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“The credit agencies however offer you a real and valuable service. Without credit history it’s impossible to get credit.” I think I generally agree that this

“The credit agencies however offer you a real and valuable service. Without credit history it’s impossible to get credit.” I think I generally agree that this is a reasonable service, however the main reason you can’t get credit without a credit history is these services exist that can provide credit history to lenders. It is bizarre to think that loans would not exist without these services.

judge2020 3y ago
Loans did exist before credit, but it was almost always loans from friends/family or by providing a large down payment to the bank you wanted a loan from. You needed to be a known and upstanding member of the community to get a loan for anything substantial. And technically, you can get many loans today without a credit score. For example, there are bank statement mortgage loans, but they have caveats like: - you will go through manual underwriting and will likely need to show records of payment history on any existing debts, including utilities, insurance, rent, etc - They will likely need the contact information for each one of your previous debts to verify it manually - When they run a quote, you will typically be considered at the lowest credit score possible for that program - typically 620 for a conventional loan or 500 for FHA. This means you'll be getting the worst rate possible - You'll likely need a 20% down payment, depending on if any of the PMI automated underwriting systems even give you a quote with such a low "fake" credit score. The lender might ask for more of a down payment depending on their own risk assessment. - The lender (or whoever buys your loan) will report your new account to the bureaus, giving you a score.
- fnordpiglet 3y ago
  Additionally, while it may suck, and maybe there is some other emergent reality that sucks less, we practically live in this one. Don’t cut off your nose to spite your face.

judge2020 3y ago

Loans did exist before credit, but it was almost always loans from friends/family or by providing a large down payment to the bank you wanted a loan from. You needed to be a known and upstanding member of the community to get a loan for anything substantial. And technically, you can get many loans today without a credit score. For example, there are bank statement mortgage loans, but they have caveats like: - you will go through manual underwriting and will likely need to show records of payment history on any existing debts, including utilities, insurance, rent, etc - They will likely need the contact information for each one of your previous debts to verify it manually - When they run a quote, you will typically be considered at the lowest credit score possible for that program - typically 620 for a conventional loan or 500 for FHA. This means you'll be getting the worst rate possible - You'll likely need a 20% down payment, depending on if any of the PMI automated underwriting systems even give you a quote with such a low "fake" credit score. The lender might ask for more of a down payment depending on their own risk assessment. - The lender (or whoever buys your loan) will report your new account to the bureaus, giving you a score.

fnordpiglet 3y ago
Additionally, while it may suck, and maybe there is some other emergent reality that sucks less, we practically live in this one. Don’t cut off your nose to spite your face.