I'm honestly unsure. What is the alternative? Instead of a pre-emptive risk assessment of whether or not you can pay something, more people just receive punishments when they end up not being able to? I don't like being judged or told what I can or cannot pay back a month from now, but on a large scale doesn't this mostly protect people from dangerous debts? For the opponents, what is the proposed alternative?

[–] InquisitiveApathy@lemm.ee 11 points 4 months ago

on a large scale doesn't this mostly protect people from dangerous debts?

Not really. It just ends up with lenders offering far more predatory interest rates, which worsens the situation for the debtor. The system is set up in such a way that you can spiral pretty hard with a single misstep.

[–] azertyfun@sh.itjust.works 5 points 4 months ago* (last edited 4 months ago)

I’m honestly unsure. What is the alternative?

Given that there are plenty of developed countries where credit scores don't exist (and plenty more where they do but only for businesses), I think alternatives are imaginable. I would know, I live in one such country.

If you want a mortgage here, the bank will:

Ask you about your current loans and potential past defaults
Ask you about your current and past income, marital status, employment status, etc.
Use those variables to pretty straightforwardly determine your loan capacity
I think do a background check in national databases for defaults/"bad payer" status
Contractually obligate you to receive your salary on the same account from which they will automatically pull the mortgage. I don't think this helps reduce actual defaults much, but it probably greatly reduces the financial and administrative overhead of late/missed payments. Also this ties you into the creditor bank which is good for business, IDK how standard that practice is abroad.

The US consumer economy is very highly dependent on short-term/credit debt, and that is absolutely crazy to me. Some Americans say they "need" a credit card to defer payment on some purchases, and as someone raised in culture where debit is king this sounds absolutely insane. Y'all have been propagandized, here it is perfectly normal to not have a single credit line open before shopping for a mortgage and if anything your banker will commend you for it.

[–] biribiri11@lemmy.ml 0 points 4 months ago (1 children)

For the opponents, what is the proposed alternative?

I’d imagine this is the crux of the problem. Banks need some way to determine if someone will pay back their loans, and what better way than to tabulate their history of doing just that? Should banks be willing to take risks in a system with stuff like the 7 year rule?

[–] Default_Defect@midwest.social 9 points 4 months ago (2 children)

If it was about the ability to pay back loans, then why does it go down when I finish paying the loan? Its about your ability to pay as much interest as possible.

[–] Elaine@lemm.ee 6 points 4 months ago

This. Paid off my house and my excellent credit score dropped by almost 20 points.

[–] biribiri11@lemmy.ml 2 points 4 months ago

Part of your credit score is also the present. It’s more than a bit predatory, but not having any current financial responsibilities looks bad. For example, if you have no loans whatsoever but paid back a bunch in the past, there’s little evidence saying you can currently pay them off. At least, that’s the theory of it.

[–] deathbird@mander.xyz 4 points 4 months ago (1 children)

I'd like credit scores systems to be fully public and developed by the government. It would be far better than the three private systems Americans deal with now.

[–] joenforcer@midwest.social 2 points 4 months ago* (last edited 4 months ago)

Four*. FICO is another one and at one time was most commonly used for home mortgages. Not sure how true that is today, but it's still very much in use.

[+] wildbus8979@sh.itjust.works -15 points 4 months ago* (last edited 4 months ago) (6 children)

The vast majority of Americans (95%) say having a good credit score is important to them, according to the survey.

I have yet to meet a Democrat or Republican who thinks they shouldn't exist.

[–] Rikj000@discuss.tchncs.de 43 points 4 months ago (1 children)

I mean same applies to the Chinese,
but wanting to look good in an oppressive system, does not mean you actually like to be oppressed by said system.

[–] ReakDuck@lemmy.ml 2 points 4 months ago (1 children)

Is this stockholm syndrome?

[–] BmeBenji@lemm.ee 9 points 4 months ago

Following rules because you’re afraid of the consequences is extremely different from falling in love with or even desiring the rules.

[–] InquisitiveApathy@lemm.ee 31 points 4 months ago

There's a difference between wanting to have good credit so that you can benefit from a garbage system and wanting that system to exist in the first place.

[–] Paradachshund@lemmy.today 27 points 4 months ago

No shit. Going to the hospital is important to me but I wish I didn't have to do that, too.

[–] clay_pidgin@sh.itjust.works 8 points 4 months ago

Of course it is; that's the system under which we're living.

[–] Fixbeat@lemmy.ml 7 points 4 months ago (1 children)

The system exists and you can't really do anything about it. No one wants to be penalized by it.

[–] wildbus8979@sh.itjust.works -1 points 4 months ago (1 children)

you can't really do anything about it.

I mean denouncing the system would be a first step, yes. Like I said I never seen Democrats or Republicans claims this system shouldn't exist.

[–] TopRamenBinLaden@sh.itjust.works 10 points 4 months ago* (last edited 4 months ago)

I'm a leftist who dislikes capitalism, but I can admit that credit scores were a step up from the way loans were done before. The old way just made it so the banks themselves decided who they wanted to issue a loan to, and that led to a lot of racism and sexism when it came to giving the loans out.

Still, I do think we can come up with a better system than the current credit score system, and I think you have the right idea to point out it's flaws to start the wheels turning on improving it.

[–] reverendsteveii@lemm.ee 6 points 4 months ago

your conclusion doesn't follow from your premise. the ability to live indoors is going to be important to people even if they think the system by which we decide who is allowed to live indoors is kinda shit.