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credit score is the number one determinant which one will be more likely to get into an accident I'd like to know how that differs from just plain income? The

credit score is the number one determinant which one will be more likely to get into an accident I'd like to know how that differs from just plain income? The more money you make, the easier it is to keep clean credit. But it also gives you more control over driving to let you be a safer driver. Overnight snowfall made the roads slippery? An office worker can go in late, or just work from home for the day, but the low paid service worker has to go in or he doesn't get paid (or might even lose his job). Feeling sick today? Office worker can just call in sick, the service worker doesn't have many (or any) sick days, so he drinks half a bottle of cough medicine and drives to work anyway. Going out for a drink after work? Well paid worker can take an Uber home, or get a hotel room in the city, an option that the low paid worker doesn't have since even if he took Uber home, his car is parked on the street and is going to get ticketed or towed. Running late for work? Office worker can call in to the meeting or reschedule his morning meeting (and just shrug and say "traffic" when he shows up late), low paid worker is going to get his pay docked or lose his entire shift for being 5 minutes late so he's gotta drive fast to make it.

legitster 5y ago
The implication the person was giving is that people who have debt problems are likely people who struggle with decision making, with lots more downstream effects than just credit. So in an unusual way, credit could almost be an approximation of EQ.
- Johnny555 5y ago
  But people who have debt problems also tend to have lower income, and it can't all be blamed on "poor decision making". My credit rating was abysmal shortly after college when I was in a low paid job and juggling payments around based on what bills could afford to pay and shifting debt to credit cards. And that low credit rating meant that the cost of credit was high, making it that much worse. But now that I have a good income, it's easy to pay bills on time, or even early, even if a payroll snafu that's not even my fault means my paycheck is late, I have plenty of cash in the bank to pay bills.
TulliusCicero 5y ago
> I'd like to know how that differs from just plain income? Because it indirectly measures responsibility to a certain extent, though of course there are exceptions. And there’s not really another, better way to quickly check if someone is generally responsible. And you can definitely find lower income people with good scores and higher income people with bad ones.
- toomuchtodo 5y ago
  I don't care for this analogy, as you can be as responsible as possible and still have your credit tarnished due to microeconomic black swan events (and there are numbers thrown about that a majority of citizens can't afford a $1000 financial emergency without relying on subprime credit or family). What credit scoring for insurance purposes does due is suss out who is more likely to make a claim because their finances are marginal and they need the payout versus relying on their own finances for minor claims. Similar to folks who can't afford to replace their roof, and so they make a claim with a public adjuster to have the insurer cover the cost (very popular strategy in Florida for example, causing insurers to flee the state or stop insuring homeowners seeking coverage if their roof is over 10 years old). If one is well to do, they're going to avoid making a claim unless the economic cost of the event is catastrophic (in which case, everyone is making that claim), and so the credit score is being used as a proxy for household financial strength (which is lazy, but easier than ongoing income and asset surveillance, although some credit card companies do this for credit risk management [Amex comes to mind]). EDIT: > That’s the bleeding heart take, yeah. Guilty as charged.
  - TulliusCicero 5y ago
    That’s the bleeding heart take, yeah. The truth is that credit scores do what you say, AND they also measure responsibility in practice, enough to where you can find all sorts of correlations.
  - eigenvalue 5y ago
    Whether or not there are exceptions (which of course there are) doesn't mean that there isn't a general pattern at work that is robust enough to make it a very strong predictor.
spiznnx 5y ago
I had a poor friend who couldn't afford new tires. She would buy used tires, with little life left, and replace them more frequently. It was more expensive in the long run, and less safe. If she had access to credit she could have bought new tires on credit. It is also just a proxy for income, which is harder to quickly/cheaply verify than a credit score.
- frederikvs 5y ago
  See also : the Sam Vimes "Boots" theory of socioeconomic unfairness.
  - ars 5y ago
    I've always hated that story, because if you go into a "goodwill" type store and look at the used shoes you'll quickly realize it's not actually a true story. There are places where it's true - for example short term rent. And buying in bulk. Buying used is not one of those places. Buying used is the correct thing to do for someone with low income.
    - mrguyorama 5y ago
      The story is not used boots vs new, it's shitty, Walmart brand boots vs being able to afford the really nice L.L. Bean boots. It's starting to lose its meaning unfortunately, as most companies realize you can just charge a lot of money for the cheaply made shit and most consumers just don't have easy options to avoid buying it.
- ars 5y ago
  > It was more expensive in the long run, and less safe. Are you sure about that? It's more annoying to have to change them, but as someone who bought some long ago, it was cheaper than new, even taking into account how much wear there was. Most used tires actually have lots of wear left - people throw them out because they get a puncture and want all the remaining tires to match. Or even more common they have 2 good ones in back, and 2 bad in front (they forgot to rotate tires), and just replace all 4. Those 2 good ones are sold for much less than new, but they're almost as good as new. > If she had access to credit she could have bought new tires on credit. Once you pay interest on that credit, there's no way she would have come out ahead. Used tires are the correct thing to do here. > It is also just a proxy for income, which is harder to quickly/cheaply verify than a credit score. If you look at the other replies you'll see that credit score is actually not a proxy for income. It measures responsibility.
rory 5y ago
Is there any actual evidence that what you're saying is the reason for the difference though? It's incorrect that credit scores are highly correlated with income [0]. Most accidents are caused by things that are pretty ordinary forms of irresponsibility [1]. A credit score is a (flawed) measure of financial responsibility. That seems like a much more reasonable, although less narratively satisfying, connection. [0] https://www.federalreserve.gov/econres/notes/feds-notes/are-income-and-credit-scores-highly-correlated-20180813.htm https://www.federalreserve.gov/econres/notes/feds-notes/are-... We find a low correlation between credit score levels and income, with the correlation coefficient around 0.27 for income levels and 0.29 for log income. [1] https://www.iii.org/table-archive/21313 https://www.iii.org/table-archive/21313 Driving too fast for conditions or in excess of posted limit or racing 8,746 17.2% Under the influence of alcohol, drugs, or medication 5,164 10.1 Failure to yield right of way 3,728 7.3 Failure to keep in proper lane 3,381 6.6 Operating vehicle in a careless manner 3,302 6.5 Distracted (phone, talking, eating, object, etc.) 3,008 5.9
- rtlfe 5y ago
  > Most accidents are caused by things that are pretty ordinary forms of irresponsibility This is a big diversion form the actual point, but it's important. The vast majority of these crashes (the word "accident" is rarely used by news/DOTs/etc anymore) could be prevented by designing streets to control speed and improve visibility. So I'd argue that they're caused by poor design which comes as a result of misplaced societal values. Re the second item in that list of causes, an interesting article came out a couple days ago: https://www.bloomberg.com/news/articles/2022-03-21/make-the-world-safe-for-drunk-drivers https://www.bloomberg.com/news/articles/2022-03-21/make-the-...
  - rory 5y ago
    Yes, society can and should do more to encourage people to drive safely, but that doesn't mean it's impossible to do so. The same logic applies to all sorts of things like obesity, smoking, etc.. These things obviously have multiple causes-- some societal, some individual. It's not a binary.
  - 5y ago
ballenf 5y ago
Would be interesting to investigate a correlation between a low-income person with a relatively high credit and an above-average increase in their income and net worth over time.
kansface 5y ago
Maintaining a really good credit score requires deliberate action and high conscientiousness over a long time. That is just a really strong proxy for success in life. There are loads of people with bad credit and high income - chronic gamblers, for instance.
- Johnny555 5y ago
  No doubt there are high income people with low credit and low income people with high credit. But my point is that it's a lot easier to keep a good credit school on high income than it is on low income. When your cost of necessities for living (food, rent, utilities, etc) is close to your total income, all it takes is a small disruption in your income to cause a cascade of credit lowering events that are hard to dig yourself out of.
  - s1artibartfast 5y ago
    This is all true, but beside the point. The purpose of credit scores is to predict outcome, not measure the effort or intentions of people to overcome their personal situation.
deleted 5y ago
[deleted]
s1artibartfast 5y ago
>I'd like to know how that differs from just plain income? It has basically all the same advantages you mentioned but also filters out high earners with rash behavior and or low responsibility. I know plenty of high earners with low reliability and impulsive behavior.
throwaway0a5e 5y ago
>I'd like to know how that differs from just plain income? The more money you make, the easier it is to keep clean credit. But it also gives you more control over driving to let you be a safer driver. Doctor and nurse who work in the same hospital and have basically the same commute buy the same car. Doctor might bump someone in rush hour gridlock. Nurse is gonna nail a deer at 60mph at 4am. Doctor is gonna park it in the garage. Nurse's car is gonna get hit on the street. Doctor is gonna rent the Home Depot truck. Nurse is gonna bust the windshield trying to get a pipe in there. Etc. etc. There's tons of situational factors that make it so wealthier people can afford to be way easier on their possessions.
snotrockets 5y ago
> I'd like to know how that differs from just plain income? The more money you make, the easier it is to keep clean credit. But it also gives you more control over driving to let you be a safer driver. Basically credit score is a measure of how you manage debt, which is easier with higher income, of course. An edge case I myself recently run into is that having no debt would lower your score, as having no debt provides no evidence of how well you can manage it.

legitster 5y ago

The implication the person was giving is that people who have debt problems are likely people who struggle with decision making, with lots more downstream effects than just credit. So in an unusual way, credit could almost be an approximation of EQ.

Johnny555 5y ago
But people who have debt problems also tend to have lower income, and it can't all be blamed on "poor decision making". My credit rating was abysmal shortly after college when I was in a low paid job and juggling payments around based on what bills could afford to pay and shifting debt to credit cards. And that low credit rating meant that the cost of credit was high, making it that much worse. But now that I have a good income, it's easy to pay bills on time, or even early, even if a payroll snafu that's not even my fault means my paycheck is late, I have plenty of cash in the bank to pay bills.

TulliusCicero 5y ago

> I'd like to know how that differs from just plain income? Because it indirectly measures responsibility to a certain extent, though of course there are exceptions. And there’s not really another, better way to quickly check if someone is generally responsible. And you can definitely find lower income people with good scores and higher income people with bad ones.

toomuchtodo 5y ago
I don't care for this analogy, as you can be as responsible as possible and still have your credit tarnished due to microeconomic black swan events (and there are numbers thrown about that a majority of citizens can't afford a $1000 financial emergency without relying on subprime credit or family). What credit scoring for insurance purposes does due is suss out who is more likely to make a claim because their finances are marginal and they need the payout versus relying on their own finances for minor claims. Similar to folks who can't afford to replace their roof, and so they make a claim with a public adjuster to have the insurer cover the cost (very popular strategy in Florida for example, causing insurers to flee the state or stop insuring homeowners seeking coverage if their roof is over 10 years old). If one is well to do, they're going to avoid making a claim unless the economic cost of the event is catastrophic (in which case, everyone is making that claim), and so the credit score is being used as a proxy for household financial strength (which is lazy, but easier than ongoing income and asset surveillance, although some credit card companies do this for credit risk management [Amex comes to mind]). EDIT: > That’s the bleeding heart take, yeah. Guilty as charged.
- TulliusCicero 5y ago
  That’s the bleeding heart take, yeah. The truth is that credit scores do what you say, AND they also measure responsibility in practice, enough to where you can find all sorts of correlations.
- eigenvalue 5y ago
  Whether or not there are exceptions (which of course there are) doesn't mean that there isn't a general pattern at work that is robust enough to make it a very strong predictor.

spiznnx 5y ago

I had a poor friend who couldn't afford new tires. She would buy used tires, with little life left, and replace them more frequently. It was more expensive in the long run, and less safe. If she had access to credit she could have bought new tires on credit. It is also just a proxy for income, which is harder to quickly/cheaply verify than a credit score.

frederikvs 5y ago
See also : the Sam Vimes "Boots" theory of socioeconomic unfairness.
- ars 5y ago
  I've always hated that story, because if you go into a "goodwill" type store and look at the used shoes you'll quickly realize it's not actually a true story. There are places where it's true - for example short term rent. And buying in bulk. Buying used is not one of those places. Buying used is the correct thing to do for someone with low income.
  - mrguyorama 5y ago
    The story is not used boots vs new, it's shitty, Walmart brand boots vs being able to afford the really nice L.L. Bean boots. It's starting to lose its meaning unfortunately, as most companies realize you can just charge a lot of money for the cheaply made shit and most consumers just don't have easy options to avoid buying it.
ars 5y ago
> It was more expensive in the long run, and less safe. Are you sure about that? It's more annoying to have to change them, but as someone who bought some long ago, it was cheaper than new, even taking into account how much wear there was. Most used tires actually have lots of wear left - people throw them out because they get a puncture and want all the remaining tires to match. Or even more common they have 2 good ones in back, and 2 bad in front (they forgot to rotate tires), and just replace all 4. Those 2 good ones are sold for much less than new, but they're almost as good as new. > If she had access to credit she could have bought new tires on credit. Once you pay interest on that credit, there's no way she would have come out ahead. Used tires are the correct thing to do here. > It is also just a proxy for income, which is harder to quickly/cheaply verify than a credit score. If you look at the other replies you'll see that credit score is actually not a proxy for income. It measures responsibility.

rory 5y ago

Is there any actual evidence that what you're saying is the reason for the difference though? It's incorrect that credit scores are highly correlated with income [0]. Most accidents are caused by things that are pretty ordinary forms of irresponsibility [1]. A credit score is a (flawed) measure of financial responsibility. That seems like a much more reasonable, although less narratively satisfying, connection. [0] https://www.federalreserve.gov/econres/notes/feds-notes/are-income-and-credit-scores-highly-correlated-20180813.htm https://www.federalreserve.gov/econres/notes/feds-notes/are-... We find a low correlation between credit score levels and income, with the correlation coefficient around 0.27 for income levels and 0.29 for log income. [1] https://www.iii.org/table-archive/21313 https://www.iii.org/table-archive/21313 Driving too fast for conditions or in excess of posted limit or racing 8,746 17.2% Under the influence of alcohol, drugs, or medication 5,164 10.1 Failure to yield right of way 3,728 7.3 Failure to keep in proper lane 3,381 6.6 Operating vehicle in a careless manner 3,302 6.5 Distracted (phone, talking, eating, object, etc.) 3,008 5.9

rtlfe 5y ago
> Most accidents are caused by things that are pretty ordinary forms of irresponsibility This is a big diversion form the actual point, but it's important. The vast majority of these crashes (the word "accident" is rarely used by news/DOTs/etc anymore) could be prevented by designing streets to control speed and improve visibility. So I'd argue that they're caused by poor design which comes as a result of misplaced societal values. Re the second item in that list of causes, an interesting article came out a couple days ago: https://www.bloomberg.com/news/articles/2022-03-21/make-the-world-safe-for-drunk-drivers https://www.bloomberg.com/news/articles/2022-03-21/make-the-...
- rory 5y ago
  Yes, society can and should do more to encourage people to drive safely, but that doesn't mean it's impossible to do so. The same logic applies to all sorts of things like obesity, smoking, etc.. These things obviously have multiple causes-- some societal, some individual. It's not a binary.
- 5y ago

ballenf 5y ago

Would be interesting to investigate a correlation between a low-income person with a relatively high credit and an above-average increase in their income and net worth over time.

kansface 5y ago

Maintaining a really good credit score requires deliberate action and high conscientiousness over a long time. That is just a really strong proxy for success in life. There are loads of people with bad credit and high income - chronic gamblers, for instance.

Johnny555 5y ago
No doubt there are high income people with low credit and low income people with high credit. But my point is that it's a lot easier to keep a good credit school on high income than it is on low income. When your cost of necessities for living (food, rent, utilities, etc) is close to your total income, all it takes is a small disruption in your income to cause a cascade of credit lowering events that are hard to dig yourself out of.
- s1artibartfast 5y ago
  This is all true, but beside the point. The purpose of credit scores is to predict outcome, not measure the effort or intentions of people to overcome their personal situation.

deleted 5y ago

[deleted]

s1artibartfast 5y ago

>I'd like to know how that differs from just plain income? It has basically all the same advantages you mentioned but also filters out high earners with rash behavior and or low responsibility. I know plenty of high earners with low reliability and impulsive behavior.

throwaway0a5e 5y ago

>I'd like to know how that differs from just plain income? The more money you make, the easier it is to keep clean credit. But it also gives you more control over driving to let you be a safer driver. Doctor and nurse who work in the same hospital and have basically the same commute buy the same car. Doctor might bump someone in rush hour gridlock. Nurse is gonna nail a deer at 60mph at 4am. Doctor is gonna park it in the garage. Nurse's car is gonna get hit on the street. Doctor is gonna rent the Home Depot truck. Nurse is gonna bust the windshield trying to get a pipe in there. Etc. etc. There's tons of situational factors that make it so wealthier people can afford to be way easier on their possessions.

snotrockets 5y ago

> I'd like to know how that differs from just plain income? The more money you make, the easier it is to keep clean credit. But it also gives you more control over driving to let you be a safer driver. Basically credit score is a measure of how you manage debt, which is easier with higher income, of course. An edge case I myself recently run into is that having no debt would lower your score, as having no debt provides no evidence of how well you can manage it.