4 ms·

excuse my ignorance, but what's a credit score and why does it matter? I can see it's a Bad Thing to have a low one, but in what way does it impact someone?

sp332 15y ago
A credit score is maintained by a credit bureau, so potential lenders can check up on how "good" a potential borrower is before making a deal. https://secure.wikimedia.org/wikipedia/en/wiki/Credit_score https://secure.wikimedia.org/wikipedia/en/wiki/Credit_score So having a low one makes it difficult and expensive to get a loan or any kind of credit.
- palish 15y ago
  That's correct, but it's not quite that simple. If my car dies, I won't be able to get anywhere, because I can't get a loan for a new one. When we move to a new apartment, they won't allow us to have Internet service. I am not exaggerating in the slightest. AT&T U-Verse already denied me once in the past, before I got my score to 760 --- they refused me service. Completely. No alternatives. It didn't matter to them whether I had $10, $1,000, or $10,000 in the bank. The computer told them "unknown risk", and so they would not do business with me. There were no alternative internet providers. I would have been completely screwed, but my wife (who was my fiancée at the time, thankfully; credit score of one person will reflect on both of you after marriage) was approved. We will not be able to get a house, if we choose to. We might not even be able to live in a specific area we want --- apartment complexes check your credit before allowing you to live there. All over $80, due to the messed up health insurance system. Blergh.
  - cubicle67 15y ago
    and you've got no recourse? sheeesh! what a screwed up system I sincerely hope you're able to get things sorted. Thanks for the explanation
notJim 15y ago
I'm sorry, as this is rather off-topic, but are you by any chance unfamiliar with credit scores because they don't exist in Australia? If so, how do lending institutions gauge your credit-worthiness, and how do you set expectations about the same? I am just curious how this works outside of the US.
- cubicle67 15y ago
  This is going to sound terribly naive, but I don't know what we have here in Aus. I've got a mortgage, car loan and credit card, but the process for getting them was relatively mundane. I know if you sign up for a phone plan they do a "credit check" but I don't know what it involves. I assume we have something, but I've never had cause to think about it before
  - palish 15y ago
    I wish I could be terribly naive too... =) Aus sounds amazing!
- merijnv 15y ago
  non-US perspective: In the Netherlands we have the "Burea of Credit Registration" which registers most debts, storing: - amount - start date - expected end date - actual end date - type of credit - miscellaneous notes If payments are missed or other difficulties develop the lender can contact the Bureau, which notes this information on file. This information is stored for up to 5 years after final payment. Note that this only tracks loans to individuals with a duration longer than 3 months and over a certain minimum amount. The basic idea is that everyone who has not failed to repay a loan is considered creditworthy, actual loans are based on the above info, income (plus certainty of employment) and collateral.
  - notJim 15y ago
    Thanks, that sounds basically the same as the credit reporting agencies here in the US (except maybe the thing you're talking about is government-run?)
ThomPete 15y ago
Credit score or credit history is the way the US build trust in you as a customer. Other places, like in Denmark for instance you are by default considered a trust-worthy customer and only if you start not paying your bills does it affect your ability to get a loan etc.

sp332 15y ago

A credit score is maintained by a credit bureau, so potential lenders can check up on how "good" a potential borrower is before making a deal. https://secure.wikimedia.org/wikipedia/en/wiki/Credit_score https://secure.wikimedia.org/wikipedia/en/wiki/Credit_score So having a low one makes it difficult and expensive to get a loan or any kind of credit.

palish 15y ago
That's correct, but it's not quite that simple. If my car dies, I won't be able to get anywhere, because I can't get a loan for a new one. When we move to a new apartment, they won't allow us to have Internet service. I am not exaggerating in the slightest. AT&T U-Verse already denied me once in the past, before I got my score to 760 --- they refused me service. Completely. No alternatives. It didn't matter to them whether I had $10, $1,000, or $10,000 in the bank. The computer told them "unknown risk", and so they would not do business with me. There were no alternative internet providers. I would have been completely screwed, but my wife (who was my fiancée at the time, thankfully; credit score of one person will reflect on both of you after marriage) was approved. We will not be able to get a house, if we choose to. We might not even be able to live in a specific area we want --- apartment complexes check your credit before allowing you to live there. All over $80, due to the messed up health insurance system. Blergh.
- cubicle67 15y ago
  and you've got no recourse? sheeesh! what a screwed up system I sincerely hope you're able to get things sorted. Thanks for the explanation

notJim 15y ago

I'm sorry, as this is rather off-topic, but are you by any chance unfamiliar with credit scores because they don't exist in Australia? If so, how do lending institutions gauge your credit-worthiness, and how do you set expectations about the same? I am just curious how this works outside of the US.

cubicle67 15y ago
This is going to sound terribly naive, but I don't know what we have here in Aus. I've got a mortgage, car loan and credit card, but the process for getting them was relatively mundane. I know if you sign up for a phone plan they do a "credit check" but I don't know what it involves. I assume we have something, but I've never had cause to think about it before
- palish 15y ago
  I wish I could be terribly naive too... =) Aus sounds amazing!
merijnv 15y ago
non-US perspective: In the Netherlands we have the "Burea of Credit Registration" which registers most debts, storing: - amount - start date - expected end date - actual end date - type of credit - miscellaneous notes If payments are missed or other difficulties develop the lender can contact the Bureau, which notes this information on file. This information is stored for up to 5 years after final payment. Note that this only tracks loans to individuals with a duration longer than 3 months and over a certain minimum amount. The basic idea is that everyone who has not failed to repay a loan is considered creditworthy, actual loans are based on the above info, income (plus certainty of employment) and collateral.
- notJim 15y ago
  Thanks, that sounds basically the same as the credit reporting agencies here in the US (except maybe the thing you're talking about is government-run?)

ThomPete 15y ago

Credit score or credit history is the way the US build trust in you as a customer. Other places, like in Denmark for instance you are by default considered a trust-worthy customer and only if you start not paying your bills does it affect your ability to get a loan etc.