4 ms·

A credit score is determined by your loan totals/history. Every lender needs to assess credit-worthiness in some way, and they resort to the very similar schem

by tyoma 3y ago

A credit score is determined by your loan totals/history. Every lender needs to assess credit-worthiness in some way, and they resort to the very similar schemes, with minor procedural differences based on cultural factors and historical accident.

sofixa 3y ago
Except that credit scores in the US include things such as evictions and credit card use, scores going down if you repay a loan in full and other bullshit, which a random bank determining your credit worthiness in France doesn't do. They ask for proof of income, check with Banque de France if you have outstanding debts or if you have failed debt payments, and that's it.
- lotsofpulp 3y ago
  Evictions are not reported on a credit history report. There is no single credit score in the US. Anyone can calculate whatever they want from a credit history. There is no requirement for a lender to negatively view a borrower’s decision to buy pay off a loan. In fact, I doubt any even do. Using a credit card is borrowing money, hence shows up on a credit report.
  - pc86 3y ago
    Of course there's no requirement, but everyone knows that paying off a loan early can, in some circumstances[0], lower your credit score. Nobody is taking the time to look into your score and see why it was 810 last month and is 780 this month. They just use the 780 and move on, so it can absolutely affect the rate you get, and whether you get approved or not. No creditor is overriding a denial because they spent time investigating your recent score change. [0] Usually the credit score is a measure of how likely you are to hold credit over time. It is not a "how good are you with money" or "how much money do you have" score, it is a "how likely are you to pay this back under the agreed-upon terms" score. Part of that score is the mix of different credit types, so if you pay off your final installment loan (e.g. car, house, private loan, student loan), your mix of credit types just went from N to N-1, hence a temporary, minimal drop. This is also why paying something off early can negatively affect it (in certain models, but I don't think this happens much anymore). This is always used by people to explain how credit scores are stupid and evil and idiotic and evil and stupid, but its effect is always overblown, and your score almost always rebounds within a few months.

by tyoma 3y ago

sofixa 3y ago

Except that credit scores in the US include things such as evictions and credit card use, scores going down if you repay a loan in full and other bullshit, which a random bank determining your credit worthiness in France doesn't do. They ask for proof of income, check with Banque de France if you have outstanding debts or if you have failed debt payments, and that's it.

lotsofpulp 3y ago
Evictions are not reported on a credit history report. There is no single credit score in the US. Anyone can calculate whatever they want from a credit history. There is no requirement for a lender to negatively view a borrower’s decision to buy pay off a loan. In fact, I doubt any even do. Using a credit card is borrowing money, hence shows up on a credit report.
- pc86 3y ago
  Of course there's no requirement, but everyone knows that paying off a loan early can, in some circumstances[0], lower your credit score. Nobody is taking the time to look into your score and see why it was 810 last month and is 780 this month. They just use the 780 and move on, so it can absolutely affect the rate you get, and whether you get approved or not. No creditor is overriding a denial because they spent time investigating your recent score change. [0] Usually the credit score is a measure of how likely you are to hold credit over time. It is not a "how good are you with money" or "how much money do you have" score, it is a "how likely are you to pay this back under the agreed-upon terms" score. Part of that score is the mix of different credit types, so if you pay off your final installment loan (e.g. car, house, private loan, student loan), your mix of credit types just went from N to N-1, hence a temporary, minimal drop. This is also why paying something off early can negatively affect it (in certain models, but I don't think this happens much anymore). This is always used by people to explain how credit scores are stupid and evil and idiotic and evil and stupid, but its effect is always overblown, and your score almost always rebounds within a few months.