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While FICO is highly problematic in a number of ways, I think many people miss the upsides of it. In a system like you describe, there are only negative marks a

While FICO is highly problematic in a number of ways, I think many people miss the upsides of it. In a system like you describe, there are only negative marks against a creditor. Take this example scenario: - You move from location A to location B - Your internet bill is not cancelled correctly and they send you a $50 bill - You never get the bill and it goes to collections - This leads to a negative mark on your credit In your system, you are the sum of your mistakes. With the US system, the negative mark is offset by the positive actions you are taking at the same time. Does it hurt your credit? Yes. Is it nearly as damaging as the negative only system? No.

Msurrow 5y ago
Not really. In Denmark the offical “bad payor” register (RKI) is not something you easily and without noticing is registered into. And you can get de-registered simply by paying off you debt as far as I know. So, besides that, banks look at income, loans, mortage vs house valuation especially. At least, as far as we consumers know. That means, if I want a mortage loan for a house, actual and relevant factors weigh in on what I can get approved for. To me, thats way better than some scoringsystem where my score depends on sp many different actual and historical things.
lokedhs 5y ago
Your example wouldn't have happened though, at least in Sweden. Registration into the bad lender registry doesn't happen automatically, and the government knows your address after you moved, so they would be able to inform you what's going on. There are benefits and drawbacks of course. I ended up in the registry for not paying my taxes on time (I had challenged a tax authority decision and thought I did need to pay it while the investigation was ongoing, so it was my fault). For this I was on the registry for 3 years and it was seriously annoying, similar to having a bad credit score in the US I can imagine. There was nothing one can done about this other than waiting for you to be removed from the registry after 3 years. The benefit is that that the system is completely transparent, and is not based on random metrics such as an account being closed or whether or not you have any loans at all (the last part is bizarre to me, you should be rewarded for being debt free, not punished).

Msurrow 5y ago

Not really. In Denmark the offical “bad payor” register (RKI) is not something you easily and without noticing is registered into. And you can get de-registered simply by paying off you debt as far as I know. So, besides that, banks look at income, loans, mortage vs house valuation especially. At least, as far as we consumers know. That means, if I want a mortage loan for a house, actual and relevant factors weigh in on what I can get approved for. To me, thats way better than some scoringsystem where my score depends on sp many different actual and historical things.

lokedhs 5y ago

Your example wouldn't have happened though, at least in Sweden. Registration into the bad lender registry doesn't happen automatically, and the government knows your address after you moved, so they would be able to inform you what's going on. There are benefits and drawbacks of course. I ended up in the registry for not paying my taxes on time (I had challenged a tax authority decision and thought I did need to pay it while the investigation was ongoing, so it was my fault). For this I was on the registry for 3 years and it was seriously annoying, similar to having a bad credit score in the US I can imagine. There was nothing one can done about this other than waiting for you to be removed from the registry after 3 years. The benefit is that that the system is completely transparent, and is not based on random metrics such as an account being closed or whether or not you have any loans at all (the last part is bizarre to me, you should be rewarded for being debt free, not punished).