Credit scores could end up being 20 or more points lower, according to financial experts
This, uh… doesn’t sound terribly impactful? My score fluctuates ±50 points just from regular credit utilization, idk what throwing 60k in student loans onto the report would do but - 20 points sounds very optimistic.
A 50pt fluctuation is wild, like honestly you should look into why. Getting a mortgage didn’t affect my score by 50pts…
The -20 probably assumes you’re still making the loan payments.
So I checked my history and you’re right, over the last 2 years the wildest swings I’ve had have been ±20, but I also haven’t spent wildly on the cards like I used to, not exceeding 50% utilized in this timeframe.
But I think a mortage being a secured loan probably reduces impact too.
(I’m not a banker or finance person, just someone who’s watched their score rollercoaster on apps in my less responsible youth lol)
Not the arbitrary made up numbers that some how go down every time I pay off a car loan!!!
Credit scores are a number used by financial institutions to judge how much money they can take from your pockets. I don’t have a cent of debt, and my credit score is 630.
I remember paying off my car loan years ago and it dropping. I’m like… wait a minute!
It’s crazy to me. I just focus on my personal debts and pay off timelines and ignore my credit score these days.
Banks were willing to give me mortgages a couple of months ago that I in no way could afford based off my score (it’s actually good). None of this is grounded in reality; prior to 2020 those same fucks wouldn’t even pick up the phone for me.
Credit reporting is an evil practise. It needs to end.
It’s there for good reason. Credit can be used for good or ill. Just remember, anything can and will be gamified. We humans love patterns and puzzles too much.
Credit scores are barely a 40 year old concept
There is far more corporate and institutional fraud rather than individuals causing problems
Who would be likely set something like this up without the desire to use it for social control? The government? China’s system. Capitalists? Ours. It exists to incentivize you being in perpetual debt that can be leveraged over you by those who own everything. It’s a system that ensures indentured servitude; a system for the wealthy to project power over you. What fucking entity would have selfish motivation to do anything more?
Credit reporting is an evil practise. It needs to end.
What should lender use instead to determine you are capable of paying back money you’re asking to borrow from them?
Collateral and, historically, age, race, sex, and ethnicity. They’d also look at how well you were dressed because 100% of the time you went to the bank in-person to get a loan. Also, your bank wouldn’t be far from where you lived and the local population wasn’t so large that they couldn’t just “ask around” the local social network to see if this man before them was upstanding enough to warrant giving them money.
Also note that people didn’t need to borrow money as much as they do today. You wanted a new home appliance like an oven or refrigerator? You saved for quite some time to buy it.
There weren’t as many things to spend your money on either!
I’m a bit confused by your response. Are you suggesting going back to the old ways (as your description of those old ways encapsulates) or are you pointing out the shortcomings of the old ways (of which there are many)?
I’m just telling it like it is. The old ways were terrible! However, being local and requiring proper collateral instead of just giving n people money en mass—knowing that the percentage that default will be outweighed by the percentage that pay the loan back (and ripping people off by making them pay the interest up front)—was probably better for the economy.
Not everyone should be allowed to amass debt the way we currently allow it. Furthermore, if people couldn’t get loans for school so easily (in fact, guaranteed!) then college tuition would be but a fraction of what it is today.
However, being local
Local meaning what does local have to do with it unless you’re allowing that bank to make a subjective decision about lending to you because they know you or the area? That’s how we got people of color being denied loans for houses in certain areas of town via “Redlining”. If we allowed this we might also have discrimination based on being LGBTQ or being an unmarried mother.
and requiring proper collateral instead of just giving n people money en mass
So if you need to get a car loan, and you don’t own any assets to put forth for collateral you just don’t get a car?
Furthermore, if people couldn’t get loans for school so easily (in fact, guaranteed!) then college tuition would be but a fraction of what it is today.
Furthermore, if people couldn’t get loans for school so easily (in fact, guaranteed!) then college tuition would be but a fraction of what it is today.
And college would only be available to the rich that already have money, or the middle class with assets (like a house) to borrow against. The poor, without money or assets, would be shut out entirely.
How about we don’t build an economy on borrowing?
I’m not an economist, but I’m not aware of any economic systems that work without a lending component.
Without lending that means you’ve got one group of people with stuff that don’t need it, and another group of people with need for stuff but without stuff. Without lending there’s no way for the people with needs to get stuff, and the stuff is wasted sitting without being used.
Thats the world you want to live in?
Money is credit. It’s a promise that someone else will pay their labor or capital or goods in exchange.
I would like a world where the things people NEED housing, food, medical care, are provided and the things people want, they can save up money (credit) and purchase by selling what they can, labor, skills, assets.I agree with you, but thats a wholesale change in government and society far removed from credit scores.
Well usury is harem in Islam, so you can do it without the insane profiteering.
So your problem isn’t lending, its just large profits on lending?
Yeah pretty much. It’s just, in a capitalist system (without some kind of overarching ideology shaming people into not doing it), there is no lending without profiting. Nobody is going to lend their money out of the goodness of their heart in this system.
Though mutual aid could probably solve this.
If everyone’s credit score falls, aren’t we all set?
Or is every single service in the USA that depends on credit score all going to tank at the same time?
What’s all this about buying now and paying later?
Don’t do that.
I haven’t given a thought to my “credit score” in decades. I hope that means that it’s tanked due to the unimaginable, unearthly, inhuman crime of not routinely borrowing money.
Just remember, the rich are rich because they borrow other peoples money. You just need to know how to take advantage of it to work for you.
Build credit by never paying any minimum late > gain credit above 700 (ideally 750+) usually within 2-5 years > get great rates > 0% for X months starts showing up > Use their money to keep credit high, gain rewards/miles, etc.
It really just takes organizing and consistency. It’s not that hard once you’ve built the habit. In fact, my wife and I don’t even put brain power into it anymore. Credit fluctuates between high 700s / lower 800s and we get 0% financing offers constantly. Once you’re a sure bet everyone wants you to finance/get credit with them. This absolutely pays off over time. When someone else is stuck buying a car with a higher APR, I’m getting close to fed rates, same with mortgages.
Is the system perfect? No, but it’s what we all have so you may as well take advantage of its potential benefits.
When someone else is stuck buying a car with a higher APR, I’m getting close to fed rates
One of the tactics I picked up in a book on financial management was to start paying myself some kind of money as a monthly payment instead. You do that by…either lucking out and having parents that bought you a car and drive that for as long as possible, or you (like me) buy some total shitbox, either paying off the entire thing at sale or nearly immediately, and keep that on the road for as long as and cheaply as possible, all while making “payments” on my next car. Trust me, that first car especially will not be glamorous.
Then, with the money you paid yourself for whatever time - use that to buy the next car. I haven’t had a car loan in years as a consequence of this.
Paying for everything in cash isn’t always the smart financial decision. Would you rather take a 2% loan on a car and put $30k into the market earning 15% or take that $30k and earn 2% by paying for a car in cash? This isn’t true all the time especially right now, but that was the smart move just a few years ago. Think about all the people with 2.5% mortgages right now who didnt wait to buy with our current 6%+ mortgage rates.
Yep. These are all tradeoffs to be weighed. Part of the equation for me is knowing the market volatility for jobs tends to fluctuate wildly, too. It’d be one thing if a job was virtually guaranteed over the course of a loan, etc.
I don’t mind having debt for something like a house - I have no real alternative anyway and it tends to appreciate in value besides. I did a refi in 2021 and locked in an absurdly low rate for instance.
Lastly - earning 15% in the market? Returns like that are not necessarily guaranteed. I sure wish they were!
Flipping cars from a shit box to get to high end is certainly one way to help with this. I personally never did that but know those who did.
My aim was not necessarily to get to high end, although I suppose people could try to use it that way.
“There are 45 million people with student loan debt and 15 million with medical debt. It’s highly likely that there is some overlap there,” said Adam Rust, director of financial services for the Consumer Federation of America. “People are really facing a perfect storm here.”
LOL @ credit scores, the US is changing slowly in a western China.
And you just keep playing along with it like good little minions.
Jokes on them cause I don’t even have credit.
What do you mean by soon?…mines been nonexistent for years, decades now!
