9 ms·

How would you get history if no one trusts an id with no history?

zAy0LfpBZLC8mAC 9y ago
https://en.wikipedia.org/wiki/Tit_for_tat https://en.wikipedia.org/wiki/Tit_for_tat
jeremyjh 9y ago
This is not a new problem. The solution is the same as it is today, you must build a history with small limit revolving lines, cosigners and guarantors.
groby_b 9y ago
Slowly. Ask anybody who immigrated to the US, it's a royal pain. (Especially since you have global brands - like e.g. Mastercard - incapable of referencing their data from outside the US). You start with a secured credit card for $200. Next, you buy a clunker of a car for all-cash. At that point, you have enough history to get a CC with $500-$1,000 limit. Now you pay everything through that CC. And make damn sure you're always 100% on time - a single slip costs you a lot of time setting up that history. After a year or two of that, you usually get a CC covering one or two months of income. Keep building. It's a really painful process.
- goialoq 9y ago
  Or you start by getting a job with direct deposit, and depositing some savings in a bank account.
  - boondaburrah 9y ago
    That doesn't help at all, unfortunately.
  - defined 9y ago
    In the USA, what builds credit scores is showing a pattern of using revolving credit and servicing the debt over a period of time. You are penalized if you use too much of your available credit. You are also penalized if you use too little of it, as I found out when I paid off the balance of the one remaining card that held a balance, and saw my credit score hit by about 15 points shortly thereafter. There are other rules, too. Basically, I can only conclude that we are encouraged to be 'good citizens" by borrowing money and paying interest on it while slowly paying back the principal. People who live on a cash-only basis, which was considered to be a respectable practice not that long ago (borrowing was shameful) have terrible credit scores. So what, you may ask? There are very real and increasing disincentives to having bad or no credit. Creditworthiness (in the form of a nice, easy to understand number) is being taken more and more by various entities as a sign of responsibility and even good character. A credit score is now used by some entities, beyond the mainstay car dealers, to judge risk and character: apartment rentals and employers, to name two. I'm not suggesting that all employers and apartment management companies do this, only that the trend (I have no citations but it should be searchable) is on the increase. The bottom line is that in the USA today, credit scores depend on how - and how much - you borrow and repay. Furthermore, the higher your credit score, the better you are treated, to a degree: better rates on loans, no problems getting a job (all other things being equal), and so on. The opposite is true for bad scores. This is one of the many ways we are corraled into greasing the gears of the economy, and it is a wasteland for cash-only operators (unless, I suppose, they have a huge amount of cash).
    - syshum 9y ago
      >>Basically, I can only conclude that we are encouraged to be 'good citizens" by borrowing money and paying interest on it while slowly paying back the principal. People who live on a cash-only basis, which was considered to be a respectable practice not that long ago (borrowing was shameful) have terrible credit scores. Welcome to the new consumerism.... Being Thrifty, having savings, and generally being responsible with your income is bad. The Government does not like it and punishes you with low/no interest on savings and inflation that outpaces that savings, Banks hate it because they would rather you spend spend spend so you need their loans to live above your means so they can not only get interest but maybe you will also over draft on your checking and they can kill you in fees. Retail shops hate it because they need to sell you increasing amounts of cheaply made poor quality product you must replace every 12-18 months The economy lives and dies with debt. If everyone started saving and living with in their means tomorrow the national economy would come to a screeching halt and we would have a depression that would make 1929 looks like a boom year
- pxeboot 9y ago
  American Express can reference and transfer credit if you move abroad. https://www.americanexpress.com/global-card-transfers/ https://www.americanexpress.com/global-card-transfers/
- defined 9y ago
  I'll second that. Had a similar experience.
- woolvalley 9y ago
  You can also go with capital one which has an unsecured $500 credit limit immigrant credit card. Citibank also had a program for new immigrant credit cards. The citibank one references your current income, I got a card with a $10k limit. This was ~6 years ago so YMMV
  - solotronics 9y ago
    yes but if you can make a new independent "ID" cert at a whim then any unsecured debt instrument will be subject to massive fraud
- ataturk 9y ago
  How is that a "really painful process?" It's the same process I went through in my early 20s as a native born American citizen! I got a MasterCard with a $500 credit line in like 1993 and used it sparingly. I later got an apartment and paid my rent and bills on time. I eventually bought a car on a loan. It was not hard establishing credit, it just meant not being a total deadbeat.
metellus 9y ago
The same way someone new (young people, immigrants) gains history now. Start with something low/no risk in order to build history.
richardknop 9y ago
You don’t really need a history. I.e. it’s very possible to get around just fine without credit card or loans. Most people I know in continental Europe just have debit cards and only buy things they have enough cash in their bank account to afford. The only exception is mortgage which is usually the only loan people take their entire life. And it’s possible to get it without having a credit score. You’ll need your complete history of employment and addresses and based on that bank can borrow you money. Perhaps car leasing is another loan people might take but that works similar way. Borrowing money to buy everything seems to be an American fetish (but also present in U.K. which is most America like part of Europe and Asia, not continental Europe though). It always seemed insane to me to have to borrow money from bank to buy a latte or groceries.
- lmm 9y ago
  Having my consumption expenses separate from my actual bank account is quite nice - it means my bank account statement gives me a quick summary of what I spent this month (x went to my mortgage, y went on utility bills, z went on buying things) and then my credit card statement has the details. You could see it as borrowing money for your latte but you can also see it as being billed at the end of the month for your lattes which is normal for many things. In principle I'm all about living within your means, but really why wouldn't I do things this way and get a month's grace on paying for everything and free plane tickets every so often?
  - Double_a_92 9y ago
    Because I don't want to pay an extra 2% "tax" to the banks, for loans that I don't need? The only place I use a credit card is online. So i can pay quickly and worldwide.
    - lmm 9y ago
      How do you end up paying anything? I don't. A few shops charge a fee for using a credit card, in which case I'd use cash[1], but that's rare. [1] Not actually true, because I find the convenience of the card is worth it - but I understand people taking the opposite position.
kelnos 9y ago
The same way you do now, as a new adult: apply for a very low-limit credit card, get an older relative to co-sign a loan for you, etc. Over time you build history that shows you are (or are not) trustworthy to lend to.
djrogers 9y ago
You skip it - don’t have a credit score, and when you finally get around to buying a home use a lender that will manually underwrite your mortgage. The fallacy of needing to use debt for day to day living is ruining people.

https://en.wikipedia.org/wiki/Tit_for_tat https://en.wikipedia.org/wiki/Tit_for_tat

This is not a new problem. The solution is the same as it is today, you must build a history with small limit revolving lines, cosigners and guarantors.

groby_b 9y ago

Slowly. Ask anybody who immigrated to the US, it's a royal pain. (Especially since you have global brands - like e.g. Mastercard - incapable of referencing their data from outside the US). You start with a secured credit card for $200. Next, you buy a clunker of a car for all-cash. At that point, you have enough history to get a CC with $500-$1,000 limit. Now you pay everything through that CC. And make damn sure you're always 100% on time - a single slip costs you a lot of time setting up that history. After a year or two of that, you usually get a CC covering one or two months of income. Keep building. It's a really painful process.

goialoq 9y ago
Or you start by getting a job with direct deposit, and depositing some savings in a bank account.
- boondaburrah 9y ago
  That doesn't help at all, unfortunately.
- defined 9y ago
  In the USA, what builds credit scores is showing a pattern of using revolving credit and servicing the debt over a period of time. You are penalized if you use too much of your available credit. You are also penalized if you use too little of it, as I found out when I paid off the balance of the one remaining card that held a balance, and saw my credit score hit by about 15 points shortly thereafter. There are other rules, too. Basically, I can only conclude that we are encouraged to be 'good citizens" by borrowing money and paying interest on it while slowly paying back the principal. People who live on a cash-only basis, which was considered to be a respectable practice not that long ago (borrowing was shameful) have terrible credit scores. So what, you may ask? There are very real and increasing disincentives to having bad or no credit. Creditworthiness (in the form of a nice, easy to understand number) is being taken more and more by various entities as a sign of responsibility and even good character. A credit score is now used by some entities, beyond the mainstay car dealers, to judge risk and character: apartment rentals and employers, to name two. I'm not suggesting that all employers and apartment management companies do this, only that the trend (I have no citations but it should be searchable) is on the increase. The bottom line is that in the USA today, credit scores depend on how - and how much - you borrow and repay. Furthermore, the higher your credit score, the better you are treated, to a degree: better rates on loans, no problems getting a job (all other things being equal), and so on. The opposite is true for bad scores. This is one of the many ways we are corraled into greasing the gears of the economy, and it is a wasteland for cash-only operators (unless, I suppose, they have a huge amount of cash).
  - syshum 9y ago
    >>Basically, I can only conclude that we are encouraged to be 'good citizens" by borrowing money and paying interest on it while slowly paying back the principal. People who live on a cash-only basis, which was considered to be a respectable practice not that long ago (borrowing was shameful) have terrible credit scores. Welcome to the new consumerism.... Being Thrifty, having savings, and generally being responsible with your income is bad. The Government does not like it and punishes you with low/no interest on savings and inflation that outpaces that savings, Banks hate it because they would rather you spend spend spend so you need their loans to live above your means so they can not only get interest but maybe you will also over draft on your checking and they can kill you in fees. Retail shops hate it because they need to sell you increasing amounts of cheaply made poor quality product you must replace every 12-18 months The economy lives and dies with debt. If everyone started saving and living with in their means tomorrow the national economy would come to a screeching halt and we would have a depression that would make 1929 looks like a boom year
pxeboot 9y ago
American Express can reference and transfer credit if you move abroad. https://www.americanexpress.com/global-card-transfers/ https://www.americanexpress.com/global-card-transfers/
defined 9y ago
I'll second that. Had a similar experience.
woolvalley 9y ago
You can also go with capital one which has an unsecured $500 credit limit immigrant credit card. Citibank also had a program for new immigrant credit cards. The citibank one references your current income, I got a card with a $10k limit. This was ~6 years ago so YMMV
- solotronics 9y ago
  yes but if you can make a new independent "ID" cert at a whim then any unsecured debt instrument will be subject to massive fraud
ataturk 9y ago
How is that a "really painful process?" It's the same process I went through in my early 20s as a native born American citizen! I got a MasterCard with a $500 credit line in like 1993 and used it sparingly. I later got an apartment and paid my rent and bills on time. I eventually bought a car on a loan. It was not hard establishing credit, it just meant not being a total deadbeat.

metellus 9y ago

The same way someone new (young people, immigrants) gains history now. Start with something low/no risk in order to build history.

richardknop 9y ago

You don’t really need a history. I.e. it’s very possible to get around just fine without credit card or loans. Most people I know in continental Europe just have debit cards and only buy things they have enough cash in their bank account to afford. The only exception is mortgage which is usually the only loan people take their entire life. And it’s possible to get it without having a credit score. You’ll need your complete history of employment and addresses and based on that bank can borrow you money. Perhaps car leasing is another loan people might take but that works similar way. Borrowing money to buy everything seems to be an American fetish (but also present in U.K. which is most America like part of Europe and Asia, not continental Europe though). It always seemed insane to me to have to borrow money from bank to buy a latte or groceries.

lmm 9y ago
Having my consumption expenses separate from my actual bank account is quite nice - it means my bank account statement gives me a quick summary of what I spent this month (x went to my mortgage, y went on utility bills, z went on buying things) and then my credit card statement has the details. You could see it as borrowing money for your latte but you can also see it as being billed at the end of the month for your lattes which is normal for many things. In principle I'm all about living within your means, but really why wouldn't I do things this way and get a month's grace on paying for everything and free plane tickets every so often?
- Double_a_92 9y ago
  Because I don't want to pay an extra 2% "tax" to the banks, for loans that I don't need? The only place I use a credit card is online. So i can pay quickly and worldwide.
  - lmm 9y ago
    How do you end up paying anything? I don't. A few shops charge a fee for using a credit card, in which case I'd use cash[1], but that's rare. [1] Not actually true, because I find the convenience of the card is worth it - but I understand people taking the opposite position.

kelnos 9y ago

The same way you do now, as a new adult: apply for a very low-limit credit card, get an older relative to co-sign a loan for you, etc. Over time you build history that shows you are (or are not) trustworthy to lend to.

djrogers 9y ago

You skip it - don’t have a credit score, and when you finally get around to buying a home use a lender that will manually underwrite your mortgage. The fallacy of needing to use debt for day to day living is ruining people.