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Doesn't credit score also incorporate depth of payment (not sure if that's the term, but a history of paying back a large debt)? A financial adviser once told m

Doesn't credit score also incorporate depth of payment (not sure if that's the term, but a history of paying back a large debt)? A financial adviser once told me, when I was three years out of university and had finished paying off my student loans, that my credit score was good (I'd paid off minimal bills ontime on credit cards for years and paid off a used car and student loans) but not deep - I'd never taken on a mortgage or any other high five-digit or six-digit debts. So, though I'd been responsible for a long time, it didn't count like it would have if I'd engaged in a lot more borrowing. Problem was, I valued being debt-free sooner for the flexibility it gave me. After all, look at the etymology of mortgage - mort gage (old French), literally "death pledge". Thanks, but I prefer life without that kind of constraint. And if one is born into generational poverty, in a place highly dependent on government intervention, its probably really hard to access the mindset and opportunities for education and entrepreneurial examples that could start to break the poverty trend.

vorpalhex 4y ago
You are correct that history of repayment helps the score. Someone who borrows $5 once and pays it back once is less trustworthy (from a credit sense) then the person who borrows $5 every month and pays it back every month, as odd as that feels in the abstract. Credit scores are intentionally a blend of elements. Generally the advice is to make one or two small credit purchases a month and pay them back - just enough to show consistent mild activity. Some people like using gas for this since credit cards are more fraud protected, but that may or may not be a "small purchase" for you. When we talk about poverty, we want to seperate out the individual case (Bob is broke) from the group case (Mary's tribe is broke.) Fixing Bob's problems looks very different from fixing the tribes problems. (That doesn't mean the root problem is unrelated.) Financial literacy education is unfortunately overrun with scams.

vorpalhex 4y ago

You are correct that history of repayment helps the score. Someone who borrows $5 once and pays it back once is less trustworthy (from a credit sense) then the person who borrows $5 every month and pays it back every month, as odd as that feels in the abstract. Credit scores are intentionally a blend of elements. Generally the advice is to make one or two small credit purchases a month and pay them back - just enough to show consistent mild activity. Some people like using gas for this since credit cards are more fraud protected, but that may or may not be a "small purchase" for you. When we talk about poverty, we want to seperate out the individual case (Bob is broke) from the group case (Mary's tribe is broke.) Fixing Bob's problems looks very different from fixing the tribes problems. (That doesn't mean the root problem is unrelated.) Financial literacy education is unfortunately overrun with scams.