3 ms·

Are you able to offer a better system that is/was working in another developed country?

sofixa 4y ago
I can tell you about the system here in France - when you apply for a loan, the bank asks for some information (your salary, marriage status, kids, etc.) from you to see what you're capable of to spend monthly, and checks with the national bank what loans you have/had, and if you've defaulted on any of them. That's it, they don't need to know more, and the national bank doesn't keep track of everything, only very basic loan information (and of course they have no for profit motive), and nobody outside of a bank where you're applying for a loan uses this information to define your worthiness as a tenant or employee.
- aantix 4y ago
  But why not? Failure of paying back a loan prior - why would I want them as a tenant? If you had a friend that failed to pay back loans, would you want to make a future loan to them?
  - toomuchtodo 4y ago
    Depends on the terms. People change, situations change. It's a big reason why finance firms in the US are attempting to move away from the three CRAs to cashflow underwriting; it turns out credit scores aren't a great forward looking proxy for repayment ability.
  - nicolas_t 4y ago
    Well, French laws are heavily in favour of tenants so actually contrarily to the OP, it's not that easy to rent an apartment. I'm guessing the OP has a CDI (permanent contract), has a French family name and doesn't look Arab or Black. In those cases, yeah you can get a mortgage relatively easily, you can easily rent too. But, 24.8% of people who are employed have those permanent contract. People who do not have that, have it much tougher. To get back to the example of renting, landlords in France are scared of renting to tenants who don't pay because it's hard to evict tenants, so they often use something called a "Garantie Loyer Impayé" which is an insurance backed by the government that will pay back any unpaid rent to the landlord. But if you don't have a permanent contract, it's hard to qualify for this. When I was searching for an apartment 7 years ago, 80% of apartments rejected me because I was working as a contractor (and what's worse my income was from another country since I was working remotely). They used that insurance and that means that I couldn't qualify. So, yes, if you have a permanent contract in France, things are relatively easy but, even then, I have a friend who is black and worked as an electronic engineer with a permanent contract but still had a hard time securing a mortgage because, for some unknown strange reason, he got rejected a lot more than his white friends. Credit systems with clear rules like the US may be gameable but they have the advantage of actually protecting against racism, of enabling people with non-standard profiles access to credit and of actually being relatively easy to follow.
    - mixmastamyk 4y ago
      Hmm, the US credit system might not be as effective at preventing racism as one might imagine. Hard to say without comprehensive numbers however.

I can tell you about the system here in France - when you apply for a loan, the bank asks for some information (your salary, marriage status, kids, etc.) from you to see what you're capable of to spend monthly, and checks with the national bank what loans you have/had, and if you've defaulted on any of them. That's it, they don't need to know more, and the national bank doesn't keep track of everything, only very basic loan information (and of course they have no for profit motive), and nobody outside of a bank where you're applying for a loan uses this information to define your worthiness as a tenant or employee.

aantix 4y ago
But why not? Failure of paying back a loan prior - why would I want them as a tenant? If you had a friend that failed to pay back loans, would you want to make a future loan to them?
- toomuchtodo 4y ago
  Depends on the terms. People change, situations change. It's a big reason why finance firms in the US are attempting to move away from the three CRAs to cashflow underwriting; it turns out credit scores aren't a great forward looking proxy for repayment ability.
- nicolas_t 4y ago
  Well, French laws are heavily in favour of tenants so actually contrarily to the OP, it's not that easy to rent an apartment. I'm guessing the OP has a CDI (permanent contract), has a French family name and doesn't look Arab or Black. In those cases, yeah you can get a mortgage relatively easily, you can easily rent too. But, 24.8% of people who are employed have those permanent contract. People who do not have that, have it much tougher. To get back to the example of renting, landlords in France are scared of renting to tenants who don't pay because it's hard to evict tenants, so they often use something called a "Garantie Loyer Impayé" which is an insurance backed by the government that will pay back any unpaid rent to the landlord. But if you don't have a permanent contract, it's hard to qualify for this. When I was searching for an apartment 7 years ago, 80% of apartments rejected me because I was working as a contractor (and what's worse my income was from another country since I was working remotely). They used that insurance and that means that I couldn't qualify. So, yes, if you have a permanent contract in France, things are relatively easy but, even then, I have a friend who is black and worked as an electronic engineer with a permanent contract but still had a hard time securing a mortgage because, for some unknown strange reason, he got rejected a lot more than his white friends. Credit systems with clear rules like the US may be gameable but they have the advantage of actually protecting against racism, of enabling people with non-standard profiles access to credit and of actually being relatively easy to follow.
  - mixmastamyk 4y ago
    Hmm, the US credit system might not be as effective at preventing racism as one might imagine. Hard to say without comprehensive numbers however.