We used to do that too. If you wanted any kind of credit, mortgage, car loan, personal loan, business loan, etc.: you’d go to your local bank branch and apply in person (or maybe get it at a car dealership or other business offering payments) and they would evaluate you on previous business, in theory.
What actually happened is if you walked in with the wrong skin color, went to the wrong church, didn’t play golf with the right people, etc. you wouldn’t get approved. Now we have an objective risk assessment formula; the development of which has been a great improvement for marginalized groups.
that sounds like a social issue, and social issues very seldom have technological solutions. we just computerised the old system and it just works. also helps that we’ve historically had very low societal stratification. working on the class question could help you.
I’m sorry, I don’t think I’m following. Because it sounds like you’re saying you have a computerized database that keeps track of the credit you have and whether or not you pay on time, but, despite that, you don’t think you have a credit scoring system. Is it just because whatever system you have doesn’t have a number attached (that you know of)? If so, do you think that’s functionally different?
it’s binary. you either get loans or you don’t. and your actions with regards to how you pay or how many loans you have or if you do or do not have a credit card… none of that changes your situation.
it is functionally different, because it’s not something people here have to think about.
I’m still not following. You said “we just mark if there’s any default on earlier loans and then evaluate on individual basis (in-person) if so”, but now you’re saying “your actions with regards to how you pay or how many loans you have or if you do or do not have a credit card… none of that changes your situation”.
So are you evaluated on past behavior or not? If you are, how is that different than a credit report? If not, how is it determined if “you (either) get loans or you don’t”?
It’s also “not something people here have to think about” here also, you might check it every now and again to make sure there isn’t anything you don’t recognize that might indicate identity theft, but that’s it, unless you get turned down. I expect people where you are would also think about it if they’re turned down.
so i might be misunderstanding credit scores, but my impression has always been that what makes them go up or down is seemingly arbitrary things, like if you don’t have a credit card or you don’t use it you get a low score, or if your cash flow is low because you’re frugal you can’t build a good score, or if you’re with certain banks or live in certain areas that automatically makes your score go up slower and down faster.
here, the only thing that’s checked is “do you have a payment default”. if no, you’re good. if yes, you are usually good as well, because that can happen to anyone. if you have multiple, then you get to talk to the bank to explain why this time is different.
so i guess your past actions do matter, but only in extreme cases. it’s not a whole spectrum of mediocre scores where you get bad rates.
the fact that we have a government-backed debt restructuring scheme for individuals also plays in to the rarity of the cases. if you can’t handle your debt, and you don’t have stuff to sell off, you can enter into a contract with the state where they hold all money you make for five years, only giving you the minimum required to live, and then wipe your debt.
You’re only misunderstanding them because financial literacy is so poor that there are widely held, but ridiculous, theories on what makes them move. And you have no reason to know yourself, you just hear the misinformation.
It’s pretty straight forward. When you’re 18 and obviously don’t have a history, any credit card you can get will have a low limit and you will probably need a co-signer for something like a car loan. After you demonstrate that you use these things responsibility, your limits go up, you qualify for things on your own, and your rates go down. Your credit report is just a list of these things and your score is just so lenders don’t have to read the whole thing. But they can: before medical debt was removed from these it was common for a lender to see a low score, look at why, see your only black marks were medical related, and issue an approval anyway. Many big issuers even get their own special scores tailored to their business so they don’t even have to do things like that.
We don’t have gov. sponsored restructuring but we do have a court process called bankruptcy, and there are a couple different kinds, where you can get debt beyond your ability to pay wiped out, with some restrictions. This disappears from your credit report after seven years, but it doesn’t mean you can’t get credit in the meantime, just less and higher rates.
It’s nothing more than an objective history of your credit usage so approvals aren’t subject to the whim of the issuer.
Turns out you might have one whether you imagine having one or not.
nah we don’t do those. we just mark if there’s any default on earlier loans and then evaluate on individual basis (in-person) if so.
We used to do that too. If you wanted any kind of credit, mortgage, car loan, personal loan, business loan, etc.: you’d go to your local bank branch and apply in person (or maybe get it at a car dealership or other business offering payments) and they would evaluate you on previous business, in theory.
What actually happened is if you walked in with the wrong skin color, went to the wrong church, didn’t play golf with the right people, etc. you wouldn’t get approved. Now we have an objective risk assessment formula; the development of which has been a great improvement for marginalized groups.
that sounds like a social issue, and social issues very seldom have technological solutions. we just computerised the old system and it just works. also helps that we’ve historically had very low societal stratification. working on the class question could help you.
I’m sorry, I don’t think I’m following. Because it sounds like you’re saying you have a computerized database that keeps track of the credit you have and whether or not you pay on time, but, despite that, you don’t think you have a credit scoring system. Is it just because whatever system you have doesn’t have a number attached (that you know of)? If so, do you think that’s functionally different?
it’s binary. you either get loans or you don’t. and your actions with regards to how you pay or how many loans you have or if you do or do not have a credit card… none of that changes your situation.
it is functionally different, because it’s not something people here have to think about.
I’m still not following. You said “we just mark if there’s any default on earlier loans and then evaluate on individual basis (in-person) if so”, but now you’re saying “your actions with regards to how you pay or how many loans you have or if you do or do not have a credit card… none of that changes your situation”.
So are you evaluated on past behavior or not? If you are, how is that different than a credit report? If not, how is it determined if “you (either) get loans or you don’t”?
It’s also “not something people here have to think about” here also, you might check it every now and again to make sure there isn’t anything you don’t recognize that might indicate identity theft, but that’s it, unless you get turned down. I expect people where you are would also think about it if they’re turned down.
so i might be misunderstanding credit scores, but my impression has always been that what makes them go up or down is seemingly arbitrary things, like if you don’t have a credit card or you don’t use it you get a low score, or if your cash flow is low because you’re frugal you can’t build a good score, or if you’re with certain banks or live in certain areas that automatically makes your score go up slower and down faster.
here, the only thing that’s checked is “do you have a payment default”. if no, you’re good. if yes, you are usually good as well, because that can happen to anyone. if you have multiple, then you get to talk to the bank to explain why this time is different.
so i guess your past actions do matter, but only in extreme cases. it’s not a whole spectrum of mediocre scores where you get bad rates.
the fact that we have a government-backed debt restructuring scheme for individuals also plays in to the rarity of the cases. if you can’t handle your debt, and you don’t have stuff to sell off, you can enter into a contract with the state where they hold all money you make for five years, only giving you the minimum required to live, and then wipe your debt.
You’re only misunderstanding them because financial literacy is so poor that there are widely held, but ridiculous, theories on what makes them move. And you have no reason to know yourself, you just hear the misinformation.
It’s pretty straight forward. When you’re 18 and obviously don’t have a history, any credit card you can get will have a low limit and you will probably need a co-signer for something like a car loan. After you demonstrate that you use these things responsibility, your limits go up, you qualify for things on your own, and your rates go down. Your credit report is just a list of these things and your score is just so lenders don’t have to read the whole thing. But they can: before medical debt was removed from these it was common for a lender to see a low score, look at why, see your only black marks were medical related, and issue an approval anyway. Many big issuers even get their own special scores tailored to their business so they don’t even have to do things like that.
We don’t have gov. sponsored restructuring but we do have a court process called bankruptcy, and there are a couple different kinds, where you can get debt beyond your ability to pay wiped out, with some restrictions. This disappears from your credit report after seven years, but it doesn’t mean you can’t get credit in the meantime, just less and higher rates.
It’s nothing more than an objective history of your credit usage so approvals aren’t subject to the whim of the issuer.