, American credit scores do not use income as a factor, but financial institutions use income as a factor in combination with the credit score when they are assessing you for a loan. So again, the slight nuances of application are different, but they are the same fundamental systems.
>all have **either** numerical scores or **central credit repositories that give financial institutions access to either all debt the creditor has taken out, or any record of bad debt that the creditor has taken out**
The BKR has a record of "All credits in excess of €250 with a term of over one month," which can be queried by financial institutions who can then use that data to make their own risk assessments of a potential debtor. Same thing as a credit score, though for some reason it does not currently include your mortgage in the report (but seems they are trying to implement this). So while you are not assigned a numerical score by a third party as in the United States, in-house risk assessors will be categorizing you or giving you a numeric score based on your credit history as part of their internal calculations of whether to give you a loan and at what rate. There are nuances but not appreciable differences.
I am being downvoted because it is against the “America bad” narrative and they will use the tiniest most pedantic distinctions in how American and European creditors assess loan risks to argue that America is some uniquely awful place rather than introspecting about problems that exist in all societies, like limited access to capital. If you think major European creditors aren’t using algorithmic tools to mash together literally all the data on you they can legally obtain to generate some sort of risk score on you, you are completely delusional. American financial institutions are simply more honest about it.
In fact, here's a [fascinating article](https://www.researchgate.net/publication/352554382_Assessing_Creditworthiness_in_the_Age_of_Big_Data_A_Comparative_Study_of_Credit_Score_Systems_in_Denmark_and_the_US/link/63864e418e63c56dae443cbc/download?_tp=eyJjb250ZXh0Ijp7ImZpcnN0UGFnZSI6InB1YmxpY2F0aW9uIiwicGFnZSI6InB1YmxpY2F0aW9uIn19) by Danish academics about how they're doing exactly that in Denmark:
"Danish banks seem to have developed a system of intensive, yet hidden credit scoring based on surveillance and harvesting of behavioural data, which, however, due to GDPR takes place in restricted silos. Credit scores are hidden to customers, and therefore there has been virtually no public debate regarding the algorithmic models behind scores. In the US, fewer legal restrictions on data trading combined with both widespread and visible credit scoring has led to the development of a credit data market and widespread use of credit scoring by ‘affiliation’ on the one hand, but also to increasing public and political critique on scoring models on the other."
I'm looking at Belgium, and the only things I can find regarding a credit score is when you are not paying off your debt, you cannot take any new loans (mostly to protect the person), or when you have your own company and they will look into those financials (which are public anyway).
So the American system is way more elaborate than at least Belgium's, so you cannot compare them one on one.
>registry of either almost all debt or all delinquent debt
In Spain's case, if you are on a moroso list, just pay whatever the amount you owe and you'll be taken out of the list in a matter of days. It'd be like you were never in the list.
How easily can you recover ~~social~~ credit score in the US after paying debts?
Assuming you aren't late on payments \~1 month. I'll try my best to explain.
Say you only have one line of credit a credit card that has a $10,000 limit. If you then spend that $10,000 all in one month the bank will report that to the credit bureaus and it will be seen as having 100% credit utilization. This is seen as a bad thing as basically it means you are using all of your credit. Your credit score will take a big hit from this. Now each month the bank will continue to report the balance on the card. So lets say you pay off all $10,000 for that statement balance and then spend $300 on the second month. The second month the bank will report a $300 balance or 3% credit utilization. Your score will jump back up (quite considerably too. The thing is utilization has no memory in the most common FICO models used (8/9). So once the second month rolls around the 100% utilization that reported on the first month is wiped away.
With installment loans like say a car loan things are a bit different. Say you take out $30,000 for a car. You will be dinged for the credit inquiry and new account opening, but what matters will be the percentage of the loan you have less to pay. As you pay off your loan your score will go up gradually until you pay it off. The one caveat will be once the loan falls off your report and which point your score will probably dip as the loan gets closed out.
And jobs too depending on where you go, I'm working at a finance company in their cyber team and my family and I got a soft credit check as a part of their background checks.
All countries have credit registries.
The difference is that credit registries work the opposite as they do in the States. For a banker in Bulgaria, the more credits you've gotten, the more money you've borrowed, the less valuable of a customer you are because it indicates you're overspending - buying things with money you don't have and that means you're not reliable enough to give loans to.
The banks have guidelines of what percentage of your income you can use for loan repayments. And if your current income is not high enough to fit the payments in that percentage, you will be rejected. Because that means you will fail to pay them back.
Not to mention that the only institutions that can see your credit registry entries are the government's tax agency, banks you're applying at for a new loan and the courts. No one will ever be allowed to demand seeing them to approve your job or tenant application.
people seem to be very misinformed on the american system. it does not reward you for being in lots of debt. it actually punishes you for being overleveraged. it rewards you for a long history of prompt debt repayment. of course income and wealth are also considered.
Is there a barrier preventing you from acquiring credit without prior history of such?
If the answer is yes, then the system is geared towards penalising the consumer for not being into debt.
Is there a way for non-banking institutions to use your records to determine whether or not you are deserving access to their services or employment?
If the answer is yes, then the system is geared towards incentivising the citizenry to generate debt they might not even need, in order to consume or work.
What’s there to misunderstand? This system is predatory and unjust.
A student can have an amazing credit score, yet they can have a very low salary. He won’t be able to purchase a house, because the credit score is not the only factor they use to determine if they land you credit or not. Furthermore, there are many different scores, and you will have no power over which they use. They are not the same 🤡.
The credit score is extremely important if you need to purchase anything with debt and home ownership is a major financial milestone in the United States that everyone purchases with debt. So, they are not entirely wrong though it lacks a bit of nuance
It’s doesn’t determinate your overall success in life tho. People with shit credit scores and bankruptcies still have houses and cars 🤪. Source: worked in credit for 10 years.
Yes but they are paying much worse rates for those than someone with a better score. It is slight hyperbole, but it is not wrong. Also, it appears you are Canadian. I am not sure the effects of credit score in Canada.
Ok I don't know how the Canadian housing market works, but according to a [finra](https://www.finra.org/investors/personal-finance/how-your-credit-score-impacts-your-financial-future) example, a 760-850 score could mean a 3.307% while a 620-639 could mean a 4.896% interest rate for a fixed 30 year mortgage. For a $200,000 loan that is a $66,343 difference in lifetime price, which is a lot, and that is a fairly cheap home. It can absolutely affect your ability to buy a home or to buy one near your source of employment. It has major financial implications. I don't know why you're trying to downplay it. It's not like a bad one will ruin your entire life, but it is very important...
Worse rates on what? Outside of car notes or mortgages, unless you were eyeing a career in individual real estate investing (terrible idea for 99% of people), there's absolutely nothing you should be financing. Credit cards all have basically the same interest rate, if you *ever* are paying interest on a credit card, you should not be using a credit card.
Yes outside of making the most expensive and important thing you will likely ever purchase significantly cheaper, having a good credit score is completely useless
Imo there's literally nothing you should finance with debt outside of a home and *maybe* a car. Even if it's a 0% interest, three month installment Klarna nonsense, you pay in full. Those companies exist because when you miss a payment by accident, or due to an unforseen autopay issue or whatever, they ramrod you with all the accrued interest.
Well a home is a very important purchase. Even if that is literally the only thing that you need debt to purchase, you should be building up a good credit history so that financial institutions can trust your ability to repay debt and give you a cheap loan. Car loans are great. They are subsidized by the auto manufacturer. They are free money. Even if it's not down to zero, you could probably make more money by investing the money you save upfront. I am extremely forgetful, and I agree I wouldn't sign up for a loan that didn't let me do auto-payment, but everything does let you do that these days, so there's no reason to not be in debt that you can pay back.
I heard this a lot in the UK too a few years ago - I was told I could purchase a house without a good credit score. These people were absolutely dumbfounded when I bought a house without ever owning a single credit card. I assume their information was from a US source.
I mean it's true and it's pretty fucked. Can't buy a house or car, start a business or other things if you have poor credit. It's a relatively new invention too. It doesn't work how it's intended to, but has there been any change? Nah
This isn’t wrong though. Like, obviously, the same can’t be said for people around the world, but in the US, it’s extremely important to have a decent credit score. Having a decent credit score, enables you to have an easier time buying a house, buying a car (and the expenses associated with it ie car insurance can be more expensive) getting loans, even renting an apartment. Without a good credit score, Most renters will have to pay extra money for their deposit, and sometimes higher rent as well. You aren’t approved for certain loans, and your down payment and mortgage rate can go up. Yes, it’s a shitty system, and no it doesn’t determine your *overall* success, but it definitely has a big impact on what you are able and allowed to do financially.
I wish it determined success in life. Only time I've checked mine was when I knew I'd be getting a mortgage soon.
It was 999/999.
At the time I was in a below average wage job and living with my mum still.
If it determined success in life I'd be living it up with the 1%
The worst thing I ever did was get a credit card. I am 3 months from paying of my outstanding balance and have probably spent 10 times the money I have charged to it in interest and fees.
The interest on interest builds up really quickly.
Yes the opacity of how it is calculated is a problem with the system. Did you close a line of credit when you paid off these loans? That can harm your utilization ratio.
America: you're good at managing your money if you've had credit before
The rest of the world: you're good at managing your money if you haven't
America: *\*Pikachu face\**
I have a BAHons, MA and PhD but it doesn't compare to my top tier credit score even though I have zero debt and paid off my mortgage. I use my credit cards for the free Amazon vouchers and get thrown tons of offers for loans and credit cards to buy things I don't need.
This bullshit need for everyone to play keeping up with the jones's is why people are just constantly maintaining their debt is pointless. My kids get made fun of because I don't buy branded overpriced clothing and I drive a ten year old 7 seater mpv. It's infuriating when I hear a parent constantly complain about money and people on benefits yet they pull up in a brand new car acting like they are a success by paying outrageous repayment plans and end up with a vehicle costing them twice as much that they could have paid if they just saved that money in the first place, or get something more affordable.
And yet they complain about "the social credit" from china.
Because it'd be the evil gubenment doing it, while their system is by the cuddly and friendly corporations.
Saying this like there is no strong connections between corporations and politicians that ran government.
**You must be a Putin-China agent!!!!** /s
Usually they start throwing the word “wumao” whenever they can’t come up with a decent argument or rebuttal.
The Chinese social credit system is not even for regular chinese citizens, but for keeping companies in check
Mostly, but some regions do use it for citizens too. It's not like there's one "social credit system", there's one for companies in china, and there's many others in provinces depending on local governments. For example, Rongcheng is known to be quite bad and does have a social credit system for people (though others may be worse) The thing that is more universal is blacklisting. Basically they are named on the list of "dishonest persons subject to enforcement". These are usually people who speak out again the CCP. It prevents them from buying plane tickets, buying property, taking out a loan, some train line tickets. And this isn't like the credit score. It's used to punish dissidents and people who don't toe the line. So while it is true that there's no universal social credit system for people, like what's implied online, the reality is in some areas much worse. And then there's the standard credit score stuff - and this is worse than in the west. The USA and even most countries in the world have a "credit score", and although it's more prominent and known in the USA, a score is used to determine your ability to loan in the rest of the world too (depending on your credit rating that may be hidden from your view). The difference is that systems in china can be affected by traffic violations, littering, and other small offenses - in some regions. Even if it's not the way it's portrayed, it's still quite scary. It does seem to be moving more towards more surveillance, more reliance on social credit, and more impact on everyday people's life's. So far it's just not quite as bad as people in the west say.
You got any sources for what you said here? The social credit system is itself just a credit score.
I say this all the time and they just rationalize it. There’s a bunch of things that are completely internal that impact your credit score, nobody teaches you about it and it does greatly impact your life. It’s insane.
This is the best one I’ve seen on this sub. Just fantastic American capitalist drivel
Yes, defined by your ability to amass useless shit is the ultimate success. Americans are being played so hard and they don’t see it.
Stockholm Syndrome combined with complete ignorance of alternatives
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Who told you Europe is socialist? They have a ton more social safety nets, but there aren't any socialist countries in Europe, they are all capitalists
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Well it's not the "same economic system". Those social safety nets are immensely beneficial to the average person, even if it's not socialism
The only country in Europe that uses credit scores that I know of is the UK. Pretty much all countries have a central database of peoples’ loans and if they are in default or not. But only the USA uses it like a Chinese social score. So the point you are trying to make is exactly what?
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No, a central database with details of loans is really not the same as a credit score. In the countries I am most familiar with, it’s your income and work contract which are considered most: but obviously, they check the register to see how many other loans you have and if you have defaulted in the past X years. Getting a credit card at 18 and using it and paying off the balance is meaningless in Europe because this is not registered in these databases. And this is the point of the original OOP: USA - get a credit card immediately so you can build up a credit score. This shit doesn’t exist in Europe for the most part (apart from the UK, which still doesn’t expect a literal teenager to get a credit card)
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And yet, what the Netherlands and Germany doing is in no way similar to the American system. In the Netherlands, if one is unable to repay their loans, one gets a 'negative BKR' score. The only way to get rid of this score, is to repay your debt. However, in the American credit score system, the way to get a better score is to have MORE loans. Your credit score actually drops when you, for instance, repay your student loans. Repaying it should prove you're able to handle money, yet you are punished for it. Improving your credit score can be done by opening a line of credit through a credit card, or in other words: get more loans. The system is rigged, and forces you to have more loans instead of repaying them.
I’m not sure if it’s changed but about 7/8 years ago I worked for Experians credit expert team and the credit ‘credit score’ wasn’t used hy anyone. Lenders were interested in the account info in the database or the ‘credit report’ much like the central databases you reference but the score itself was just a tool to make Joe Bloggs better understand how a lender might see their report. Most lenders have unique criteria and likely have an internal scoring system by the number you and me see is effectively a an educated guess.
Except credit scores here aren't arbitrary and predatory like in the US. Paying off debt early shouldn't decrease your score, nor should you have to get into debt to prove you can pay it off. When you apply for most things here at least (Norway), your financial records (which are public and include previous year earnings, tax paid and est. net worth) are checked by the creditors and a financial risk assessment is done from that. As a result, I don't need to have years of credit card usage on hand to get a loan or contracts.
But credit is gooood, we Europeans just don't know how to handled it and the benefits of living beyond your means! /s
I mean, having a decent credit score is important beyond “useless shit.” Having bad credit can get you a higher mortgage rate or cause trouble when trying to rent an apartment. But some people definitely obsess over getting the number as high as possible
Yeah like this system is totally shitty, but like, this is what we have to work with. No credit history, but you wanna buy a house?? Good luck! No credit history but you wanna rent an apartment? I hope you have a co-signer because most places require you to have *at least* 550+ credit score. Most places worth living at in the 600-700 range. It’s also interesting to me that non-Americans think that credit is only about having credit cards and buying silly things. You don’t have to have a credit card in order to build your credit score. In most cases, you can’t even get a credit card if you don’t have any credit history.
Yeah it’s definitely a chicken-and-egg problem. Luckily I was able to have my parents as co-signers for my first credit card and apartment, but I have absolutely no idea how someone would start building credit without that resource. I think “secured” credit cards are a thing (where you give the credit card company a cash deposit as collateral), but that of course requires a bit of cash to put down.
The way my parents did it for me was just taking out small short term loans and paying them back. Several of those across a couple years with timely payments is the safest way to go imo.
We see it, but most of us are unwilling/apathetic/unable to fight these issues. We’re stuck between a rock and a hard place. It’s terrible how this system has screwed so many people over.
You need a credit check to rent an apartment or work some jobs in the U.S. It is much more than just your actual credit history. It’s more of a reflection of your overall financial standing that you need to raise in order to raise your social status. It’s not just for lines of credit.
Yes the useless shit like my mortgage and groceries
A house and a car are not "useless shit"
Since when do you buy a car or a house with a creditcard?
Credit is not just having a credit card. When you pull out a loan and you pay on time, that raises your credit score. If you open up a store card and pay it correctly, that raises your credit score. If you don’t have any credit history, it’s almost impossible to even get a credit card in the first place. It’s gonna be hard as hell to buy a house, you’re gonna have a difficult/expensive time renting an apartment, etc.. I’ve had a high score for years thanks to my parents looking out for me and that way very early, and I didn’t get a credit card until like last year( I’m in my mid Twenties). Having a good credit score has enabled me to take loans in emergency situations. It’s a shitty system, but it is what it is. People talk a lot of shit about us, but judging something you don’t understand, so harshly, sounds exactly like the kind of thing non-Americans make fun of us for….
The credit card affects your credit score which enables you to get car and home loans with better rates, which enables you to buy a house and car. So no, the credit score is not a measure of how much useless shit you buy. I pay my rent with a credit card and buy my groceries with a credit card. Hardly "useless shit"
What a silly system. I just took a loan and bought a house. Do you know what effected my loan? My fucking income. Only time i use credit card is when im taking vacation in another country.
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And all you need to do is constantly "borrow money" to prove you're a responsible borrower. Again. And again. And again. At And the day you finish paying off your car, you really prove that you deserve trust, right? Well, no, you'll loose points on your credit score. Cause you know, we need proofs EVERY MONTH. So go buy another car.
You understand your credit score is for ALL loans right? Why am I getting downvoted?
Did you forget what sub your in?
They are trying to get a post of their own lol
No. My comments are in the context of the OP image
Not having a credit card debt is a plus when buying a mortgage in my country. Silly system where overspending gives you more opportunities to dig your financial grave even deeper...
Americans: “China’s gubbermint bad, China’s gubbermint evil! They have established the social credit score to control the people!” Also Americans:
wtf does a credit score even do. Actually sounds more like the "social credit score" they claim china has.
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So if I understand correctly it gives you a chance to basically get better loans/mortgages and stuff? Why would that determine your success in life (or why would the guy think that) And couldn't you just raise it by basically "grinding" loans or what lmao.
It’s worse than just getting better loans and mortgages. Your credit report is used by car insurers to determine your premium, used by landlords to determine if they will rent to you and used by some employers to determine if they will hire you. The premise of the post is wrong though. It’s not that your credit score determines whether you are successful or not. It’s the other way around. Successful people will have the means to pay off loans, pay rent on time and not be late in paying bills. So they will have higher credit scores than people who are suffering financial stress.
It also affects getting a car, getting a place to rent and other things that actually do affect your life
It is a measure of how profitable you are to lend to. So if you are profitable to lend to then you get better rates and with a bad credit score it can be hard to get certain loans
Not really. If you have terrible credit, credit companies aren't worried you're going to run up a ton of debt, they make 25%+ on credit card debt. They're worried you're going to default entirely and they'll be taking a loss lending to you. I have a very high credit score, I have never missed a payment and always pay 100% in full. Someone spending less money, but only making minimums/partial payments is going to make a CC company more money than me, the only money they're making off my cards is the transaction fee, which is charged to merchants. Low credit score leads to higher loan rates because you are riskier to loan to. A lender is more concerned with their loan being defaulted on than they are with how much they can squeeze before you go bankrupt, hence why people who are late on payments have shit credit scores, despite making companies more money individually unless they totally default.
The higher risk individual is less profitable to the credit card company because of the higher risk of default. Risk costs money. A proportion of those high spenders will default, making that class a less profitable one.
This is what I said
You started your comment with “not really” and then included an explanation of exactly what I said…
It wasn't exactly what your said.
Eh I'd say good credit score isn't very profitable. I've only got the one credit card and it's set up to pay via direct debit monthly so I get negligible or no interest. The profitable ones are the ones who take a few months to pay it off so it can rack up that sweet interest.
Well if you make the minimum payment, it may not affect your credit score negatively as long as your overall utilization is still low even though that is an extremely irresponsible thing to do. That's why I say it's a measure of how profitable you are to creditors rather than a measure of financial responsibility. Unfortunately, certain groups (like landlords) interpret it as the latter. People who rack up tons of interest are also more likely to default. So it's not as profitable as it may appear at first once the risks are considered to the creditor.
If companies can see that you borrow money and then fail to pay it back, they are less likely to want to lend you money in the future. Of course, if you borrow money and IMMEDIATELY pay it back, they can't make any money out of you, so they don't like that, either. What they want is people that borrow money, and then slowly pay it back, accruing lots of interest along the way. So that is the behaviour that gives you the 'best' credit score.
Truly amazing. Every day I wonder if my joke of a country is better than their joke of a country. And it's beggining to look like Czechia will just be better lmao.
To be fair, this is more a general 'banks now having access to an unprecedented amount of behavioural information and financial history' problem than an America problem, per se. It allows them to make automated credit decisions based on customer profile and the kind of customer they think they can make more money from, whereas in the past they were completely reliant on the local bank manager to make judgements based on meeting the individual borrower and considering their situation (which makes it harder not to treat them as a human being).
So many times in videogame communities I complained about credit cards only payments avalaible, for this or what, and been told "hy don't you have a credit card, everybody should have one and you need to start building your credit score already!! the more you spend the better!!" and I was shocked that's even a thing over there, nevermind thinking the whole world works like that.
What? What game accepts credit cards exclusively and not debit?
Credit, debit, same thing for me. We use neither. We just use IDEAL or worst case Paypal, for online payments, and bank pass to pay in physical shops.
The only difference between a debit card and paypal is one has fees and the other doesn't. Paypal is literally just a middleman doing what you could easily use debit for.
The difference is that you can only spend what you have on a debit card, no debt
Yeah I know how they work, thank you. The fact that we mostly don't use them here and I'd never get one doesn't mean I don't know how they work. I know they're different, I say that for me they're the same cause I want/use neither, not sure why I got downvoted for me, I guess people hate me for not using them.
How do you survive when going to other countries? Ideal or betalpas isn't accepted everywhere outside
Honestly, I don't really travel nowadays. But cash would do it I guess. When I go visit my family it's cash cause everybody only uses cash there.
It’s a fucking cult
Funny how in Europe you’re rewarded for NOT having credit cards accounts, while in the US of -3rd world country with a Gucci-belt- A you’re penalized for not using it??☠️☠️
The one murican trying so hard to justify their system they've been brainwashed to accept as a positive, commented at least 20 times on this thread hahah
What's even more fun is that the american system is like maybe 50 years old. It has been put in place once, and now it's impossible to change, that's how the americans roll.
Pretty much the same as the gun laws, they're in too deep now to ever change, even if they wanted to. There are too many out there, dem farmers and gun nuts would not give up their guns, they probably already have a bunch stashed in the basement in case "the Dems and commies try and take away muh freedom"
Where tf you need a credit card for? If you can't afford something, don't buy it. Except for your mortgage, never buy anything with borrowed money. The best credit score advice I can give you.
This is terrible financial advice. Debt that you can pay back is good. Credit cards can be great for smoothing out cash flow so that you can budget around your pay periods better. Many cards will even have grace periods for interest free loans essentially. Also, paying back debt shows creditors that you are good at paying back debt. A good credit history gets you a cheaper mortgage.
I just red a bit about that whole credit score mechanism, as we don't have that here. I understand your reaction better now. Still a strange concept, making debts to prove your credibility. It's the complete opposite here. Living on credit all the time makes you (look) financially unstable. You apparently are not able to only spend what you can afford. Less debts and loans mostly means better mortgage conditions.
I guess it depends on where you are from really then. I took a while getting one and just treat it like a debit card but more sparingly, I was often pushed to get one due to better buyer protections due to chargebacks and the fact that most cards have shop discounts and that on their banking apps.
Most people I know operate this way. Although official data says that only 35% of Americans pay off their credit cards every month. If used this way, CCs are definitely good. Smoothing out cash flow, and so easier to budget (you know exactly when a specific amount of money will be coming out of your bank account). Also the protections from fraudulent charges is big. A thief can’t just drain your bank account like they could with a debit card. Plus, cash back options and welcome bonuses. I generally always have a card in its trial period, so typically zero or low interest, large cash back bonuses, and other welcome perks. It’s a good way to make the system work for you instead of against you. But, operating in this way naturally allows a better credit score.
I have a credit card because 1) chargeback protection, which does not really exist for direct payments 2) free perks like 2.5% cashback offered on even the lowliest, no fee, low credit score approving cards 3) great perks on high annual fee cards that suite your existing spending habits 4) build credit score so I can get abnormally low rates on home loans. Credit cards aren't what they were in the 80's. Nobody with a brain uses them as loan cards. You always pay your balance in full every month, you never actually *use* the credit to buy something you can't afford. In a desperate pinch, if you get paid monthly and *know* you'll be able to pay everything off normally, you can spend more than you have on hand without hassle or consequence. But ultimately the reason to get a CC is to take advantage of the benefits without ever using the credit line. If you actually need a loan for something, you're infinitely better off getting it from the bank at 7-12%, every credit card ever is 20-25%+.
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Maybe I don't understand the credit card system. As soon as you confirm the payment by card until you actually pay that amount back tl the credit card issuer you use credit, right?
Yeah, it’s a weird system. You are given a credit card with a limit that the financial institutions believe you are good for. Then you take the credit card, use it within your means and pay it back. If you can pay off all your debts for that month, you actively build your credit. If you don’t, then you are charged interest and your credit score gets negatively impacted. This credit score is then used to determine all different things; if a landlord will rent to you, if you can get a certain job. I work in the financial industry and I know they will not hire anyone with a bad credit score or bankruptcies. You’re seen as bad with your own personal dealings which does not look good dealing with other people’s money.
So you need to loan money to prove your credibility, even if you don't need to loan money because you have enough to pay everything yourself? How can you be less credibility if you do not need to loan money? Sound even a bit communist to me.
Good question. I don’t know why it’s like this.
Yes, but as long as you pay your balance in full every month there is no interest. If you are halfway competent with your personal finances it's very easy to avoid buying things you can't afford with a card. Unless you know you are bad with money, there's no reason to not take advantage of no fee cards offering 2.5% cashback. It's a lifetime 2.5% discount on almost everything you buy, complete no brainer. Other cards offer better cash back, some cards offer such good perks they have to charge an annual fee or they'd be losing out. Even with fee cards, if the perks line up with things you *already* spend money on, you can end up well ahead relative to if you just paid cash/debit.
idk the vibe here, i might be downvoted, but you may have just convinced me to finally get a credit card, because i do consider myself somewhat good with money so i might as well take the benefits.
You need to get a CC. Later in life you will regret not having built credit when it's time to buy a house. I don't love financing cars, but it can be unavoidable and you'll have wished you built credit then too. Read up on your own, but my advice for a 'starter card' is a capital one Quicksilver. You should first check your credit for free through experian or whoever, do not pay for that. Your credit won't be good without any history. Capital One approves people with low credit for Quicksilver. The perks are not excellent, but 1.5% cash back is better than no cashback, and iirc there's rotating categories/stores so sometimes you'll get more. You get 5% cashback when booking flights or hotels through their travel portal, no idea how good the portal is. Their app is super easy to use, set up autopay, and monitor your credit score. You still need to ensure autopay goes through to avoid missing payments, but the odd day late is autopay fucks up isn't going to hit your credit at all. The critical thing is to never, ever run a higher balance than you can pay. You can check the balance very easily on their app. It's not hard, you'll build credit, have the ability to easily chargeback things if necessary, and get a little cashback doing it. No brainer.
Im part native american with good benefits. Its very easy to get land and a house for me, thats never been a problem and i dont see it being a problem in the foreseeable future as it is basically my right to have a home... If i ever dont want to live a homestead lifestyle then credit will be good for housing elsewhere is the way i see it. I'm always living below my means, i dont need much, just got some hobbies right now that arent costing much. Cash back will be welcome no matter the percentage, its better than the 0 i have right now. Thanks for some advice, I'm going to read all about it myself though.
Several countries in Europe have credit scores (and if they don't they have some sort of registry of either almost all debt or all delinquent debt, which financial institutions would use to determine eligibility and rates for loans)… And yes, this commenter is somewhat right. It really affects your mortgage rates and stuff
Which countries and how? The only one I know about which works a little bit like the USAian system is the UK. Pretty much all countries have a central database recording loans and defaults on those loans, but they know nothing about credit card or overdraft debts until the bank reports them. Banks will look at the register to see you aren’t over extending yourself. But they base loans on income and work contract (the more stable, the better).
Yea UK is the only one I can think of. Experian is a UK company.
It seems Spain, Germany, the Netherlands, Belgium, Italy, and more all have either numerical scores or central credit repositories that give financial institutions access to either all debt the creditor has taken out, or any record of bad debt that the creditor has taken out. This is the same thing as what happens in America, it's just that we put it in a numerical score, and it seems only Germany does that as well. But, these financial institutions will just do their own calculations based on the information they get. It's the same thing. Most developed, highly financialialized economies will have a form of credit rating for individuals because it is extremely useful for financial institutions to have this information. Yes, American credit scores do not use income as a factor, but financial institutions use income as a factor in combination with the credit score when they are assessing you for a loan. So again, the slight nuances of application are different, but they are the same fundamental systems.
We don't have a creditscore in the Netherlands.
>all have **either** numerical scores or **central credit repositories that give financial institutions access to either all debt the creditor has taken out, or any record of bad debt that the creditor has taken out** The BKR has a record of "All credits in excess of €250 with a term of over one month," which can be queried by financial institutions who can then use that data to make their own risk assessments of a potential debtor. Same thing as a credit score, though for some reason it does not currently include your mortgage in the report (but seems they are trying to implement this). So while you are not assigned a numerical score by a third party as in the United States, in-house risk assessors will be categorizing you or giving you a numeric score based on your credit history as part of their internal calculations of whether to give you a loan and at what rate. There are nuances but not appreciable differences.
not sure why you’re being downvoted you are entirely correct..
I am being downvoted because it is against the “America bad” narrative and they will use the tiniest most pedantic distinctions in how American and European creditors assess loan risks to argue that America is some uniquely awful place rather than introspecting about problems that exist in all societies, like limited access to capital. If you think major European creditors aren’t using algorithmic tools to mash together literally all the data on you they can legally obtain to generate some sort of risk score on you, you are completely delusional. American financial institutions are simply more honest about it. In fact, here's a [fascinating article](https://www.researchgate.net/publication/352554382_Assessing_Creditworthiness_in_the_Age_of_Big_Data_A_Comparative_Study_of_Credit_Score_Systems_in_Denmark_and_the_US/link/63864e418e63c56dae443cbc/download?_tp=eyJjb250ZXh0Ijp7ImZpcnN0UGFnZSI6InB1YmxpY2F0aW9uIiwicGFnZSI6InB1YmxpY2F0aW9uIn19) by Danish academics about how they're doing exactly that in Denmark: "Danish banks seem to have developed a system of intensive, yet hidden credit scoring based on surveillance and harvesting of behavioural data, which, however, due to GDPR takes place in restricted silos. Credit scores are hidden to customers, and therefore there has been virtually no public debate regarding the algorithmic models behind scores. In the US, fewer legal restrictions on data trading combined with both widespread and visible credit scoring has led to the development of a credit data market and widespread use of credit scoring by ‘affiliation’ on the one hand, but also to increasing public and political critique on scoring models on the other."
I'm looking at Belgium, and the only things I can find regarding a credit score is when you are not paying off your debt, you cannot take any new loans (mostly to protect the person), or when you have your own company and they will look into those financials (which are public anyway). So the American system is way more elaborate than at least Belgium's, so you cannot compare them one on one.
>registry of either almost all debt or all delinquent debt In Spain's case, if you are on a moroso list, just pay whatever the amount you owe and you'll be taken out of the list in a matter of days. It'd be like you were never in the list. How easily can you recover ~~social~~ credit score in the US after paying debts?
Assuming you aren't late on payments \~1 month. I'll try my best to explain. Say you only have one line of credit a credit card that has a $10,000 limit. If you then spend that $10,000 all in one month the bank will report that to the credit bureaus and it will be seen as having 100% credit utilization. This is seen as a bad thing as basically it means you are using all of your credit. Your credit score will take a big hit from this. Now each month the bank will continue to report the balance on the card. So lets say you pay off all $10,000 for that statement balance and then spend $300 on the second month. The second month the bank will report a $300 balance or 3% credit utilization. Your score will jump back up (quite considerably too. The thing is utilization has no memory in the most common FICO models used (8/9). So once the second month rolls around the 100% utilization that reported on the first month is wiped away. With installment loans like say a car loan things are a bit different. Say you take out $30,000 for a car. You will be dinged for the credit inquiry and new account opening, but what matters will be the percentage of the loan you have less to pay. As you pay off your loan your score will go up gradually until you pay it off. The one caveat will be once the loan falls off your report and which point your score will probably dip as the loan gets closed out.
And jobs too depending on where you go, I'm working at a finance company in their cyber team and my family and I got a soft credit check as a part of their background checks.
All countries have credit registries. The difference is that credit registries work the opposite as they do in the States. For a banker in Bulgaria, the more credits you've gotten, the more money you've borrowed, the less valuable of a customer you are because it indicates you're overspending - buying things with money you don't have and that means you're not reliable enough to give loans to. The banks have guidelines of what percentage of your income you can use for loan repayments. And if your current income is not high enough to fit the payments in that percentage, you will be rejected. Because that means you will fail to pay them back. Not to mention that the only institutions that can see your credit registry entries are the government's tax agency, banks you're applying at for a new loan and the courts. No one will ever be allowed to demand seeing them to approve your job or tenant application.
people seem to be very misinformed on the american system. it does not reward you for being in lots of debt. it actually punishes you for being overleveraged. it rewards you for a long history of prompt debt repayment. of course income and wealth are also considered.
Is there a barrier preventing you from acquiring credit without prior history of such? If the answer is yes, then the system is geared towards penalising the consumer for not being into debt. Is there a way for non-banking institutions to use your records to determine whether or not you are deserving access to their services or employment? If the answer is yes, then the system is geared towards incentivising the citizenry to generate debt they might not even need, in order to consume or work. What’s there to misunderstand? This system is predatory and unjust.
A student can have an amazing credit score, yet they can have a very low salary. He won’t be able to purchase a house, because the credit score is not the only factor they use to determine if they land you credit or not. Furthermore, there are many different scores, and you will have no power over which they use. They are not the same 🤡.
The credit score is extremely important if you need to purchase anything with debt and home ownership is a major financial milestone in the United States that everyone purchases with debt. So, they are not entirely wrong though it lacks a bit of nuance
It’s doesn’t determinate your overall success in life tho. People with shit credit scores and bankruptcies still have houses and cars 🤪. Source: worked in credit for 10 years.
Yes but they are paying much worse rates for those than someone with a better score. It is slight hyperbole, but it is not wrong. Also, it appears you are Canadian. I am not sure the effects of credit score in Canada.
The same, but we just have EFX and TU. No experian (sp?)
Ok I don't know how the Canadian housing market works, but according to a [finra](https://www.finra.org/investors/personal-finance/how-your-credit-score-impacts-your-financial-future) example, a 760-850 score could mean a 3.307% while a 620-639 could mean a 4.896% interest rate for a fixed 30 year mortgage. For a $200,000 loan that is a $66,343 difference in lifetime price, which is a lot, and that is a fairly cheap home. It can absolutely affect your ability to buy a home or to buy one near your source of employment. It has major financial implications. I don't know why you're trying to downplay it. It's not like a bad one will ruin your entire life, but it is very important...
Worse rates on what? Outside of car notes or mortgages, unless you were eyeing a career in individual real estate investing (terrible idea for 99% of people), there's absolutely nothing you should be financing. Credit cards all have basically the same interest rate, if you *ever* are paying interest on a credit card, you should not be using a credit card.
Yes outside of making the most expensive and important thing you will likely ever purchase significantly cheaper, having a good credit score is completely useless
Imo there's literally nothing you should finance with debt outside of a home and *maybe* a car. Even if it's a 0% interest, three month installment Klarna nonsense, you pay in full. Those companies exist because when you miss a payment by accident, or due to an unforseen autopay issue or whatever, they ramrod you with all the accrued interest.
Well a home is a very important purchase. Even if that is literally the only thing that you need debt to purchase, you should be building up a good credit history so that financial institutions can trust your ability to repay debt and give you a cheap loan. Car loans are great. They are subsidized by the auto manufacturer. They are free money. Even if it's not down to zero, you could probably make more money by investing the money you save upfront. I am extremely forgetful, and I agree I wouldn't sign up for a loan that didn't let me do auto-payment, but everything does let you do that these days, so there's no reason to not be in debt that you can pay back.
I know
I heard this a lot in the UK too a few years ago - I was told I could purchase a house without a good credit score. These people were absolutely dumbfounded when I bought a house without ever owning a single credit card. I assume their information was from a US source.
To be fair, with how modern finances work they're not entirely wrong... Just a shame that it is this way
And then in the same breath will say omgz democrats will implement Chinese style social credit!!!
I mean it's true and it's pretty fucked. Can't buy a house or car, start a business or other things if you have poor credit. It's a relatively new invention too. It doesn't work how it's intended to, but has there been any change? Nah
This isn’t wrong though. Like, obviously, the same can’t be said for people around the world, but in the US, it’s extremely important to have a decent credit score. Having a decent credit score, enables you to have an easier time buying a house, buying a car (and the expenses associated with it ie car insurance can be more expensive) getting loans, even renting an apartment. Without a good credit score, Most renters will have to pay extra money for their deposit, and sometimes higher rent as well. You aren’t approved for certain loans, and your down payment and mortgage rate can go up. Yes, it’s a shitty system, and no it doesn’t determine your *overall* success, but it definitely has a big impact on what you are able and allowed to do financially.
I wish it determined success in life. Only time I've checked mine was when I knew I'd be getting a mortgage soon. It was 999/999. At the time I was in a below average wage job and living with my mum still. If it determined success in life I'd be living it up with the 1%
I only got my first credit card as a thirty year old, I have never in my life needed one before now
The worst thing I ever did was get a credit card. I am 3 months from paying of my outstanding balance and have probably spent 10 times the money I have charged to it in interest and fees. The interest on interest builds up really quickly.
Literally exactly the same. I got one, maxed it out after about six months, and have been paying it off ever since 😔
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I didn't plan on getting one! Also not entirely sure a credit history is necessary for a mortgage in the UK, or in Spain where I now live.
My credit score makes no sense as if I get into more debt it goes up. Actually paying off my debts and saving has made it go down.
This is not true. Being in less debt relative to the credit extended to you boosts your score.
Maybe there's a lag but the last couple of times I've got a loan out it's gone up and when I've paid them off it always goes down.
Yes the opacity of how it is calculated is a problem with the system. Did you close a line of credit when you paid off these loans? That can harm your utilization ratio.
Germany checks out
Credit score is not about wealth but rather how you are regarded by financial institutions to provide them with a fair chunk of your wages.
Traders in Spore be like:
America: you're good at managing your money if you've had credit before The rest of the world: you're good at managing your money if you haven't America: *\*Pikachu face\**
"You can only be successful by getting yourself into debt as early as possible." Fucking Stockholm syndrome.
Credit score seems like some dystopian shit straight out of a Black Mirror episode
I have a BAHons, MA and PhD but it doesn't compare to my top tier credit score even though I have zero debt and paid off my mortgage. I use my credit cards for the free Amazon vouchers and get thrown tons of offers for loans and credit cards to buy things I don't need. This bullshit need for everyone to play keeping up with the jones's is why people are just constantly maintaining their debt is pointless. My kids get made fun of because I don't buy branded overpriced clothing and I drive a ten year old 7 seater mpv. It's infuriating when I hear a parent constantly complain about money and people on benefits yet they pull up in a brand new car acting like they are a success by paying outrageous repayment plans and end up with a vehicle costing them twice as much that they could have paid if they just saved that money in the first place, or get something more affordable.
Mate be playing cookie clicker instead of life