4 ms·

> despite near perfect credit Your credit wasn't near-perfect. You hadn't defaulted, but that's far from proving that you can manage your credit/money and make

by HWR_14 4y ago

> despite near perfect credit Your credit wasn't near-perfect. You hadn't defaulted, but that's far from proving that you can manage your credit/money and make payments on time. A hobo who lived in the woods would also have never missed a payment.

IvyMike 4y ago
Would that hobo have used a CC that he immediately paid off? That needs to count for something.
- HWR_14 4y ago
  It counts for something, it's just not enough by itself normally.
llsf 4y ago
But he said that he used credit cards and never missed a payment. That should count, right ? I can relate, as I came in US from Europe. I arrived, opened a bank account in a big bank, I could only get a debit card, because I had not credit history. After few months I could get a credit card, but with a $500.00 limit! I needed a car, so I bought one cash. When came the time to buy a home, I was asked to open more credit cards (one was not sufficient) and come back in a year or so later, to see how my score would improve.
- HWR_14 4y ago
  You never proved you could handle more than $500 in debt. You then asked for maybe three-orders of magnitude more debt. Surely you can appreciate that difference.
  - Spivak 4y ago
    There's no difference at all for someone who works a dayjob. The only thing that matters is that you have you demonstrated that you can make a fixed monthly payment reliably. Paying your bills, paying your rent, paying your CC all demonstrate that. If you rent a $1500/mo apartment you actually have managed $18k of debt. Doing the same thing but this time with interest proves nothing the others don't. Borrowing history makes sense for businesses or people who with complicated cash-flows. But if you're stably gainfully employed the only things that matter is how you manage your external financial risks (which banks don't check for) and your ability to not over spend (which banks also don't check for). Combine this with the your typical mortgage is overcollateralized means the magnitude of the loan is essentially meaningless outside of "is the monthly payment something you can afford."
    - zamnos 4y ago
      But what if they discover alcohol/drugs/gambling/etc? They'll fall off the tracks and the loan will never get paid back. Which ofc is incredibly stupid, classist, and racist to boot. And not even a guarantee by someone's credit score. But with a credit score, you have a metric of just how much money to trust them with (not really), which can be plugged into the spreadsheet and you can hire an army of mortgage brokers to plug stuff into the spreadsheet. Credit score is a moralizing system that hates the poor, so it's unsurprisingly embedded itself into American culture by three corporations that will never be held accountable (see: Equifax leak). It's as American as the bald eagle. I'll stop now, my cynicism is showing. I just don't see a way to get to a place where we don't have the current trifecta of credit scoring corporations running our lives without a giant pile of money to start a competing credit bureau that makes and underwrites loans based on different computation of a person's score. Because a credit score was initially for rating people on their ability to pay back borrowed money. It's just been perverted since its inception into what we have now.
    - atkailash 4y ago
      [dead]
    - HWR_14 4y ago
      > . If you rent a $1500/mo apartment you actually have managed $18k of debt. I agree. And slowly credit scores are starting to take rent into account. > There's no difference at all for someone who works a dayjob. But there is a difference. If you put your living expenses on a $500/mo credit card, you can have a $120k job and be eating ramen, living in a flophouse and spending the rest on drugfs or supporting people who cannot work. You cannot afford to service a mortgage. If you commonly service larger debts, then they don't have to worry about hidden things sapping all your funds.
      - kristianbrigman 4y ago
        Your friend often asks for you to spot them $5 when you are out at lunch, it’s no big deal and they’ve always paid it back. Now they want to borrow $5k all of a sudden. Do you give it to them, just based on the above history?
  - llsf 4y ago
    I guess that is where Europe differs. They look more into what you currently earn (and how stable you are at jobs) than past debts. So, if I have been making $100K for 6 years at the same company, with no credit card (I only used debit in Europe because there was very little incentive for me to use credit card that I pay at the end of the month), even though I have never had a debt before, they would be willing to give me loan. While in US, with no credit card before, they could not.
SeriousGamesKit 4y ago
Interestingly, this expectation isn't universal in the Western world outside of the US. In Australia, the banks don't expect to see previous credit card management, and in fact the presence of an open credit card will significantly reduce your calculated borrowing power for a mortgage. The myth of US-style 'credit score' requiring a history of card use does persist here though, and I've known several people who have had to close one or more credit cards in order to get their mortgage approved.
- stephen_g 4y ago
  Weird thing is that when I got my mortgage, I had two credit cards (for airline points) and the broker was like “oh if you’re happy to close them you’ll be able to borrow more”, so we did the application based on that, but then the bank just didn’t ask me to… I still have them, years later…

by HWR_14 4y ago

IvyMike 4y ago

Would that hobo have used a CC that he immediately paid off? That needs to count for something.

HWR_14 4y ago
It counts for something, it's just not enough by itself normally.

llsf 4y ago

But he said that he used credit cards and never missed a payment. That should count, right ? I can relate, as I came in US from Europe. I arrived, opened a bank account in a big bank, I could only get a debit card, because I had not credit history. After few months I could get a credit card, but with a $500.00 limit! I needed a car, so I bought one cash. When came the time to buy a home, I was asked to open more credit cards (one was not sufficient) and come back in a year or so later, to see how my score would improve.

HWR_14 4y ago
You never proved you could handle more than $500 in debt. You then asked for maybe three-orders of magnitude more debt. Surely you can appreciate that difference.
- Spivak 4y ago
  There's no difference at all for someone who works a dayjob. The only thing that matters is that you have you demonstrated that you can make a fixed monthly payment reliably. Paying your bills, paying your rent, paying your CC all demonstrate that. If you rent a $1500/mo apartment you actually have managed $18k of debt. Doing the same thing but this time with interest proves nothing the others don't. Borrowing history makes sense for businesses or people who with complicated cash-flows. But if you're stably gainfully employed the only things that matter is how you manage your external financial risks (which banks don't check for) and your ability to not over spend (which banks also don't check for). Combine this with the your typical mortgage is overcollateralized means the magnitude of the loan is essentially meaningless outside of "is the monthly payment something you can afford."
  - zamnos 4y ago
    But what if they discover alcohol/drugs/gambling/etc? They'll fall off the tracks and the loan will never get paid back. Which ofc is incredibly stupid, classist, and racist to boot. And not even a guarantee by someone's credit score. But with a credit score, you have a metric of just how much money to trust them with (not really), which can be plugged into the spreadsheet and you can hire an army of mortgage brokers to plug stuff into the spreadsheet. Credit score is a moralizing system that hates the poor, so it's unsurprisingly embedded itself into American culture by three corporations that will never be held accountable (see: Equifax leak). It's as American as the bald eagle. I'll stop now, my cynicism is showing. I just don't see a way to get to a place where we don't have the current trifecta of credit scoring corporations running our lives without a giant pile of money to start a competing credit bureau that makes and underwrites loans based on different computation of a person's score. Because a credit score was initially for rating people on their ability to pay back borrowed money. It's just been perverted since its inception into what we have now.
  - atkailash 4y ago
    [dead]
  - HWR_14 4y ago
    > . If you rent a $1500/mo apartment you actually have managed $18k of debt. I agree. And slowly credit scores are starting to take rent into account. > There's no difference at all for someone who works a dayjob. But there is a difference. If you put your living expenses on a $500/mo credit card, you can have a $120k job and be eating ramen, living in a flophouse and spending the rest on drugfs or supporting people who cannot work. You cannot afford to service a mortgage. If you commonly service larger debts, then they don't have to worry about hidden things sapping all your funds.
    - kristianbrigman 4y ago
      Your friend often asks for you to spot them $5 when you are out at lunch, it’s no big deal and they’ve always paid it back. Now they want to borrow $5k all of a sudden. Do you give it to them, just based on the above history?
- llsf 4y ago
  I guess that is where Europe differs. They look more into what you currently earn (and how stable you are at jobs) than past debts. So, if I have been making $100K for 6 years at the same company, with no credit card (I only used debit in Europe because there was very little incentive for me to use credit card that I pay at the end of the month), even though I have never had a debt before, they would be willing to give me loan. While in US, with no credit card before, they could not.

SeriousGamesKit 4y ago

Interestingly, this expectation isn't universal in the Western world outside of the US. In Australia, the banks don't expect to see previous credit card management, and in fact the presence of an open credit card will significantly reduce your calculated borrowing power for a mortgage. The myth of US-style 'credit score' requiring a history of card use does persist here though, and I've known several people who have had to close one or more credit cards in order to get their mortgage approved.

stephen_g 4y ago
Weird thing is that when I got my mortgage, I had two credit cards (for airline points) and the broker was like “oh if you’re happy to close them you’ll be able to borrow more”, so we did the application based on that, but then the bank just didn’t ask me to… I still have them, years later…