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In France we don’t have credit scores and credit monitoring companies, but everytime you take a loan you are asked for a ton of proof of solvability, and basica

In France we don’t have credit scores and credit monitoring companies, but everytime you take a loan you are asked for a ton of proof of solvability, and basically give your full bank statements to the credit lender so that they can check your incomes vs spendings (and see what you spend on btw). Don’t know what’s worse.

frereubu 7y ago
This is a great 99% Invisible episode about how credit cards came about, and what it was like beforehand, where you would be interviewed at length by a store before being given credit to buy, for example, a piece of furniture. Credit cards were designed to outsource checking of credit-worthiness, stop intrusive interviews with stores and avoid embarrassment of being rejected in-store. Lax digital storage of information and consolidation in the credit rating industry seems to be the problem here, not credit ratings per se. https://99percentinvisible.org/episode/the-fresno-drop/ https://99percentinvisible.org/episode/the-fresno-drop/ Everyone seems to like the idea of friendly local stores these days, but I also remember reading an interview with someone who was around when large chain supermarkets were starting. They loved the fact that they were relatively anonymous so people weren't able to gossip about you buying, for example, condoms. There's clearly a balance to be struck here, and it's well away from a sensible middle ground at the moment.
- elcomet 7y ago
  Coming from Europe, it would never occur to me to buy furniture on credit, is this something common in the US ?
  - jdietrich 7y ago
    I'm also European, but buying furniture on credit is perfectly normal in my country - indeed, it would be quite unusual to buy any big-ticket item and not be offered credit terms, usually with an interest-free option.
    - pergadad 7y ago
      Being offered whether actually planning to buy on credit are different things. I'm German and would never buy furniture for which I don't have the money (exception maybe if the oven breaks and I don't have enough at hand) - but I'd never buy a sofa paying as instalments.
      - donogh 7y ago
        Culturally, Germany seems to have a strong aversion to personal debt. In the UK and Ireland, consumer behavior is very much in line with the US.
        akuji1993 7y ago
        This is absolutely the case for Germany yeah. We only take credits out for cars and houses mostly. Taking out a credit for common or ordinary items is very uncommon and looked down upon. It "shows" that the person can't handle money well or lives above their means.
      - bengale 7y ago
        Each time I've got a sofa I've done it on credit. It's always been 0% interest and it seems sensible to keep money liquid if someone wants to give me credit for free.
    - donkeyd 7y ago
      I'm also European and I know, within my own country, one group of people who would fin it completely normal to buy TVs and furniture on credit and another group that wouldn't. The former is low income and the latter is high income. People in low income communities find it very normal to buy on credit, often allowing you to buy now, pay in a year. My friends from higher income communities think this is a strange thing to do. What I'm trying to say is that some of these customs might not depend on country, but even on groups within countries. On a related note, I've personally noticed that here in the Netherlands, there's a pretty clear split between low income and high income, very tightly connected with education. In 'High School', lower and higher education are split in different classes and often different schools. So friendships are often formed within these groups and not across them (sports begin the exception). Because of this, a lot of people think something is normal in the Netherlands, but it's actually normal in their environment.
  - sfifs 7y ago
    Would you possibly be in the top 20% household income percentile? For such households, it's generally not required to buy furniture in credit in most markets. Credit for these sortse of things generally is for people with lower income
    - mamon 7y ago
      In my country lower income people usually save money first (even if they need to save for a long time, like a year or two), then buy expensive items, like furniture. Typically it works like this: people simply try not to spend their whole income, and save at least some part of it. Then, when they arrive at a significant amount of it they sit down and think: what can we do with those money? buy a new car? redecorate our living room? And if they decide to redecorate they buy furniture or whatever is needed with cash. Buying stuff on credit is pretty much unheard of.
      - donarb 7y ago
        What's the difference between saving money for a year and buying on interest free credit, with the "saved" money going to payments for that year?
  - Cthulhu_ 7y ago
    Furniture can often be sold on credit or with payments, because it can be a pretty big investment (e.g. a good bed). Mind you, can be - chains like ikea offer products at a price that should be payable from savings. But it's also pretty common for cars and houses and the like.
  - navigatesol 7y ago
    >it would never occur to me to buy furniture on credit Ikea, and nearly any reasonably sized furniture store, has a financing arm. So I assume it's common (and a money maker). Thing is, often these places offer 6 months interest free and what not, so as long as you pay off your debt in the allotted time, it's smarter than paying cash.
    - Retric 7y ago
      Those loans can be a profit center as they make it really easy to miss a payment, and then instantly jack up the rates to ~20% APR. Think short window to make a payment and no automatic payments available. It’s probably not worth it for effectively a sub 1% discount.
      - navigatesol 7y ago
        >It’s probably not worth it for effectively a sub 1% discount. The discount is small, I agree. But it's always worth it. It's riskless if you have the cash anyway.
        Retric 7y ago
        It’s up to you how many hoops you want to jump through for ~10$. Just be aware some companies do things like destroying mail without opening it.
        Slartie 7y ago
        It's worth it until you miss a payment and run in the absurdly high interest rates. Which makes it not riskless, because your risk of missing a payment is non-zero, even if you think it is zero. And regarding having cash: if you set aside the full amount in cash at time of purchase in order to reduce the risk of not being able to pay the rates, then you did win absolutely nothing. Opportunity cost of not having that cash available for profitable investments in case of paying in cash is what could possibly be the reason for the credit variant being cheaper in the end, but that of course depends on you investing the cash and divesting just when it is necessary to pay a rate.
        7y ago
  - safgasCVS 7y ago
    I had the exact same thought. Making credit easier to obtain is taken as 'good' but I only see that as beneficial for something major like a house or car but the idea of going into debt for disposable items seems really weird
    - adrianN 7y ago
      For low income families, furniture is something major.
      - behringer 7y ago
        Low income families need to buy furniture at the goodwill, not taking out loans for a leather sofa.
        corodra 7y ago
        I find this to be an interesting quip. I do agree with you, since I've done it myself. I've also taken furniture friends were going to trash. But I refinished and cleaned them. However I know not everyone has those skill sets. But, is it right to say someone can't have something moderately nice? I couldn't afford to in the past and lived like that. I didn't like it, obviously. But I also had an "exit strategy" to that situation, which has decently worked out. I'm just curious how I'd feel if it didn't work out. Even though I agree with you, that comment kind of stung oddly... I don't know...
        krageon 7y ago
        > is it right to say someone can't have something moderately nice If they can't reasonably pay for it, I don't see what other option there is for a responsible adult. Perhaps that is my cultural background speaking.
        adrianN 7y ago
        And people who can't afford to pay cash for cars should buy used cars. Sometimes cash flow is more important than final price. I haven't experienced it myself, but I heard that this is especially true for low income people who live paycheck to paycheck. The $300 couch you can get on a credit for 24 easy payments of 30 dollars is easier to afford than the $100 used couch.
  - Kneecaps07 7y ago
    Yes. There are even large chains where you can rent things like furniture and TVs.
  - dsfyu404ed 7y ago
    I haven't financed furniture but my impression is that if your credit is decent that the cost of financing it is basically the same as paying cash. Furniture is high margin, low volume so furniture retailers have an incentive to spread out cash-flow and get consumers to buy more expensive furniture than they would if paying all at once. That said, I suspect if your rand the numbers you'd find that the overwhelming majority of furniture (by units sold) is bought cash from Walmart, Ikea and the like by people paying cash.
- pas 7y ago
  Why was that interview so lengthy? Usually, in Europe, if you can show a bank statement for the last ~3 months that shows you get regular payments from a company, and/or a statement from your employer that you're a regular employee (not just started, not already halfway out of the door) then you're good to go.
raverbashing 7y ago
The interviews sucks, but do you think those credit bureaus (+ your bank + your credit card operator) don't have that exact same information? I might add it's one thing to buy a car or house on credit, another, very different is to gouge on credit cards and have them topped up beyond your repayment capacity.
- tialaramex 7y ago
  In the UK at least the Credit Reference Agencies don't have any information except debts and re-payments. The best of them (Experian) can see that I have a credit card and I pay it off every month. They can see I don't have any unsecured loans from major banks, and that I'm registered to vote (information available for personal inspection to anybody but supplied in bulk only to CRAs) None of them has any idea that I own property, or that I have a large amount of savings, or that my salary is many times more than my expenditures. That's invisible. I could prove it if I needed to do so for some reason, but it isn't passively collected (in the UK at least).
gregcrv 7y ago
In the US you still have to provide the same amount of paper work for large loans like mortgages or for renting an apartment even though they already have all the information they need.
- ubermonkey 7y ago
  I wouldn't compare the paperwork involved in a mortgage to the fairly simple rental applications I've seen.
  - pas 7y ago
    Hm, here (Hungary) landlords just ask for a deposit (usually ~2 month in advance), no credit is involved.

frereubu 7y ago

This is a great 99% Invisible episode about how credit cards came about, and what it was like beforehand, where you would be interviewed at length by a store before being given credit to buy, for example, a piece of furniture. Credit cards were designed to outsource checking of credit-worthiness, stop intrusive interviews with stores and avoid embarrassment of being rejected in-store. Lax digital storage of information and consolidation in the credit rating industry seems to be the problem here, not credit ratings per se. https://99percentinvisible.org/episode/the-fresno-drop/ https://99percentinvisible.org/episode/the-fresno-drop/ Everyone seems to like the idea of friendly local stores these days, but I also remember reading an interview with someone who was around when large chain supermarkets were starting. They loved the fact that they were relatively anonymous so people weren't able to gossip about you buying, for example, condoms. There's clearly a balance to be struck here, and it's well away from a sensible middle ground at the moment.

elcomet 7y ago
Coming from Europe, it would never occur to me to buy furniture on credit, is this something common in the US ?
- jdietrich 7y ago
  I'm also European, but buying furniture on credit is perfectly normal in my country - indeed, it would be quite unusual to buy any big-ticket item and not be offered credit terms, usually with an interest-free option.
  - pergadad 7y ago
    Being offered whether actually planning to buy on credit are different things. I'm German and would never buy furniture for which I don't have the money (exception maybe if the oven breaks and I don't have enough at hand) - but I'd never buy a sofa paying as instalments.
    - donogh 7y ago
      Culturally, Germany seems to have a strong aversion to personal debt. In the UK and Ireland, consumer behavior is very much in line with the US.
      - akuji1993 7y ago
        This is absolutely the case for Germany yeah. We only take credits out for cars and houses mostly. Taking out a credit for common or ordinary items is very uncommon and looked down upon. It "shows" that the person can't handle money well or lives above their means.
    - bengale 7y ago
      Each time I've got a sofa I've done it on credit. It's always been 0% interest and it seems sensible to keep money liquid if someone wants to give me credit for free.
  - donkeyd 7y ago
    I'm also European and I know, within my own country, one group of people who would fin it completely normal to buy TVs and furniture on credit and another group that wouldn't. The former is low income and the latter is high income. People in low income communities find it very normal to buy on credit, often allowing you to buy now, pay in a year. My friends from higher income communities think this is a strange thing to do. What I'm trying to say is that some of these customs might not depend on country, but even on groups within countries. On a related note, I've personally noticed that here in the Netherlands, there's a pretty clear split between low income and high income, very tightly connected with education. In 'High School', lower and higher education are split in different classes and often different schools. So friendships are often formed within these groups and not across them (sports begin the exception). Because of this, a lot of people think something is normal in the Netherlands, but it's actually normal in their environment.
- sfifs 7y ago
  Would you possibly be in the top 20% household income percentile? For such households, it's generally not required to buy furniture in credit in most markets. Credit for these sortse of things generally is for people with lower income
  - mamon 7y ago
    In my country lower income people usually save money first (even if they need to save for a long time, like a year or two), then buy expensive items, like furniture. Typically it works like this: people simply try not to spend their whole income, and save at least some part of it. Then, when they arrive at a significant amount of it they sit down and think: what can we do with those money? buy a new car? redecorate our living room? And if they decide to redecorate they buy furniture or whatever is needed with cash. Buying stuff on credit is pretty much unheard of.
    - donarb 7y ago
      What's the difference between saving money for a year and buying on interest free credit, with the "saved" money going to payments for that year?
- Cthulhu_ 7y ago
  Furniture can often be sold on credit or with payments, because it can be a pretty big investment (e.g. a good bed). Mind you, can be - chains like ikea offer products at a price that should be payable from savings. But it's also pretty common for cars and houses and the like.
- navigatesol 7y ago
  >it would never occur to me to buy furniture on credit Ikea, and nearly any reasonably sized furniture store, has a financing arm. So I assume it's common (and a money maker). Thing is, often these places offer 6 months interest free and what not, so as long as you pay off your debt in the allotted time, it's smarter than paying cash.
  - Retric 7y ago
    Those loans can be a profit center as they make it really easy to miss a payment, and then instantly jack up the rates to ~20% APR. Think short window to make a payment and no automatic payments available. It’s probably not worth it for effectively a sub 1% discount.
    - navigatesol 7y ago
      >It’s probably not worth it for effectively a sub 1% discount. The discount is small, I agree. But it's always worth it. It's riskless if you have the cash anyway.
      - Retric 7y ago
        It’s up to you how many hoops you want to jump through for ~10$. Just be aware some companies do things like destroying mail without opening it.
      - Slartie 7y ago
        It's worth it until you miss a payment and run in the absurdly high interest rates. Which makes it not riskless, because your risk of missing a payment is non-zero, even if you think it is zero. And regarding having cash: if you set aside the full amount in cash at time of purchase in order to reduce the risk of not being able to pay the rates, then you did win absolutely nothing. Opportunity cost of not having that cash available for profitable investments in case of paying in cash is what could possibly be the reason for the credit variant being cheaper in the end, but that of course depends on you investing the cash and divesting just when it is necessary to pay a rate.
      - 7y ago
- safgasCVS 7y ago
  I had the exact same thought. Making credit easier to obtain is taken as 'good' but I only see that as beneficial for something major like a house or car but the idea of going into debt for disposable items seems really weird
  - adrianN 7y ago
    For low income families, furniture is something major.
    - behringer 7y ago
      Low income families need to buy furniture at the goodwill, not taking out loans for a leather sofa.
      - corodra 7y ago
        I find this to be an interesting quip. I do agree with you, since I've done it myself. I've also taken furniture friends were going to trash. But I refinished and cleaned them. However I know not everyone has those skill sets. But, is it right to say someone can't have something moderately nice? I couldn't afford to in the past and lived like that. I didn't like it, obviously. But I also had an "exit strategy" to that situation, which has decently worked out. I'm just curious how I'd feel if it didn't work out. Even though I agree with you, that comment kind of stung oddly... I don't know...
        krageon 7y ago
        > is it right to say someone can't have something moderately nice If they can't reasonably pay for it, I don't see what other option there is for a responsible adult. Perhaps that is my cultural background speaking.
      - adrianN 7y ago
        And people who can't afford to pay cash for cars should buy used cars. Sometimes cash flow is more important than final price. I haven't experienced it myself, but I heard that this is especially true for low income people who live paycheck to paycheck. The $300 couch you can get on a credit for 24 easy payments of 30 dollars is easier to afford than the $100 used couch.
- Kneecaps07 7y ago
  Yes. There are even large chains where you can rent things like furniture and TVs.
- dsfyu404ed 7y ago
  I haven't financed furniture but my impression is that if your credit is decent that the cost of financing it is basically the same as paying cash. Furniture is high margin, low volume so furniture retailers have an incentive to spread out cash-flow and get consumers to buy more expensive furniture than they would if paying all at once. That said, I suspect if your rand the numbers you'd find that the overwhelming majority of furniture (by units sold) is bought cash from Walmart, Ikea and the like by people paying cash.
pas 7y ago
Why was that interview so lengthy? Usually, in Europe, if you can show a bank statement for the last ~3 months that shows you get regular payments from a company, and/or a statement from your employer that you're a regular employee (not just started, not already halfway out of the door) then you're good to go.

raverbashing 7y ago

The interviews sucks, but do you think those credit bureaus (+ your bank + your credit card operator) don't have that exact same information? I might add it's one thing to buy a car or house on credit, another, very different is to gouge on credit cards and have them topped up beyond your repayment capacity.

tialaramex 7y ago
In the UK at least the Credit Reference Agencies don't have any information except debts and re-payments. The best of them (Experian) can see that I have a credit card and I pay it off every month. They can see I don't have any unsecured loans from major banks, and that I'm registered to vote (information available for personal inspection to anybody but supplied in bulk only to CRAs) None of them has any idea that I own property, or that I have a large amount of savings, or that my salary is many times more than my expenditures. That's invisible. I could prove it if I needed to do so for some reason, but it isn't passively collected (in the UK at least).

gregcrv 7y ago

In the US you still have to provide the same amount of paper work for large loans like mortgages or for renting an apartment even though they already have all the information they need.

ubermonkey 7y ago
I wouldn't compare the paperwork involved in a mortgage to the fairly simple rental applications I've seen.
- pas 7y ago
  Hm, here (Hungary) landlords just ask for a deposit (usually ~2 month in advance), no credit is involved.