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TIL credit score is a real thing in a Western country - I always figured it was some thing hypothetical. Looks scarily too familiar to the Social score from som

TIL credit score is a real thing in a Western country - I always figured it was some thing hypothetical. Looks scarily too familiar to the Social score from some Black Mirror episode, or the alleged Chinese system if you ask me.

tacLog 5y ago
As someone from a Western country, what replaces it? How do you buy a car on a loan for example? It's not perfect but unlike both your examples it isn't based on things that could be consider political. You can't lower your credit score by attending a protest for example. Or posting things for or against causes on the internet. I am just honestly wondering what else is our there? It has always seemed like a tool that can be used by both individuals and lenders.
- hocuspocus 5y ago
  Plenty of European countries don't have credit scores. A car loan is collateralized so I don't really see what's complicated.
  - MaxHoppersGhost 5y ago
    The cost of repossessing a car isn’t zero, and even finding the car can be hard. What if the car is trashed when you repossess it? Say they wrecked it and don’t have insurance? This isn’t an uncommon scenario.
    - hocuspocus 5y ago
      No insurance = no registration = no plates. That's a pretty serious offense and it's extremely uncommon over here. Sure, repossession can be costly but debt collection agencies will make your life hell very quickly, it's not something you can drag for years without big consequences.
- PeterisP 5y ago
  At my home the approach is a central registry of defaults that can be accessed with your permission (which is required by some but not all lenders to evaluate you). It's kind of an extreme version of a credit score, where everyone who has never defaulted - or where the cause of default wasn't their fault e.g. identity fraud - has a perfect "credit score". The key values used by banks is essentially two ratios, loan vs collateral, and monthly loan payments vs monthly income; so the question isn't about whether to grant a loan but what is the maximum amount they are willing to risk given your income.
  - maxk42 5y ago
    That's exactly what a credit score is - only the defaults disappear after a certain number of years to give people another chance.
    - PeterisP 5y ago
      As far as I understand, people in USA with zero credit history get a poor credit score, which is a major difference from zero history being as good as it gets.
      - astura 5y ago
        If you have nothing on your credit report you don't have a poor credit score, you have no credit score.
  - addaon 5y ago
    Doesn't this system also require a central registry of outstanding debt per individual? Otherwise if the bank ratio calculations say they're comfortable lending you $1000, what prevents you from going to 100 banks and getting 100x that amount (which, presumedly, would be beyond each individual bank's risk tolerance)?
    - chii 5y ago
      This is exactly what happened with https://en.wikipedia.org/wiki/Archegos_Capital_Management#March_2021_losses https://en.wikipedia.org/wiki/Archegos_Capital_Management#Ma... - they had what basically amounts to loans to several different banks (with each bank largely unaware of his other leveraged holdings at other banks). When the stock price dropped and started to make margin calls on the loans, some of the banks had to take a loss as there wasn't enough liquidity to sell into. banks don't like to be in this sort of situation - in this particular case, the banks just didn't do enough due diligence presumably.
mynameishere 5y ago
In the old days, if you wanted a mortgage, you and the wife put on your Sunday best and went down to talk to the banker in person. If he didn't already know you, he'd grill you. You better have a good job and a good reputation, mister. Should have thought ahead and got yourself some good standing in the Rotary Club or Elks. Have you been seen in church lately? Etc, etc. Credit scores replaced all that crap.
- jfk13 5y ago
  We get regular HN threads about "company X auto-terminated my account and there's no way to get a human involved". Is that really a better way to run society? Maybe local bank managers having connections to the local community, and actually knowing their customers, rather than sitting behind opaque algorithms and data brokers, wasn't entirely a bad thing after all.
  - seoaeu 5y ago
    Historically, the "human" way could certainly bad thing for you if your skin color, religion, etc. didn't match the local bank manager... As I understand it, that's why the government pressured banks to move away from that system.
- asdff 5y ago
  No they haven't. Rent an apartment. You need paystubs to prove your income. You need two references to vouch for your moral character or whatever references are supposed to do for a landlord. You have to throw down a security deposit equal to x months rent. Then you also get that credit check hit. The credit check is saving you from none of that crap, it is just more crap on top of all that other crap that hasn't gone anywhere.
josephcsible 5y ago
Regular credit scores existing isn't dystopian at all (though there are some issues with exactly how they're implemented). In principle, they're just a formalization of the concept that if you've broken promises to pay people in the past, they're less likely to trust you to keep your promises going forward.
- thrashh 5y ago
  If anything, we just need mandated personal finance classes in high school since not everyone has parents/family to teach them. It would go a long way.
  - archhn 5y ago
    It's the "thrift" argument all over again. You're projecting systematic economic problems onto the poor. Wages have been stagnant for many years. Inflation and cost of living is rising incredibly. Can we at least make the government take a financially literacy class first? It is the biggest debtor in the world.
    - josephcsible 5y ago
      > Can we at least make the government take a financially literacy class first? It is the biggest debtor in the world. Having debt isn't the problem. Defaulting on it is, and the government doesn't do that.
      - brnaftr361 5y ago
        Isn't the government, for practical purposes and intentions, effectively insolvent?
        archhn 5y ago
        HN posters are mostly corporate workers, or institutionalized in some way. The individual is always wrong in their eyes, institutions are always right. If an individual goes broke wracking up medical debt, "Too bad. You should have been more economically useful." If the government goes broke, "Uh, it's no problem." I get it. They were trained to despise individuals and worship institutions. They stop singing this song when they get edged out of the system though. I've met many middle aged programmers that gave up all hope in life because they lost their economic value. Hope you people aren't one of them.
trasz 5y ago
It’s pretty much exactly like the one in China, if you compare facts and not just propaganda about both.
asdff 5y ago
It's basically your uber rider rating but in terms of debts and shared with banks and other financial agencies.
- unsupp0rted 5y ago
  My Uber rider rating is abysmal because I used Uber in developing countries a lot and kept noping out of the ride when the seatbelts were absent, were broken, the driver was texting on the highway, the driver was drunk, etc Drivers don't like passengers like me, who want to get into a car, put on a seatbelt, and have the driver keep their eyes on the road until the destination.

tacLog 5y ago

As someone from a Western country, what replaces it? How do you buy a car on a loan for example? It's not perfect but unlike both your examples it isn't based on things that could be consider political. You can't lower your credit score by attending a protest for example. Or posting things for or against causes on the internet. I am just honestly wondering what else is our there? It has always seemed like a tool that can be used by both individuals and lenders.

hocuspocus 5y ago
Plenty of European countries don't have credit scores. A car loan is collateralized so I don't really see what's complicated.
- MaxHoppersGhost 5y ago
  The cost of repossessing a car isn’t zero, and even finding the car can be hard. What if the car is trashed when you repossess it? Say they wrecked it and don’t have insurance? This isn’t an uncommon scenario.
  - hocuspocus 5y ago
    No insurance = no registration = no plates. That's a pretty serious offense and it's extremely uncommon over here. Sure, repossession can be costly but debt collection agencies will make your life hell very quickly, it's not something you can drag for years without big consequences.
PeterisP 5y ago
At my home the approach is a central registry of defaults that can be accessed with your permission (which is required by some but not all lenders to evaluate you). It's kind of an extreme version of a credit score, where everyone who has never defaulted - or where the cause of default wasn't their fault e.g. identity fraud - has a perfect "credit score". The key values used by banks is essentially two ratios, loan vs collateral, and monthly loan payments vs monthly income; so the question isn't about whether to grant a loan but what is the maximum amount they are willing to risk given your income.
- maxk42 5y ago
  That's exactly what a credit score is - only the defaults disappear after a certain number of years to give people another chance.
  - PeterisP 5y ago
    As far as I understand, people in USA with zero credit history get a poor credit score, which is a major difference from zero history being as good as it gets.
    - astura 5y ago
      If you have nothing on your credit report you don't have a poor credit score, you have no credit score.
- addaon 5y ago
  Doesn't this system also require a central registry of outstanding debt per individual? Otherwise if the bank ratio calculations say they're comfortable lending you $1000, what prevents you from going to 100 banks and getting 100x that amount (which, presumedly, would be beyond each individual bank's risk tolerance)?
  - chii 5y ago
    This is exactly what happened with https://en.wikipedia.org/wiki/Archegos_Capital_Management#March_2021_losses https://en.wikipedia.org/wiki/Archegos_Capital_Management#Ma... - they had what basically amounts to loans to several different banks (with each bank largely unaware of his other leveraged holdings at other banks). When the stock price dropped and started to make margin calls on the loans, some of the banks had to take a loss as there wasn't enough liquidity to sell into. banks don't like to be in this sort of situation - in this particular case, the banks just didn't do enough due diligence presumably.

mynameishere 5y ago

In the old days, if you wanted a mortgage, you and the wife put on your Sunday best and went down to talk to the banker in person. If he didn't already know you, he'd grill you. You better have a good job and a good reputation, mister. Should have thought ahead and got yourself some good standing in the Rotary Club or Elks. Have you been seen in church lately? Etc, etc. Credit scores replaced all that crap.

jfk13 5y ago
We get regular HN threads about "company X auto-terminated my account and there's no way to get a human involved". Is that really a better way to run society? Maybe local bank managers having connections to the local community, and actually knowing their customers, rather than sitting behind opaque algorithms and data brokers, wasn't entirely a bad thing after all.
- seoaeu 5y ago
  Historically, the "human" way could certainly bad thing for you if your skin color, religion, etc. didn't match the local bank manager... As I understand it, that's why the government pressured banks to move away from that system.
asdff 5y ago
No they haven't. Rent an apartment. You need paystubs to prove your income. You need two references to vouch for your moral character or whatever references are supposed to do for a landlord. You have to throw down a security deposit equal to x months rent. Then you also get that credit check hit. The credit check is saving you from none of that crap, it is just more crap on top of all that other crap that hasn't gone anywhere.

josephcsible 5y ago

Regular credit scores existing isn't dystopian at all (though there are some issues with exactly how they're implemented). In principle, they're just a formalization of the concept that if you've broken promises to pay people in the past, they're less likely to trust you to keep your promises going forward.

thrashh 5y ago
If anything, we just need mandated personal finance classes in high school since not everyone has parents/family to teach them. It would go a long way.
- archhn 5y ago
  It's the "thrift" argument all over again. You're projecting systematic economic problems onto the poor. Wages have been stagnant for many years. Inflation and cost of living is rising incredibly. Can we at least make the government take a financially literacy class first? It is the biggest debtor in the world.
  - josephcsible 5y ago
    > Can we at least make the government take a financially literacy class first? It is the biggest debtor in the world. Having debt isn't the problem. Defaulting on it is, and the government doesn't do that.
    - brnaftr361 5y ago
      Isn't the government, for practical purposes and intentions, effectively insolvent?
      - archhn 5y ago
        HN posters are mostly corporate workers, or institutionalized in some way. The individual is always wrong in their eyes, institutions are always right. If an individual goes broke wracking up medical debt, "Too bad. You should have been more economically useful." If the government goes broke, "Uh, it's no problem." I get it. They were trained to despise individuals and worship institutions. They stop singing this song when they get edged out of the system though. I've met many middle aged programmers that gave up all hope in life because they lost their economic value. Hope you people aren't one of them.

trasz 5y ago

It’s pretty much exactly like the one in China, if you compare facts and not just propaganda about both.

asdff 5y ago

It's basically your uber rider rating but in terms of debts and shared with banks and other financial agencies.

unsupp0rted 5y ago
My Uber rider rating is abysmal because I used Uber in developing countries a lot and kept noping out of the ride when the seatbelts were absent, were broken, the driver was texting on the highway, the driver was drunk, etc Drivers don't like passengers like me, who want to get into a car, put on a seatbelt, and have the driver keep their eyes on the road until the destination.