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No. France for one does not have a similar system available and lending still works well.
by mijamo 9y ago
No. France for one does not have a similar system available and lending still works well.
- Karunamon 9y agoHow does France go about determining if someone is a good credit risk who pays their bills on time?
- mulmen 9y agoCall the bank and ask?
- ubernostrum 9y agoIt really is amazing how until the current three credit reporting agencies came long, nobody in the history of humanity had managed to obtain a loan. We owe them a lot for inventing the entire idea of lending money.
- MaxBarraclough 9y agoWe used to have debtors' prisons instead.
- grasshopperpurp 9y agoUsed to?
- derekp7 9y agoIt's a bit deeper than lend/not lend. Interest rates are determined in part by risk -- higher risk means higher rates are required to cover defaults across a given risk pool. Without granular risk assessments, I would think that the interest for everyone would be a bit higher, as it has to be enough to cover defaults. Is that the case? That is, in locations with detailed credit reporting, do people with very good credit end up with lower interest rates than borrowers in locations that don't have a credit reporting system?
- ubernostrum 9y agoWell, in recent-ish history many places had usury laws and even enforced ideas like Christians not charging interest to other Christians. There are still places in the world today which have functioning credit markets despite prohibitions on charging interest.
- astura 9y agoSince this apparently isn't obvious to you, creditors have different interest rates and different loan terms for different risk pools. Your risk pool is determined, in part, by your history of borrowing and paying back money. It isn't that lending doesn't exist without credit history, it's everyone gets the same shitty terms and shitty interest rate and banks are much more conservative in lending.
- ubernostrum 9y agoApparently the other commenter is right, I should've used some kind of sarcasm mark. The parent comment I was replying to seemed not to understand how a functioning credit/lending market could exist without Equifax-like centralized reporting agencies. The sarcastic point was that credit and lending existed and worked for millennia previously.
- fjsolwmv 9y agoThe point you are still missing is that better credit rating leads to lower interest and more efficient investing.
- ubernostrum 9y agoWhich... didn't seem to be the claim made in the comment I originally responded to.
- macintux 9y agoYou clearly need to invent a way to indicate sarcasm more clearly.
- smsm42 9y agoIn the long history of humanity, there was no real possibility of somebody living, say, in Oakland, California, to obtain a loan from a bank located in New York, without even meeting anybody from that bank or having any prior relationship or specific recommendations. Moreover, if you are a representative of lower classes, the best loan you could hope for is probably your local grocer deferring a payment for a week or so. But don't try to pull that on a grocer in the next village, unless you're a noble or something - he doesn't know you, so cash is king. Of course, if you're noble living in a big castle, things are different for you. Unfortunately, most of the people weren't. That's why prototype credit reporting agencies - with people literally having books where they recorded all kinds of info about people, like where they work, how they pay, do they have affairs (there's a risk they'd drop everything and run away with their affair partner if they do), are they gambling, are they drinking, etc. That's what gave the raise to the modern credit reporting agencies. But before that you surely had access to loans, but not nearly at the scale you have now. You didn't have online comparison of 50+ lenders competing to give you, sight unseen, the best rate. You had to convince your local banker, and if he didn't like you (for any reason, including speaking funny, having wrong complexion or not being in a good relationship with one of his friends), tough luck, no loan for you.
- lurker456 9y ago1. there is less reliance on credit for day to day spending. 2. banks are liable, so they're more careful. I don't get offers by mail for credit cards, and the card I do have has stricter limits. 3. a national ID system 4. specifically for real estate, separate regulation exists. You cant buy or sell real estate nor take out a mortgage without going through a notary (heavily protected profession), who ensure that the real estate and the loan to pay for it remain linked.
- davidw 9y agoNotaries, at least in Italy, are a plague on the system. https://www.economist.com/news/finance-and-economics/21646801-highly-regulated-profession-fights-preserve-its-privileges-princes https://www.economist.com/news/finance-and-economics/2164680...
- conanbatt 9y agoNotaries are Dante's 8th layer of hell.
- lurker456 9y agoI'm not convinced they're worse than an Italian version of Equifax.
- davidw 9y agoThey're awful in their own, different way. Did you follow any of the SRLS stuff? Guess who wailed and gnashed their teeth that barbarian hordes would descend on Italy if notaries weren't allowed to collect thousands of Euros for registering limited liability companies?
- mbesto 9y agoI've lived in Germany and the UK. Their reliance on credit cards is drastically different from the US.
- avip 9y agoYou could, for example, put sufficient loan guarantees in place.
- PeterisP 9y agoNot from France, but elsewhere in the EU there generally are registries of bad debts (with libel-like protections requiring the information on them to be true or removed). So the bank looks at your income, possibly your expenses, and whether you've been defaulting in the past. If it's your bank, which it usually is, then they can probably mine your transaction history in more detail to decide how trustworthy you are.
- MaxBarraclough 9y agoInteresting. A quick perusal online and it seems they get by with bank statements/pay slips/tax documents to show that you're on the level. https://www.quora.com/Is-it-true-that-theres-no-credit-score-company-in-France/answer/Thomas-Dupont-1 https://www.quora.com/Is-it-true-that-theres-no-credit-score... I'm surprised that works at all. I wonder if it's quantitatively less 'effective'. (A quick Google didn't turn up much on that question.)
- d4mi3n 9y agoA company I work at more or less does the same thing, albeit in conjunction with a credit report. We're a marketplace lender operating internationally, and (from what I hear through the grapevine) it turns out the accuracy of credit reporting data outside of the US can be, put nicely, inaccurate. Aside from that, if you want a business process for vetting credit to work across geographies, you can't be dependent on a particular agency or report being available for a specific locale. You _can_ however, almost always depend on a business keeping books and paying taxes.
- the-dude 9y agoHow about better job security?
- MaxBarraclough 9y agoNot a replacement for a healthy lending.
- the-dude 9y agoAre you aware in Europe in general, there is much much less buying on credit?
- MaxBarraclough 9y agoHow about mortgages?
- rconti 9y agoFor certain values of "works well". I mean, I'm not defending the ratings agencies here, nor ignoring the real problems with cheap credit, but from an interest rate perspective, I don't think there's a better place to borrow money than the US. Head and shoulders better/cheaper than anywhere else I'm aware of.
- wu-ikkyu 9y agoWhy is it better?
- Vindicis 9y agoIt has it's roots in the USD being the currency required to buy Oil (Petrodollar) and sort of builds from there. Some searches should give the information pretty easily, but it's a rather complex topic to break down into a quick comment. Happy reading! Edit: Apparently some people are too lazy to educate themselves beyond anything in the comment section. Here, perhaps clicking a link is within your grasp. https://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp https://www.investopedia.com/articles/forex/072915/how-petro...
- deleted 9y ago[deleted]
- hectormalot 9y agoNot sure. Mortgage rates in the us are 3.5-4.5% (https://www.bankrate.com/new-jersey/mortgage-rates.aspx https://www.bankrate.com/new-jersey/mortgage-rates.aspx), while I can get a mortgage in the Netherlands for less than half of that (1.8-2.5%, https://www.abnamro.nl/nl/mobile/prive/hypotheken/actuele-hypotheekrente/hypotheekrente-overzicht.html https://www.abnamro.nl/nl/mobile/prive/hypotheken/actuele-hy...) (I actually just got a mortgage and it was pretty painless: 1 week from 1st contact to contract)
- astura 9y agoI don't speak Dutch and Google translate doesn't work for that page for some reason, but I strongly believe you're comparing apples to oranges. What's the terms to get a 1.8% mortgage? How much loan to value (down payment) is required and how long is the loan term? Fixed or variable rate? What is the maximum debt to income ratio? Income requirements? Is that APR or APY? I believe, again I don't speak Dutch, the longest loan term on that page is 10 years. If that's the case, then you'd have to compare it to a 10 year mortgage in the US, not a 30 year like you did. Edit: I was holding my phone in a way I couldn't see the whole table. It appears to me that a 30 year mortgage with less than a 15% down payment is 4.40%.