12 ms·

Higher rates on what exactly? Isn't it pretty much just mortgage rates? Plenty of people have no plan or desire to buy property within the next seven years.

• Broken_Hippo 3y ago
  In the US, it also means things like getting denied for jobs and apartments. Car loans will be more: You might not be able to easily buy a new car. And that's not even getting into some of the other random things. You'll need to pay upfront to replace the washer that went out instead of financing - unless that financing is through one of the rent-to-own places (which still might be cheaper than going to the pay laundry). Same for, say, dental work: Some places used to let you pay in installments if you had adequate enough credit.
  • pjc50 3y ago
    How on earth can people be denied jobs for poor credit? You're not a creditor to your employer! Isn't this just the "social credit" system that people worry about in China, except privatised?
    • krapp 3y ago
      Someone with poor credit may be assumed more likely to commit fraud or steal from the company. Someone with poor credit might also be assumed to be personally irresponsible and lazy, and more likely to slack off, ignore necessary details or cut corners. It isn't fair but in the US money carries moral weight, and many people assume the less of it you have, the worse of a person you are.
      • jiofj 3y ago
        >It isn't fair but in the US money carries moral weight, and many people assume the less of it you have, the worse of a person you are. This isn't about money, this is about debt. Owing money around really does sound like something a bad person would do.
        • r2_pilot 3y ago
          >Owing money around really does sound like something a bad person would do. Why would this be your default assumption? People can end up owing money for any number of moral reasons. I'd rather someone have 10,000 in debt because they borrowed to help someone with medical debt who would have died otherwise, than for that hypothetical person to die because of a lack of money. From there, it's easy to posit someone losing their job to be a caretaker for said hypothetical person. Et voilà, there's your unpaid debt yet (IMHO) for completely moral reasons. My opinion on debt has substantially changed once I encountered "Debt : the First 5,000 Years".
          • b112 3y ago
            Why would this be your default assumption I am not saying it is fair, or that I would make this assumption. However, car insurance is the same way. If some indicator shows correlation with a bad driver, eg age, birth sex, type of car, rates go up! Same thing with unpaid/delinquent debt. It is an indicator. If you have 10 good potential employees to hire, and one has bad debt....
            • kelnos 3y ago
              Except no one has presented any evidence that bad debt is an indicator of job performance issues. Car insurance providers have a ton of data that correlates all those factors you mentioned, so for the most part it's reasonably fair for them to set rates based on that. No such data exists when it comes to debt and employment, as far as I can see. Just a bunch of people here arguing back and forth for their personal opinion.
              • krapp 3y ago
                There isn't any evidence, it isn't actually true. Debt is inescapable in a country where a trip in an ambulance can wipe out a family's entire income. It's just a cultural prejudice born from the American idolization of free markets (which itself is a vestigial expression of European classism and belief in noble divinity), rugged individualism (and a pathological fear of societal bonds) and the Protestant work ethic, mixed with a bit of racism and xenophobia.
      • quaddo 3y ago
        It's also possible that someone in debt would do something dishonest against the company, if a bad actor offered them money to do so.
        • kelnos 3y ago
          Your statement is still true if you remove "in debt" from it. The question is whether or not being in debt (or having poor credit) meaningfully increases the chances of someone taking the offer from that bad actor. I'm not convinced it doe.
      • no_wizard 3y ago
        If you live in California your credit score can’t be factored into hiring unless you directly deal with company finances in a specific way, namely in the roles of accounting or finance. Even if you’re a software engineer working on financial software you’re exempt because you have no direct and common access to the company purse. There’s a few other states that have laws like this I can’t recall them though l
    • jollyllama 3y ago
      Yes, but people love cheap debt, so it stays.
    • Broken_Hippo 3y ago
      I applied for a job at a gas station in the late 90's. The store manager had to get permission to run a credit check that I needed for the job: The dude explained that folks with bad credit were more likely to steal from the company. Which isn't true, of course, and they had other ways to check for theft - but this didn't stop them.
      • NoMoreNicksLeft 3y ago
        How is it not true? Do you have evidence refuting the premise that people with bad credit are more likely to skim cash from the till?
        • Broken_Hippo 3y ago
          Do you? Its been some years since I saw any reporting on it, and I'm honestly not going to spend the time to dig it up for a comment.
          • NoMoreNicksLeft 3y ago
            I have no evidence either way, but it is not absurd in my opinion to suggest that people who make poor life decisions in one area of their lives might also make poor life decisions elsewhere.
            • Broken_Hippo 3y ago
              A bad credit score doesn't really mean you've made bad choices. It just means you had some bad luck. The reasons for your bad luck can range from medical bills, job loss, missing work when poor (it snowballs) and other such things. It might mean you made a bad decision when you were 18, but it is still hanging around on your credit. You might have been in a financially abusive relationship. Shit happens, and it is naive to think that you have absolute control over all of it. A few folks simply don't pay, sure, but you can't tell this from a credit report. And it isn't like you are going to get credit for paying most normal bills on time. Landlords and utilities rarely report positives to the agencies. And even with all this, it shouldn't realistically mean that folks can't get back up. Most jobs don't need credit checks, nor do most apartments (or at least, limited checks).
    • PeterisP 3y ago
      Well, people can be denied jobs for almost every reason (except a couple explicitly listed taboo reasons i.e. protected classes), so if any employer believes that defaulting on your debt correlates with e.g. trustworthiness of a candidate, they are free to use credit rating as (dis)qualifying criteria - no matter if that belief is true or not.
      • kelnos 3y ago
        Sure, but just because something is legally allowed, it doesn't mean we're not permitted to argue that it's a bad practice. Some places don't legally allow this, so we should think about why: because it's abused, perhaps? Because it furthers discrimination? The list of current protected classes isn't some holy thing; we can and should add to things that companies aren't permitted to discriminate based on, when those things are found to be harmful to people and society.
    • mrguyorama 3y ago
      >Isn't this just the "social credit" system that people worry about in China, except privatised Indeed it is, but Americans have a weird tendency to love horrible things done to them by private companies.
      • kridsdale3 3y ago
        Because for the most part, private companies who you have alienated yourself from have competitors, and don't enforce their displeasure with you at the end of a bayonet while holding shackles. State Level credit system is an actual dystopia.
        • pjc50 3y ago
          > private companies who you have alienated yourself from have competitors Can't alienate yourself from Experian.
    • LorenPechtel 3y ago
      The reality is that credit rating has a strong correlation with responsibility. Thus, for example, in places where it's legal to do so insurance rates will be different. This does end up sweeping up a few who were hit by unavoidable circumstances but most people who get in credit trouble were skating too close to the edge.
      • kelnos 3y ago
        The fact that in some (many?) places it's illegal to set insurance rates based on credit reports should tell us something: that at best they're an unreliable measure, and at worst they're (ab)used to discriminate.
        • LorenPechtel 3y ago
          No, it indicates that politicians are pandering to the voters who don't like it being used. If it wasn't useful insurance companies wouldn't do it.
      • Marsymars 3y ago
        Note that exceptions to the correlation has both false positives and false negatives. e.g. On opposite side of people with bad credit who got hit by unavoidable circumstances, there are people like my partner who have limited credit score upside because they don’t use much credit. My partner has a mortgage with me, but other than that, she doesn’t have any debt and doesn’t use credit cards (other than the prepaid variety which pull directly from bank accounts and don’t contribute to credit scores.)
      • FireBeyond 3y ago
        > The reality is that credit rating has a strong correlation with responsibility. No, the reality is that responsibility is but one component of credit rating - another, moreso, being 'how attractive are you as a customer to credit providers'. This is why your score might drop when you pay off an account, or close it. Defenders of the system and CRAs will say "well, there's less information to assess your creditworthiness now that that account is closed", as if, say, you had ten years of on time payments on that account, but they mean nothing.
  • no-dr-onboard 3y ago
    Bah. If you have no intention on purchasing a home then you're free to not care. - Buy a used car in cash and wait a couple years for the bankruptcy mark to fall off. - Your credit has to be absolutely thrashed to not get an apartment, even then there are plenty of private landlords that won't do a credit check. Its almost as though the presupposition is that you need financing for anything in life. You can save and pay cash, its possible. People have been doing this for generations and have been just fine. Businesses need to run off credit, individuals don't. Pay your way and live reasonably.
    • kelnos 3y ago
      I always find it weird when someone puts forth the attitude of, essentially, "you don't really need these things that other people have, so just deny yourself the things you want and it's all good!" I will certainly agree that "keeping up with the Joneses" is a very real phenomenon, and we are marketed to death to get us to want things we don't need, that actually won't make ourselves happier or our lives better. But there's a lot of wiggle room there. Debt is a useful tool, and it can measurably make our lives better if used wisely and responsibly. Should a few mistakes push you into a different class of people who don't have access to that? I would say no, that's unjust. And that's without getting into all the ways that a credit report often doesn't accurately reflect your ability to manage debt, either just because of its imprecision, or because of reporting errors and unaccountable businesses that don't care who gets screwed over.
• astura 3y ago
  It's a factor in insurance in most states- auto, renters, and homeowners insurance. Good luck renting a halfway decent apartment with poor credit.
• ace32229 3y ago
  Any sort of credit. Car loans, credit cards, overdrafts, phone contracts, personal loans, if you are a business owner they can affect your commercial loans. Rental agreements too.