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As opposed to being denied a loan in the 70s if your husband isn’t there or refusing to lend to Black customers
Yea now you can only be lent money if you don’t need it. Great system! Don’t worry though if you are black or divorced from the primary household earner and you need money, you still wont’ get it.
They created the worst system they could think of to fix it
There’s more than two options
The way the score is calculated is hidden from the public
I mean…technically, I guess, the specific parameters are hidden? But the meaningful actions - the ways in which you can improve your score - are extremely clearly advertized.
Don’t get me wrong, I’m not exactly a passionate advocate for the system - but it’s nowhere near as obfuscated as people claim. And if you accept the premise that there needs to be some algorithmic way to evaluate someone’s creditworthiness, “their past reliability in repaying debts” is a pretty reasonable choice.
the ways in which you can improve your score - are extremely clearly advertized.
They are for the “credit score” they give you. There’s dozens of different credit scores that different lenders pull though. Ones that are specifically curated for their needs and that you’ll never see.
And it’s not just Americans either. At least in Germany we’ve got credit agencies that rate you with their secret algorithms. Got a bad score? Sucks for you! I don’t know about having to take out loans to improve it though. I think that does the opposite. I’m not an expert, correct me if I’m wrong.
Having ongoing loans might be negative although something like a mortgage for a house you bought with bank assistance typically won’t. You aren’t expected to take out loans to establish your reliability.
We have an equivalent system in Germany called Schufa, but you start at close to 100% reliability and only lose points when you seriously fuck up on paying back specific debts. The points do naturally regenerate with time, so you seriously need to lose control of your life to have a bad score long-term.
But sadly, still a secret algorithm. But from what I heard, the DSgVO might help uncover it.
I think I understand where Overwatch took inspiration for the current ranking system
Everyone’s like “Better than getting denied a loan for an arbitrary reason”, but we’re addicted to debt.
Private loans being exceptionally hard to obtain would drive down prices and hopefully promote individual austerity (setting aside discrimination and bigotry).
Private loans make the fairness problem worse.
Loans only go to the “right kind of people” with connections.
Without the ability to get loans for housing, it’s a landlord’s paradise.
arbitrarily take on debt
If you count paying off a credit card, or paying a phone bill every month “arbitrarily debt” then you’re pretty stupid.
Credit cards are the definition of arbitrary debt. If the correct way to use them is to pay them off every month, and the only reason is for points/benefits, they are completely arbitrary. Just another way to profit off of people in difficult situations or those with weak willpower.
They also take a percentage of every transaction. Your ‘reward points’ came out of your own pocket in the form of credit card processing fees that are baked into the price of everything you buy.
They are also often subsidized with interest from people who don’t pay their cards off
Visa takes a cut from transaction, only a portion of that goes to the bank. I get 2.5% cash back on my transactions, but Visa only charges a 2.24% transaction fee. There must be more to cash back than the transaction fee.
Credit cards are by definition debt and I’ve never had any phone company report on my credit.
It depends on whether the plan is prepaid or postpaid. Postpaid plans are the ones which establish a line of credit since the phone company is tracking your tab and asking you to pay it down at the end of each month.
With that being said, phone companies want as many people as possible on prepaid plans because why wouldn’t they want to borrow your money every month? If you want postpaid you need to specifically ask for it and also pass a credit check.
I got my first credit card entirely to build credit and I paid off every transaction daily. I would classify that as arbitrary¹ debt as it is taking on “debt” for the sake of entering the system. I was much happier with a debit card at the time and still dislike having to pay it off every month. The cashback on my newer cards is nice though (didn’t have that on my first one).
¹ I am reading arbitrary to mean unnecessary.
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(social) credit score
Same bullshit everywhere. Stop ranking people.
Just FYI: the western conception of Chinese “Social Credit” is not particularly accurate. It technically exists, but mostly only on paper as a botched policy initiative. I’d refer you to this PolyMatter video (and their sources list) if you’re interested in learning more.
It is a pretty weird system
