Fun fact: boomers entered the workforce before credit scores existed. Credit scores were created in 1989, but people treat them like they were in the bible.
Do people want to go back to the system that was used before credit scores? Where the person serving the loan just made the choice based off if they thought you seemed trustworthy? Aka were a white man who went to the same church as them.
Maybe the answer is less reliance on a debt based economy. Maybe the answer is to not bake into the fabric of society a mechanism that makes a lifetime of debt a foregone conclusion. Kill the loan shark for all I care. Why does everyone need a loan? Because it’s built to require one.
In an economy where skill (supposedly) correlates to income, income is expected to increase across a lifetime.
Therefore 25 year-old me borrowing excess income from 45 year-old me is a good thing, purely egotistically.
Furthermore lack of debt means every big purchase is preceded by hoarding. No matter which way you look at it this is bad for society. If I had 50k€ laying around it would be much more efficient resource-wise to lend it to my neighbor so they can build up their business, than to keep the money under my mattress and tell them to tighten their belt for another five years. They get a business, I get a bit more money in the end, everyone is richer and the economy is stronger.
Economics are not a zero-sum game. This belief that “if someone is making money then someone else is getting robbed” is deeply damaging, especially as it seems to be the main economic driver for Trump’s batshit insane administration.
Debt is good. Predatory practices are not. That is what regulations are supposed to curtail. Where I live “credit scores” are not a thing, banks only loan to you based on proof of income, a declaration of open credit lines, and your civil status (age, partnership status, dependent people). Racism and sexism are of course an issue, although if caught the banks face big fines. But it’s not like American credit scores are colorblind…
Ok, so, telling lenders they cannot vet lenders is not reasonable.
Our critiques of credit scores does not automatically mean we want them abolished in favor the previous wink and a handshake.
But American credit scores don’t measure your likelihood to pay back debts, they measure the likelihood of a lender to make money off of you. Those are nearly, but not quite, the same thing, and our current system, as the previous poster said, leads to a lifetime of debt obligations.
What we want is for life to not be dependant on debt.
Every system is racist because every system is human and humans are flawed. Credit scores include systemic racism and banks making calls based on their gut is direct practiced racism. Systemic racism is much easier to slowly over time work out as long as you recognize it. But the only way to stop direct racism is to take at least some of the power away from individuals.
The systemic racism like the structural one in the argument can only be gotten rid of if you entirely removed the concepts of loans. The problem with that is it is impossible. The majority of the folks who have attempted to outlaw usury and loans entirely are not really looked back upon fondly in a historical sense.
OR, maybe we need to make a new system. It’s not just credit scores or total anarchy, have some imagination, fuck.
For example, maybe a system where paying your credit card off on time or consistently having enough cash to not even need a credit card means that your “score” goes up. If it is truly about being reliable then that’s a no brainer, and yet…
We also shouldn’t be needing so much in the way of loans anyway and we deal with that by forcing minimum wage increases. It’s insane how much people have to put on cards and how normal it is to barely manage a monthly payment on a 30-40 year mortgage. The US and Canada specifically demand that you own a car and the weather is often very hard on them, too, yet once again the prices go up and up and you have to hope for the best that you can afford the payments which hide their increases behind and extended term or only a few more dollars which adds up to thousands on the other end.
Other countries have them as well but the US has the most pervasive one.
Your credit score is based on the history of accounts and payments. If you have late payments it goes down. If you have many accounts for a long time in good standing it is goes up. A person who has many accounts and has paid off everything for 15 years might have a score of 800. Someone who has missed credit card payments and has things in collections might have a 550.
When you go to get a loan for a house or car the high credit score person might be given a 5% loan and the low credit score person no loan or a very poor rate sometimes over 20%. It can take years to change your credit score.
Fun fact: boomers entered the workforce before credit scores existed. Credit scores were created in 1989, but people treat them like they were in the bible.
Do people want to go back to the system that was used before credit scores? Where the person serving the loan just made the choice based off if they thought you seemed trustworthy? Aka were a white man who went to the same church as them.
Maybe the answer is less reliance on a debt based economy. Maybe the answer is to not bake into the fabric of society a mechanism that makes a lifetime of debt a foregone conclusion. Kill the loan shark for all I care. Why does everyone need a loan? Because it’s built to require one.
As a person with very little debt, this is the way.
In an economy where skill (supposedly) correlates to income, income is expected to increase across a lifetime.
Therefore 25 year-old me borrowing excess income from 45 year-old me is a good thing, purely egotistically.
Furthermore lack of debt means every big purchase is preceded by hoarding. No matter which way you look at it this is bad for society. If I had 50k€ laying around it would be much more efficient resource-wise to lend it to my neighbor so they can build up their business, than to keep the money under my mattress and tell them to tighten their belt for another five years. They get a business, I get a bit more money in the end, everyone is richer and the economy is stronger.
Economics are not a zero-sum game. This belief that “if someone is making money then someone else is getting robbed” is deeply damaging, especially as it seems to be the main economic driver for Trump’s batshit insane administration.
Debt is good. Predatory practices are not. That is what regulations are supposed to curtail. Where I live “credit scores” are not a thing, banks only loan to you based on proof of income, a declaration of open credit lines, and your civil status (age, partnership status, dependent people). Racism and sexism are of course an issue, although if caught the banks face big fines. But it’s not like American credit scores are colorblind…
Ok, so, telling lenders they cannot vet lenders is not reasonable.
Our critiques of credit scores does not automatically mean we want them abolished in favor the previous wink and a handshake.
But American credit scores don’t measure your likelihood to pay back debts, they measure the likelihood of a lender to make money off of you. Those are nearly, but not quite, the same thing, and our current system, as the previous poster said, leads to a lifetime of debt obligations.
What we want is for life to not be dependant on debt.
That was a great writeup. I see that “someone earning money hurts everyone else” mentality on Lemmy constantly, its maddeningly stupid.
It’s so cute you think that credit scores aren’t racist.
https://www.cnbc.com/2022/10/11/how-structural-racism-plays-a-role-in-lowering-credit-scores.html
Every system is racist because every system is human and humans are flawed. Credit scores include systemic racism and banks making calls based on their gut is direct practiced racism. Systemic racism is much easier to slowly over time work out as long as you recognize it. But the only way to stop direct racism is to take at least some of the power away from individuals.
The systemic racism like the structural one in the argument can only be gotten rid of if you entirely removed the concepts of loans. The problem with that is it is impossible. The majority of the folks who have attempted to outlaw usury and loans entirely are not really looked back upon fondly in a historical sense.
OR, maybe we need to make a new system. It’s not just credit scores or total anarchy, have some imagination, fuck.
For example, maybe a system where paying your credit card off on time or consistently having enough cash to not even need a credit card means that your “score” goes up. If it is truly about being reliable then that’s a no brainer, and yet…
We also shouldn’t be needing so much in the way of loans anyway and we deal with that by forcing minimum wage increases. It’s insane how much people have to put on cards and how normal it is to barely manage a monthly payment on a 30-40 year mortgage. The US and Canada specifically demand that you own a car and the weather is often very hard on them, too, yet once again the prices go up and up and you have to hope for the best that you can afford the payments which hide their increases behind and extended term or only a few more dollars which adds up to thousands on the other end.
as a non-american: what the fuck is a credit score? who the fuck uses credit?
Other countries have them as well but the US has the most pervasive one.
Your credit score is based on the history of accounts and payments. If you have late payments it goes down. If you have many accounts for a long time in good standing it is goes up. A person who has many accounts and has paid off everything for 15 years might have a score of 800. Someone who has missed credit card payments and has things in collections might have a 550.
When you go to get a loan for a house or car the high credit score person might be given a 5% loan and the low credit score person no loan or a very poor rate sometimes over 20%. It can take years to change your credit score.