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> 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
by 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 agoYup. 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 agoI 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 agoYeah, 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.
- Ekaros 4y ago10 cards, with average of 3000 limit. Would mean you could take a 30000 more loans at high interest rates very quickly. It is not about having used and paid them, but capability to get loans beyond what you can manage very quickly.
- skissane 4y agoIt turns into a bit of a pointless ritual though - “I need a mortgage, I’m going to cancel cards I don’t use and slash my credit limits to maximise my borrowing power” - but no sooner have I bought the property, I will apply to increase them again, and they are unlikely to say “no”-even if the credit card is issued by the same bank as the mortgage. Or at least, that’s my personal experience in Australia
- smnrchrds 4y agoHow is the system in Australia now and why was it changed?
- Semaphor 4y ago> the UK and Germany are closer to the US in their approach Germany here. a) But we are still not required to "build score" b) There is currently yet another legal challenge against the Schufa (our credit scoring agency), this time in front of the ECJ.