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A record of successfully repaying debt is highly relevant to whether you're likely to repay your debt in future. Credit risk is only partly about affordability;

A record of successfully repaying debt is highly relevant to whether you're likely to repay your debt in future. Credit risk is only partly about affordability; many people who can afford to reliably repay their debts still fail to do so, for a variety of reasons. It doesn't really matter to lenders whether you "game" the system; if you're sufficiently organised, responsible and financially stable to take out and repay debts solely for the purpose of improving your credit history, then you're probably a good person to lend to. Americans tend to use a lot of consumer credit, so not having a credit card, a cellphone contract or a car loan makes you anomalous. I don't know what country you're in, but here in the UK "building credit" is very much a thing; I'd be very surprised if it had no impact whatsoever on your creditworthiness in your country. https://www.moneysavingexpert.com/loans/credit-rating-credit-score/ https://www.moneysavingexpert.com/loans/credit-rating-credit...

inetknght 7y ago
> A record of successfully repaying debt is highly relevant to whether you're likely to repay your debt in future. Credit risk is only partly about affordability; many people who can afford to reliably repay their debts still fail to do so, for a variety of reasons. I'm not convinced. We have people like Donald Trump in our presidency who is arguably one of the worst offenders of non-payment of debts. We have the 2008 financial crisis where people were given loans regardless of payment history -- and that debt was then loaded up and sold to, effectively, shareholders. We have student loans which are frequently forgiven.
- gizmo686 7y ago
  Whats your point. Trump has a history of not paying debts, and can't get loans without going to questionable sources. People being given loans without due respect to there payment history led to an economic crises when they failed to pay them back at the expectex rate. Student loans, again given without normal consideration, have a higher rate of default and forgivenes.
  - kryogen1c 7y ago
    > People being given loans without due respect to there payment history led to an economic crises when they failed to pay them back at the expectex rate. > Student loans, again given without normal consideration, have a higher rate of default and forgivenes. Remember the common theme here is government underwriting and encouragment of loans outside of economic theory (or inside economic theory in a negative way, to be pedantic). If someone buys a dangerous guard dog that has historically saved lives but mistreats it and it harms someone innocent, do you blame the dog? To exit the analogy, it is capitalisms job to make money and the governments job to regulate. Capitalism has catapulted America and the rest of the world into an absolutely unparalleled standard of living where right now is the greatest time to be alive literally in history. However, the regulatory piece is wavering and doing damage. Corrections need to be made with minimum neccessary force to not throw the baby out with the bathwater.
stingraycharles 7y ago
Don’t you think it’s bad for a society to have a system that encourages people to get loans? I know for the businesses, it makes perfect sense to have a credit system, it’s just that I appreciate it’s not a thing over here: people should incur as little debt as possible.
- ghaff 7y ago
  I think that, in general, it's bad when people take out loans for things that they don't need and can't really afford. I'm mostly not a fan of, say, buying a big screen TV on credit. However, although some will overspend, it's mostly a positive that home ownership isn't limited to the wealthy (and even the moderately wealthy may not have sufficient cash on hand in high CoL areas). Furthermore, even those young people with great jobs probably need to borrow for purchases like cars. So I don't think people should overextend themselves but I don't have a problem with people using debt sensibly as a tool.
  - kenhwang 7y ago
    I bought my first big screen TV on Amazon store credit back when I was in college with a typical college student income. 18mo/0% APR is awesome when your credit limit and bank balance is $700.
  - Sohcahtoa82 7y ago
    > buying a big screen TV on credit. I think it's fine as long as it's always kept within reason. If I have a disposable income of $500/month, and I want a $1,500 TV, I might just put that on the credit card. If I have a 20% APR on my card and pay it off in three months, I only pay a little over $50 in interest (Note for someone else that decides to check the math: Remember that many cards have a 30-day grace period on purchases before they start collecting interest). I might think it's worth it to pay an extra $50 to get that $1,500 TV now rather than 3 months from now. Maybe it's actually a $2,500 TV and it's on sale for this week only. Better yet, maybe the store is offering 0% financing for 12/18/x months, which is far longer than it'll take me to pay it off anyways. Of course, the "within reason" part is what kills people. If my disposable income is under $100/month, then purchasing a $1,500 TV on credit is probably a bad idea. Heck, even saving for a $1,500 TV is probably a bad idea.
AnssiH 7y ago
> I don't know what country you're in, but here in the UK "building credit" is very much a thing; I'd be very surprised if it had no impact whatsoever on your creditworthiness in your country. In Finland Luottotietolaki ("Credit Data Act", https://www.finlex.fi/fi/laki/ajantasa/2007/20070527 https://www.finlex.fi/fi/laki/ajantasa/2007/20070527 - no translation) limits the allowed data in credit data registries to specific types of negative entries, such as debt adjustment, failure to pay within 60 days, attachments, etc. So you can't really build credit as such. 90%+ of people have zero entries in credit data registers.
godelski 7y ago
> It doesn't really matter to lenders whether you "game" the system; In this case "gaming the system" means taking on debt and paying it off. So pretty much if you can "game the system" they have good reason to believe that you can pay off future debt. So I'm not sure really why someone would calling "gaming the system." One thing I find nice about the system is that you can not have much capital but still get a good credit score, which tells a bank that you may not be rich but you prioritize paying back debts so you're low risk. Enabling you to get loans you normally wouldn't or ones at a lower rate.
jonmcguire 7y ago
I am a private lender and Investor, Do you need a legit, honest, reputable and quick loan? I can help you with 100% guarantee loan, I am offering business and individual loan, More also we financing all kind of projects. For more details contact us at: jonmcguire47@gmail.com.

inetknght 7y ago

> A record of successfully repaying debt is highly relevant to whether you're likely to repay your debt in future. Credit risk is only partly about affordability; many people who can afford to reliably repay their debts still fail to do so, for a variety of reasons. I'm not convinced. We have people like Donald Trump in our presidency who is arguably one of the worst offenders of non-payment of debts. We have the 2008 financial crisis where people were given loans regardless of payment history -- and that debt was then loaded up and sold to, effectively, shareholders. We have student loans which are frequently forgiven.

gizmo686 7y ago
Whats your point. Trump has a history of not paying debts, and can't get loans without going to questionable sources. People being given loans without due respect to there payment history led to an economic crises when they failed to pay them back at the expectex rate. Student loans, again given without normal consideration, have a higher rate of default and forgivenes.
- kryogen1c 7y ago
  > People being given loans without due respect to there payment history led to an economic crises when they failed to pay them back at the expectex rate. > Student loans, again given without normal consideration, have a higher rate of default and forgivenes. Remember the common theme here is government underwriting and encouragment of loans outside of economic theory (or inside economic theory in a negative way, to be pedantic). If someone buys a dangerous guard dog that has historically saved lives but mistreats it and it harms someone innocent, do you blame the dog? To exit the analogy, it is capitalisms job to make money and the governments job to regulate. Capitalism has catapulted America and the rest of the world into an absolutely unparalleled standard of living where right now is the greatest time to be alive literally in history. However, the regulatory piece is wavering and doing damage. Corrections need to be made with minimum neccessary force to not throw the baby out with the bathwater.

stingraycharles 7y ago

Don’t you think it’s bad for a society to have a system that encourages people to get loans? I know for the businesses, it makes perfect sense to have a credit system, it’s just that I appreciate it’s not a thing over here: people should incur as little debt as possible.

ghaff 7y ago
I think that, in general, it's bad when people take out loans for things that they don't need and can't really afford. I'm mostly not a fan of, say, buying a big screen TV on credit. However, although some will overspend, it's mostly a positive that home ownership isn't limited to the wealthy (and even the moderately wealthy may not have sufficient cash on hand in high CoL areas). Furthermore, even those young people with great jobs probably need to borrow for purchases like cars. So I don't think people should overextend themselves but I don't have a problem with people using debt sensibly as a tool.
- kenhwang 7y ago
  I bought my first big screen TV on Amazon store credit back when I was in college with a typical college student income. 18mo/0% APR is awesome when your credit limit and bank balance is $700.
- Sohcahtoa82 7y ago
  > buying a big screen TV on credit. I think it's fine as long as it's always kept within reason. If I have a disposable income of $500/month, and I want a $1,500 TV, I might just put that on the credit card. If I have a 20% APR on my card and pay it off in three months, I only pay a little over $50 in interest (Note for someone else that decides to check the math: Remember that many cards have a 30-day grace period on purchases before they start collecting interest). I might think it's worth it to pay an extra $50 to get that $1,500 TV now rather than 3 months from now. Maybe it's actually a $2,500 TV and it's on sale for this week only. Better yet, maybe the store is offering 0% financing for 12/18/x months, which is far longer than it'll take me to pay it off anyways. Of course, the "within reason" part is what kills people. If my disposable income is under $100/month, then purchasing a $1,500 TV on credit is probably a bad idea. Heck, even saving for a $1,500 TV is probably a bad idea.

AnssiH 7y ago

> I don't know what country you're in, but here in the UK "building credit" is very much a thing; I'd be very surprised if it had no impact whatsoever on your creditworthiness in your country. In Finland Luottotietolaki ("Credit Data Act", https://www.finlex.fi/fi/laki/ajantasa/2007/20070527 https://www.finlex.fi/fi/laki/ajantasa/2007/20070527 - no translation) limits the allowed data in credit data registries to specific types of negative entries, such as debt adjustment, failure to pay within 60 days, attachments, etc. So you can't really build credit as such. 90%+ of people have zero entries in credit data registers.

godelski 7y ago

> It doesn't really matter to lenders whether you "game" the system; In this case "gaming the system" means taking on debt and paying it off. So pretty much if you can "game the system" they have good reason to believe that you can pay off future debt. So I'm not sure really why someone would calling "gaming the system." One thing I find nice about the system is that you can not have much capital but still get a good credit score, which tells a bank that you may not be rich but you prioritize paying back debts so you're low risk. Enabling you to get loans you normally wouldn't or ones at a lower rate.

jonmcguire 7y ago

I am a private lender and Investor, Do you need a legit, honest, reputable and quick loan? I can help you with 100% guarantee loan, I am offering business and individual loan, More also we financing all kind of projects. For more details contact us at: jonmcguire47@gmail.com.