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>Automated human classification without recourse nor transparency is what the EU is against. "You cannot get a loan because the AI says so" is not acceptable.

>Automated human classification without recourse nor transparency is what the EU is against. "You cannot get a loan because the AI says so" is not acceptable. The credit score system already in place in the US is frequently as arbitrary in some cases already. You get punished for just looking at it. I don't think I need to preach to HN about that (crypto money and all that). Does Europe do it much differently? Not an arguement for AI to do it, but the only reason why the current system is better (at least in the US) is its sluggish incompetence.

kelnos 4y ago
> You get punished for just looking at it. Not completely false, but misleading: you get penalized if a lender looks at it with the express purpose of using it to decide whether or not to offer you credit (called a "hard pull"). You looking at your own credit report does not penalize you, and certain other activities (like getting pre-approved for a loan) won't either. The penalty for hard pulls isn't that bad, anyway, and disappears after a relatively short while. I currently have 7 hard pulls (I've been chasing credit card rewards offers lately), but my overall credit score is still over 800.
- IMTDb 4y ago
  So, GET request not only aren't idempotent but they also affect the party that is read. Who came up with that lovely system ? I gave it roughly 15 seconds of thought and came come up with multiple ways this design fucks up people lives.
  - sokoloff 4y ago
    It’s not a GET request on the credit history; those do not affect the score. It’s a PUT* request on the “considering taking additional credit” record. * perhaps closer to PATCH as multiple requests in short time are combined as one (as in mortgage shopping)
  - fnordpiglet 4y ago
    The key though is this operation only happens when it’s part of a requested credit evaluation for the purposes of expanding credit. The act of requesting new credit diminishes your credit worthiness. The intent is to throttle issuance of credit by providing for a race condition - if I go out and apply for 100 credit cards at the same time, they each get a credit report without the others line of credit established because they’re all in the pending state. But each request to evaluate the worthiness of credit dampens the quality of credit. At a certain point all credit requests thereafter fail. On the flip side it also causes a hole that’s increasingly hard to dig out of because if you have bad credit or borderline credit and apply for a card to see if you’re allowed back in at the capitalist buffet, you enter into a feedback loop of diminishing credit worthiness. It isn’t true however that any form of read changes credit worthiness. There are many routine reads that have no impact. It’s specifically when you’ve directly requested an evaluation for expanded credit. It can’t happen passively, as sometimes banks refresh your credit history and even offer more credit automatically. It also can’t happen for other purposes than expansion of credit.
  - NovemberWhiskey 4y ago
    A hard-pull is not a GET; it's a POST. The semantics are "this person is actively seeking credit, and we are considering whether to extend it to them". The system regards the extent of credit-seeking behavior, and changes to its pattern, as a factor that affects the credit profile. That's not prima facie unreasonable. If you have someone who suddenly starts applying for lots of personal loans (for example), that's probably something you'd be interested in, as someone who has previously extended credit to that person. As the prior poster indicated, when you look at your own credit file, it's not a hard pull. Nor is it a hard pull when a creditor updates their records on you as part of ongoing monitoring of your account. It's only a hard pull when the subject is specifically requesting a new, or increased, extension of credit. Those soft-pulls are GETs.
    - deleted 4y ago
      [deleted]
andsoitis 4y ago
> You get punished for just looking at it. Can you elaborate? Everyone of the banks I use have an affordance on their website/app that allows me to see my credit score, history, etc. The bank puts it pretty front and center, so if even juts viewing it has a negative impact, why do you think the bank would make it so easy?
bryanrasmussen 4y ago
>The credit score system already in place in the US is frequently as arbitrary in some cases already. people often think that the problems that pertain to their country are universal, but they would be wrong.
skissane 4y ago
> The credit score system already in place in the US is frequently as arbitrary in some cases already. You get punished for just looking at it. I don't think I need to preach to HN about that (crypto money and all that). Does Europe do it much differently? Almost every country has some kind of credit reporting system, but many of them differ from the US in how they do it. In particular, in many countries, credit bureaus only hold negative information such as failing to pay bills or repay debts – which means if you keep up to date with all your bills and debts, your credit history will be blank. At which point, lenders will generally ask you to provide evidence of your employment history, salary, bank balance, assets, etc, and base their lending decision on that. They may well internally convert that all info into a "score", but every lender is going to have a different scoring system. Here's an article – https://www.businessinsider.com/credit-score-around-the-world-2018-8 https://www.businessinsider.com/credit-score-around-the-worl... – which discusses the systems used in different countries, including several European countries. There is no uniform approach to this in Europe – the UK and Germany are closer to the US in their approach, the Netherlands, Spain and France are closer to the "credit bureaus hold negative info only" system.
- KyeRussell 4y ago
  Yup. Until recently, Australia only had negative event reporting. Still, you’d regularly have kids that had been brainwashed by US-centric personal finance gurus (and American media more generally) asking how they could boost their “credit score”. Fully willing to sign up for and use credit cards as an 18-year-old student to juice some system they had been led to believe existed in the first place.
  - Ekaros 4y ago
    I think in Finland having too many credit lines would actually hurt you with loans. However well you have handled those. As important factor is total amount of loans or capacity to get them.
    - endless1234 4y ago
      Yeah, amount of credit cards & the total available credit limit is used as a negative signal when applying for a loan. But I think you'd have to have some completely silly amount for it to _really_ affect the outcome. You can easily show that you've not used the cards, for example. If you have 10 credit cards which you use constantly, it would affect your ability to get a loan. To me this makes sense, but of course, it's what I'm used to.
OJFord 4y ago
> The credit score system already in place in the US [...] Does Europe do it much differently? Yes, as far as I'm aware the US & Canada are unique in having 'a credit score' for people; elsewhere there may be agencies offering scoring services to lenders, but it's not something individuals ordinarily nor need to care about, and it's not 'their score' it's just that particular company's (Equifax's, or whoever) rating. It's not taken as seriously, nor does it need to be.
- LeanderK 4y ago
  yeah, german here. I know schufa exists but right now it's really barely relevant. I don't plan to take on large debt or something (I think that's what they are used for?) and I've never used it so far.
Kranar 4y ago
>The credit score system already in place in the US is frequently as arbitrary in some cases already. The credit score system is not arbitrary, it's a specific formula that applies equally to everyone. >You get punished for just looking at it. No you do not. There are hard inquiries and soft inquiries, and an individual viewing their own credit score is considered a soft inquiry which has absolutely no effect on your credit score. As for Europe, there is no one homogeneous answer. Different parts of Europe handle credit differently. The UK and Germany are very similar to the U.S., whereas in France there is no concept of a credit rating or credit score. With that said, generally the countries that do not have a credit scoring system are much harder to get a loan from.
- wb14123 4y ago
  > it's a specific formula that applies equally to everyone. That doesn’t mean the formula is reasonable or transparent. An AI is also a specific formula that applies equally to everyone. It’s about how the formula takes “weight” on the individual’s differences. > There are hard inquiries and soft inquiries Why there are “hard inquiries”? Why someone else inquiring my credit score should affect my credit score?
  - andsoitis 4y ago
    > An AI is also a specific formula that applies equally to everyone. AI’s are not “a specific formula” and not only that, it’s decision-making is opaque to humans.
  - NovemberWhiskey 4y ago
    >That doesn’t mean the formula is reasonable or transparent. An AI is also a specific formula that applies equally to everyone. You can learn literally everything you need to know about how the FICO credit scoring systems works in probably two or three hours of dedicated research, even though the model itself is a trade-secret. When lenders deny credit, they're legally obliged to provide the specific reasons why. This is not-even-in-the-same-ballpark as AI, where no-one can even tell you how inputs relate to outputs, not even the creators.
  - 4y ago
fsloth 4y ago
”Does Europe do it much differently?” Yes (Finland and afaik other nordic countries at least). The lenders use statistics, not individul spying to set their rates.
- NovemberWhiskey 4y ago
  Uhuh. https://www.luottotietohaku.fi/?l=en https://www.luottotietohaku.fi/?l=en https://oikeus.fi/talousjavelkaneuvonta/en/index/unnamed3/badcreditrecord/checkandprotectyourdata_1.html https://oikeus.fi/talousjavelkaneuvonta/en/index/unnamed3/ba...

kelnos 4y ago

> You get punished for just looking at it. Not completely false, but misleading: you get penalized if a lender looks at it with the express purpose of using it to decide whether or not to offer you credit (called a "hard pull"). You looking at your own credit report does not penalize you, and certain other activities (like getting pre-approved for a loan) won't either. The penalty for hard pulls isn't that bad, anyway, and disappears after a relatively short while. I currently have 7 hard pulls (I've been chasing credit card rewards offers lately), but my overall credit score is still over 800.

IMTDb 4y ago
So, GET request not only aren't idempotent but they also affect the party that is read. Who came up with that lovely system ? I gave it roughly 15 seconds of thought and came come up with multiple ways this design fucks up people lives.
- sokoloff 4y ago
  It’s not a GET request on the credit history; those do not affect the score. It’s a PUT* request on the “considering taking additional credit” record. * perhaps closer to PATCH as multiple requests in short time are combined as one (as in mortgage shopping)
- fnordpiglet 4y ago
  The key though is this operation only happens when it’s part of a requested credit evaluation for the purposes of expanding credit. The act of requesting new credit diminishes your credit worthiness. The intent is to throttle issuance of credit by providing for a race condition - if I go out and apply for 100 credit cards at the same time, they each get a credit report without the others line of credit established because they’re all in the pending state. But each request to evaluate the worthiness of credit dampens the quality of credit. At a certain point all credit requests thereafter fail. On the flip side it also causes a hole that’s increasingly hard to dig out of because if you have bad credit or borderline credit and apply for a card to see if you’re allowed back in at the capitalist buffet, you enter into a feedback loop of diminishing credit worthiness. It isn’t true however that any form of read changes credit worthiness. There are many routine reads that have no impact. It’s specifically when you’ve directly requested an evaluation for expanded credit. It can’t happen passively, as sometimes banks refresh your credit history and even offer more credit automatically. It also can’t happen for other purposes than expansion of credit.
- NovemberWhiskey 4y ago
  A hard-pull is not a GET; it's a POST. The semantics are "this person is actively seeking credit, and we are considering whether to extend it to them". The system regards the extent of credit-seeking behavior, and changes to its pattern, as a factor that affects the credit profile. That's not prima facie unreasonable. If you have someone who suddenly starts applying for lots of personal loans (for example), that's probably something you'd be interested in, as someone who has previously extended credit to that person. As the prior poster indicated, when you look at your own credit file, it's not a hard pull. Nor is it a hard pull when a creditor updates their records on you as part of ongoing monitoring of your account. It's only a hard pull when the subject is specifically requesting a new, or increased, extension of credit. Those soft-pulls are GETs.
  - deleted 4y ago
    [deleted]

andsoitis 4y ago

> You get punished for just looking at it. Can you elaborate? Everyone of the banks I use have an affordance on their website/app that allows me to see my credit score, history, etc. The bank puts it pretty front and center, so if even juts viewing it has a negative impact, why do you think the bank would make it so easy?

bryanrasmussen 4y ago

>The credit score system already in place in the US is frequently as arbitrary in some cases already. people often think that the problems that pertain to their country are universal, but they would be wrong.

skissane 4y ago

> The credit score system already in place in the US is frequently as arbitrary in some cases already. You get punished for just looking at it. I don't think I need to preach to HN about that (crypto money and all that). Does Europe do it much differently? Almost every country has some kind of credit reporting system, but many of them differ from the US in how they do it. In particular, in many countries, credit bureaus only hold negative information such as failing to pay bills or repay debts – which means if you keep up to date with all your bills and debts, your credit history will be blank. At which point, lenders will generally ask you to provide evidence of your employment history, salary, bank balance, assets, etc, and base their lending decision on that. They may well internally convert that all info into a "score", but every lender is going to have a different scoring system. Here's an article – https://www.businessinsider.com/credit-score-around-the-world-2018-8 https://www.businessinsider.com/credit-score-around-the-worl... – which discusses the systems used in different countries, including several European countries. There is no uniform approach to this in Europe – the UK and Germany are closer to the US in their approach, the Netherlands, Spain and France are closer to the "credit bureaus hold negative info only" system.

KyeRussell 4y ago
Yup. Until recently, Australia only had negative event reporting. Still, you’d regularly have kids that had been brainwashed by US-centric personal finance gurus (and American media more generally) asking how they could boost their “credit score”. Fully willing to sign up for and use credit cards as an 18-year-old student to juice some system they had been led to believe existed in the first place.
- Ekaros 4y ago
  I think in Finland having too many credit lines would actually hurt you with loans. However well you have handled those. As important factor is total amount of loans or capacity to get them.
  - endless1234 4y ago
    Yeah, amount of credit cards & the total available credit limit is used as a negative signal when applying for a loan. But I think you'd have to have some completely silly amount for it to _really_ affect the outcome. You can easily show that you've not used the cards, for example. If you have 10 credit cards which you use constantly, it would affect your ability to get a loan. To me this makes sense, but of course, it's what I'm used to.

OJFord 4y ago

> The credit score system already in place in the US [...] Does Europe do it much differently? Yes, as far as I'm aware the US & Canada are unique in having 'a credit score' for people; elsewhere there may be agencies offering scoring services to lenders, but it's not something individuals ordinarily nor need to care about, and it's not 'their score' it's just that particular company's (Equifax's, or whoever) rating. It's not taken as seriously, nor does it need to be.

LeanderK 4y ago
yeah, german here. I know schufa exists but right now it's really barely relevant. I don't plan to take on large debt or something (I think that's what they are used for?) and I've never used it so far.

Kranar 4y ago

>The credit score system already in place in the US is frequently as arbitrary in some cases already. The credit score system is not arbitrary, it's a specific formula that applies equally to everyone. >You get punished for just looking at it. No you do not. There are hard inquiries and soft inquiries, and an individual viewing their own credit score is considered a soft inquiry which has absolutely no effect on your credit score. As for Europe, there is no one homogeneous answer. Different parts of Europe handle credit differently. The UK and Germany are very similar to the U.S., whereas in France there is no concept of a credit rating or credit score. With that said, generally the countries that do not have a credit scoring system are much harder to get a loan from.

wb14123 4y ago
> it's a specific formula that applies equally to everyone. That doesn’t mean the formula is reasonable or transparent. An AI is also a specific formula that applies equally to everyone. It’s about how the formula takes “weight” on the individual’s differences. > There are hard inquiries and soft inquiries Why there are “hard inquiries”? Why someone else inquiring my credit score should affect my credit score?
- andsoitis 4y ago
  > An AI is also a specific formula that applies equally to everyone. AI’s are not “a specific formula” and not only that, it’s decision-making is opaque to humans.
- NovemberWhiskey 4y ago
  >That doesn’t mean the formula is reasonable or transparent. An AI is also a specific formula that applies equally to everyone. You can learn literally everything you need to know about how the FICO credit scoring systems works in probably two or three hours of dedicated research, even though the model itself is a trade-secret. When lenders deny credit, they're legally obliged to provide the specific reasons why. This is not-even-in-the-same-ballpark as AI, where no-one can even tell you how inputs relate to outputs, not even the creators.
- 4y ago

fsloth 4y ago

”Does Europe do it much differently?” Yes (Finland and afaik other nordic countries at least). The lenders use statistics, not individul spying to set their rates.

NovemberWhiskey 4y ago
Uhuh. https://www.luottotietohaku.fi/?l=en https://www.luottotietohaku.fi/?l=en https://oikeus.fi/talousjavelkaneuvonta/en/index/unnamed3/badcreditrecord/checkandprotectyourdata_1.html https://oikeus.fi/talousjavelkaneuvonta/en/index/unnamed3/ba...