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                                                             on Gopher (inofficial)
   URI Visit Hacker News on the Web
       
       
       COMMENT PAGE FOR:
   URI   Credit Scores Can Run – and Ruin – Our Lives
   DIR   text version
       
       
        Brendathomp9 wrote 1 day ago:
        I had this public records on my credit for close to 8 years now and I
        have always worried about it until I got to work with VIRTUALHACKNET @
        GMAIL .COM , My Paul which was one of the hackers in the team was so
        nice to me , his listening ears to my issues gave me hope at first even
        before getting into work with their team , In just 5 weeks they were
        able to get the records erased and my credit score boosted to 815 as
        well .. I can actually say that I ever had such peace of mind that I
        have now in quite a long time and I’m thankful to these Incredible
        team of great credit specialists .
       
        r00tanon wrote 3 days ago:
        There is also new "recession resiliency" score that is trumping even
        high credit scores now. Another money grab on the part of CBs that
        credit card companies are using to justify raising rates even on good
        standing accounts.
       
        simonswords82 wrote 3 days ago:
        I find it abhorrent that organisations (Experian/Equifax) who I have
        never directly done business with have a license to collect, use and
        sell my very personal information for financial gain.
        
        I had hoped with the implementation of GDPR I would be able to write to
        these con artists and ask them to remove my information but alas
        apparently my personal right to object does not automatically mean they
        have to stop processing my data  see more here: [1] The whole
        arrangement is a total scam.
        
   URI  [1]: https://help.equifax.co.uk/EquifaxOnlineHelp/s/article/HowdoIa...
       
        fleddr wrote 3 days ago:
        Here in the Netherlands we have a simpler system.
        
        Any non-trivial credit such as your mortgage, car loans and student
        loans are registered centrally at an institute called the BKR. When you
        regularly fail to make payments on these loans, you may be marked with
        a negative rating.
        
        So it's fairly binary information: good or bad.
        
        Over here, day to day payments are done with debit, so no detailed
        "small credit" history is recorded at all.
        
        In my case, this BKR institute has a single entry, my mortgage, and
        soon none at all. So I'd then have no registered credit at all, and
        thus also no score.
        
        ...which is celebrated by creditors. A complete lack of data is
        interpreted as you being the most financially sound person possible.
        This high trust culture doesn't come out of nowhere. Culturally,
        payment discipline overall is very solid as we have somewhat of an
        anti-loan culture (don't live beyond your means). Further, you're not
        going to get away with defaulting on loans, there's no mercy for it
        here.
       
          wang_li wrote 3 days ago:
          In the US a credit report has things like you haven’t paid on this
          bill for 30 days, for 60 days, for 90 days. Or your account was sent
          to collections. And monthly balances on your debts. And how much
          revolving credit you have.
          
          Not sure exactly what you mean by small credit, but your daily
          purchases or spending is not on your credit report.
          
          It’s largely similar to what you describe but the information, good
          and bad is kept for 7 years.
       
            fleddr wrote 3 days ago:
            I was under the assumption that in the US, a lot of people pay with
            credit instead of debit. If they pay with credit, I would assume
            this adds to their credit history and score? Is that not true?
       
              astura wrote 3 days ago:
              It shows up as a revolving line of credit on your credit report.
              It shows your credit limit and the balance on your last bill.
       
        EVa5I7bHFq9mnYK wrote 3 days ago:
        I think in the US credit score system rose as a way to work around
        racial discrimination laws.
       
        bondolo wrote 3 days ago:
        Do credit scores and the costs of borrowing associated with specific
        scores correlate to the actuarial risk of default or is it just a huge
        scam to justify usury? What is to stop them from charging twice as much
        for 2% additional risk? "It is not our fault you have less than perfect
        credit"
       
        caethan wrote 4 days ago:
        Relevant article from patio11 on how to fix this problem if you have
        it:
        
   URI  [1]: https://www.kalzumeus.com/2017/09/09/identity-theft-credit-rep...
       
        teddyh wrote 4 days ago:
        
        
   URI  [1]: http://www.threepanelsoul.com/comic/credit-rating-agencies
       
        martin_bech wrote 4 days ago:
        As a European, the credit score system seems completely bonkers..
       
        sharker8 wrote 4 days ago:
        Credit scores are part of the marketing scheme to make people think
        they need mortgages. Slight exaggeration but not far from the truth.
       
          alar44 wrote 4 days ago:
          How else do you pay for a house?
       
          partiallypro wrote 4 days ago:
          I don't understand your point, you can have over an 800 credit score
          without ever having a mortgage.
       
        waynesonfire wrote 4 days ago:
        to play devils advocate, it can also do the opposite as it lowers rates
        for responsible folk, especially for responsible struggling folks.
       
          banannaise wrote 4 days ago:
          Credit scores for people who are responsible and struggling will be
          much closer to the scores of those who are irresponsible, rather than
          those who are responsible and not struggling. For the most part, the
          credit system expects perfection, so if you're out of work for
          several months and need to keep yourself fed, you're going to earn a
          black mark that will be a lot of work to counteract.
          
          Even if you manage to keep it spotless, credit scores still give a
          lot of weight to "having access to a lot of credit, and not using
          it", or "having a mortgage that you've been paying consistently for
          years", both of which mostly require you to already have good credit
          to get.
       
        LatteLazy wrote 4 days ago:
        Is it true that one reason the US has such a strong credit score system
        is the lack of reliable data on who people are?
        
        In the UK we have credit scores, but they're pretty irrelevant. What
        matters here is being able to show who you are (a matter of looking you
        up on things like voter lists) and you never having been taken to court
        for your debts (County Court Judgements).
        
        In fairness we also have a lot less unsecured debt and a much more
        punitive bankruptcy system...
       
          kube-system wrote 4 days ago:
          You have to know who someone is to look up their credit in the US, so
          that's not the reason.
          
          I'm guessing the biggest reason is your latter point -- it is very
          easy to get a lot of credit in the US and relatively easy to have it
          forgiven.
       
        thecleaner wrote 4 days ago:
        I am utterly flabbergasted regarding how and why am open source credit
        rating model doesn't exist. These people rely on third party providers
        whose data is "ok" if I am being generous. They do ridiculous data
        science and its basically critical software engineering being done by
        morons behind closed doors.
       
        0daystock wrote 4 days ago:
        Credit Scores are bad, but "The Work Number" and other creepy
        derivative products are getting so much worse. There is a literal
        ledger of our salaries being shared by companies to presumably
        coordinate wages - how is this ok?
       
          banannaise wrote 4 days ago:
          And then we have "tenant screening services" which give major
          negative marks for things like being taken to court for eviction,
          even if it was years ago and even if the judgment was in your favor.
          
          These are, of course, not covered by the Fair Credit Reporting Act,
          so nobody is required to tell you what's on your report or allow you
          to dispute it, nor do they even have to tell you they used the report
          in denying you an apartment.
       
            the_svd_doctor wrote 3 days ago:
            They are covered by the FCRA
            
   URI      [1]: https://www.ftc.gov/business-guidance/resources/using-cons...
       
              banannaise wrote 3 days ago:
              !!!! thank you for the info! That's news to me... and probably to
              most landlords.
       
          tediousdemise wrote 4 days ago:
          It's okay because we're just servants tied to our bank mortgages with
          little to no say in what the elite shareholder-run private sector
          dictates behind closed doors (and in which the legislative elites are
          also privvy/permissive).
          
          Year over year, your freedoms and finances will slowly dwindle. A law
          is passed that destroys your privacy... local/state/federal taxes are
          increased... the cost of groceries and housing keeps creeping up...
          but your employer need not cut you any slack, because you're just a
          number in one of their spreadsheets, serving a means to an end.
          
          There are no laws that dictate companies must pay a livable wage;
          instead we are brutalized and battered by the free market, with
          nothing left but a steadily decreasing quality of life.
       
        ProfXponent wrote 4 days ago:
        I locked my credit when I left the US, and I have no intention of ever
        unlocking it.
        
        Free yourself from a broken system and experience the world that
        doesn't treat you like a wage slave.
       
        kkielhofner wrote 4 days ago:
        There's yet another credit score type system that has significant
        effects on the ability to participate in the financial system that's
        much less known: [1] It's known (quite infamously) to essentially keep
        unbanked populations unbanked. Long story short if you've had overdraft
        fees, bounced checks, etc opening new accounts at banks that utilize
        ChexSystems becomes nearly impossible.
        
        On one hand there have clearly been people that have taken advantage of
        banks being siloed and abuse overdraft protection, etc to essentially
        get loans they can knowingly abscond with. Just move on to another
        bank. Repeat.
        
        On the other hand, ChexSystems is much less well known and a bit more
        "shadowy". The old story of "I use my debit card, mismanage my activity
        against direct deposit/balance, get hit with overdraft, then overdraft
        again once the fee hits, etc and next thing I know I'm $500 in the hole
        because of a $2.50 debit at a convenience store and now I'm essentially
        banned from every bank."
        
        In the case of the debit card example (or credit cards) banks could do
        what they used to and actually decline the charge. However they've
        clearly figured out it's much more profitable to allow the charge and
        just hit people with (often excessive) overdraft and over credit limit
        fees.
        
   URI  [1]: https://www.investopedia.com/what-to-know-and-do-if-you-re-lis...
       
          bob1029 wrote 4 days ago:
          I have personally implemented this product for several financial
          institutions.
          
          In my experience, many are simply doing it as a form of KYC (i.e.
          customer authentication) than an actual "is this a bad customer"
          check.
          
          I have seen some really janky shit too. Every FI I have ever worked
          with ultimately decided to implement some "exception" process to be
          able to work with customers when there is some system outage or other
          unexpected results come back.
          
          Additionally, every institution I worked with also provides some form
          of second-chance product offerings to customers who come back with a
          red-hot report. Obviously, these products do not offer overdraft or
          other line-of-credit features, but they are real checking accounts
          for all other purposes.
          
          From my perspective, it's not an ideal system. But then again, I
          don't know that ideal is possible or desired. I think if Chex didn't
          exist, something else certainly would take its place. I've watched
          some other vendors exit the space recently, so I think they are now
          the last/biggest player.
       
            verisimi wrote 4 days ago:
            You sound like you're not sure that what you implemented was good
            for anyone.
       
              bob1029 wrote 3 days ago:
              If you are implying there is some sort of ethical harm in
              undertaking this kind of work, I can assure you the thought was
              crossing my mind the entire time. My choices were ultimately:
              
              1. Implement this product as specified, doing everything in my
              power to ensure rules are being followed throughout.
              
              2. Quit my job in protest, bringing down my tiny startup company.
              10 people are immediately out of work. Our client finds someone
              else to implement chex for them anyways.
       
                verisimi wrote 3 days ago:
                FWIW, I just submitted a link on morality with regards to
                software:
                
   URI          [1]: https://news.ycombinator.com/item?id=31517222
       
                verisimi wrote 3 days ago:
                I do consider the ethical implications, of which there are
                many.
                
                I think we are coding ourselves into dystopia - where
                technology will not be serving us, but we will be serving it. 
                We might be there already.
                
                Which 'governance structure'/'rule creating structure' is going
                to ensure that the moral elements are considered?  Or do they
                simple wave through the legislation big corporations' lobbyists
                have written?  Will big corporations' so-called the 'ethics
                committees' give us the moral outlook we need?    (I don't think
                so - they are about justifying the unjustifiable, it seems to
                me.)  What is better - that 10 people you are out of work, or
                that - as you say - someone else will implement this?
                
                These questions are very hard to answer.  There are lots of
                coders who will do whatever-it-is without hesitation.
                
                Ultimately, I guess we will have to do as we each see fit.   
                What I say: morality is a question for the individual, so how
                do you judge yourself?    That is one way to guide oneself
                through the mire.
       
          sokoloff wrote 4 days ago:
          My bank (USAA) allows me to configure it to automatically take a
          credit card cash advance (rounded up to the nearest $100 increment),
          which is my preference for the every-other-decade situation where I
          would otherwise have an overdraft.
       
          ensignavenger wrote 4 days ago:
          There are lots of banks now that don't use ChexSystems now,some bank
          tech companies that you can get accounts with your mobile phone, so
          that helps for some of the populations.
          
          As far as the debit card issue goes- if you are bad at managing your
          accounts- you should always opt out of overdraft ability, an option
          that consumers have legally had for several years.  If you opt out of
          electronic overdrafts, your bank cannot legally charge any overdraft
          fees for those transactions (they will probably decline the
          transaction... but if they do allow it, you can't be charged a fee if
          you have opted out).  see
          
   URI    [1]: https://www.consumerfinance.gov/about-us/blog/understanding-...
       
          ge96 wrote 4 days ago:
          That was an awkward experience, I tried to open a bank in person and
          was blocked because of Chex. It is my fault though, but for example I
          opened a Citi checking account and never used it but somehow it had
          some minimum balance or something, started charging me... I had to
          pay like $38 or something to close it.
          
          I had the overdraft fees problem with BofA too and recently some suit
          was settled/I got a $20 check.
          
          JDBs suck but I did turn my stuff around eventually eg. 300s to 750s.
       
          Wistar wrote 4 days ago:
          I once had a check for about $900, drawn from a home equity line with
          tens of thousands available, rejected at a camera store by the Chex
          system which the store used at POS.
          
          There was no recourse that I could find despite spending quite a bit
          of effort trying.
          
          This was many years ago but remains a mystery as my credit was, and
          remains, great.
       
          ac29 wrote 4 days ago:
          > In the case of the debit card example (or credit cards) banks could
          do what they used to and actually decline the charge. However they've
          clearly figured out it's much more profitable to allow the charge and
          just hit people with (often excessive) overdraft and over credit
          limit fees.
          
          It should be noted that overdraft services have been opt-in only
          since 2010:
          
   URI    [1]: https://www.consumerfinance.gov/rules-policy/regulations/100...
       
          newman8r wrote 4 days ago:
          > In the case of the debit card example (or credit cards) banks could
          do what they used to and actually decline the charge.
          
          I use citibank and they've recently announced that they're going back
          to the old ways of just declining the charge, and eliminating
          overdraft fees. Hopefully that's a trend that other banks are also
          following.
       
            nradov wrote 4 days ago:
            Pretty much every US bank allows account holders to disable
            overdraft protection for checks and debit cards. It's just a
            question of whether that account feature is on or off by default.
            Most banks used to turn it on by default, perhaps motivated by the
            overdraft fees. Now industry practice is shifting and more banks
            are disabling it by default.
            
            I prefer to have overdraft protection turned on. I usually keep
            very little money in my checking account and transfer any excess to
            other accounts. But a couple of times I screwed up the timing (my
            own fault). Paying my bank an overdraft fee was a lot better than
            bouncing a check.
       
            7speter wrote 4 days ago:
            > I use citibank and they've recently announced that they're going
            back to the old ways of just declining the charge, and eliminating
            overdraft fees. Hopefully that's a trend that other banks are also
            following.
            
            I have to wonder what the incentive is for them to go back to that
            instead of easy profit
       
              Gigachad wrote 3 days ago:
              Could be good marketing/competitive advantage.
       
              toomuchtodo wrote 4 days ago:
              Regulatory fear.
       
            glenneroo wrote 4 days ago:
            I prefer the way banks do it here: you don't pay an overdraft fee,
            nor are you denied (unless you have a non-fixed income). Instead,
            it's treated like credit and you pay a low percentage at the end of
            the quarter/year depending on how long you stayed negative. I can't
            remember the numbers exactly but I've paid at most around 20 Euro
            after having gone -1000 for more than a month.
       
              SilasX wrote 4 days ago:
              If you were going to phrase that the way most (inflammatory)
              articles talk about short term loans (like payday), you could
              instead say that you were charged 26% APY.
       
              nradov wrote 4 days ago:
              Why not just use a credit card?
       
              tfehring wrote 4 days ago:
              Most US banks and credit unions offer a similar service, called
              an "overdraft line of credit." Overall I think it provides the
              best experience for the customer, but there are a few issues. You
              have to know about it and apply for it. You need a good enough
              credit score and/or regular income to qualify. And many of the
              people who currently lose money to overdraft fees would probably
              just max out their line of credit (commonly $1,000) and then
              continue to overdraft while also paying $80/year or whatever in
              interest.
       
              Sohcahtoa82 wrote 4 days ago:
              A hybrid approach is the best way to go, IMO.
              
              Like...allow up to $500 to be overdrafted with interest being
              charged.  If you reach $500 in overdraft, then decline any
              further charges.
       
                pirate787 wrote 3 days ago:
                Not spending more than you have is the best way to go.
       
                  seattle_spring wrote 3 days ago:
                  Sometimes you have much more, just in a different account.
       
              anthonypasq wrote 4 days ago:
              seems like an awful lot of risk for a bank, unless they can see
              you have the money in another account you hold with them. Still,
              you're essentially treating your checking account as a credit
              card yet they are giving you almost no interest rate instead of
              the 20% seen on credit cards? Seems fishy
       
                glenneroo wrote 4 days ago:
                I maybe should have mentioned that we also have direct deposit
                here for pretty much everything i.e. the bank knows where
                you're employed and how much income you make per month. I've
                heard from e.g. students without permanent jobs that they don't
                usually get this perk (anymore). But yes, it's essentially a
                credit card with very low interest rates, although I have a
                credit card as well and the debt is automatically deducted from
                my bank account at the end of the (CC billing) month. There is
                also a section in the online banking to view CC transactions
                even though it's a separate entity from the bank, so any
                changes to e.g. region locking, limits, etc. must be done via
                the CC website.
       
                  woobar wrote 4 days ago:
                  This (the bank knows where you're employed and how much
                  income you make) is only possible with one account per
                  person, right?
                  
                  In the US people that do direct deposit are also treated
                  differently by the banks. Both on the surface, i.e. you get
                  better interest rates, and under the hood (fraud models
                  adjusted).
       
            partiallypro wrote 4 days ago:
            With Chase you can choose if you want them to do this or to
            overdraft and charge you a fee. By default overdraft protect is
            off, so charges are just rejected.
       
              SOLAR_FIELDS wrote 4 days ago:
              That's good that it's default to decline. It wasn't always that
              way. In fact, overdraft protection used to be the mandatory and
              only option.
              
              The reason that you have an option is actually not because of
              Chase's goodwill, but due to an Obama-era law that requires banks
              allow end users to turn off overdraft protection: [1] There are
              some unfortunate and annoying loopholes. In particular, if you
              have a recurring, subscription based fee (instead of a typical
              debit card transaction) they can and still will charge you
              overdraft fees for that.
              
   URI        [1]: https://www.cbsnews.com/news/obama-signs-sweeping-financ...
       
            kkielhofner wrote 4 days ago:
            That's great news. We can only hope that with awareness and
            competition that once again becomes the standard!
       
          ARandomerDude wrote 4 days ago:
          Solution:  go to a local credit union (not a bank) and ask to speak
          to a manager.  Explain your situation and that you want to fix it but
          can't.
          
          Many credit unions can open a no-frills checking account as
          essentially a probationary account for you that you can convert into
          whatever you want after a few months of good history.
          
          Source:  I used to work at a credit union and we did this for people
          all the time.
       
            TameAntelope wrote 4 days ago:
            I just love this narrative that someone who has lived their whole
            life with a fraught relationship with banks, overdrafting
            regularly, having trouble keeping their life in order, etc. will
            suddenly have the organization and forethought to walk into a bank,
            ask to speak with a manager, and be able to credibly promise that
            they want to fix this relationship.
            
            I'm not saying people can't change, but it's naive as hell to think
            that they will on a dime such as you suggest.
       
              7speter wrote 4 days ago:
              Also these institutions have protocols set up so as not to be
              able to see any “manager” at a given location. Hell in New
              York, it seems that a lot of inner city brick and mortar banking
              locations are becoming atm kiosks with maybe 1 or 2 employees
              there… not as tellers but instead to help with using the atms.
       
                gkop wrote 3 days ago:
                Ironically, I’ve seen “kiosks-only” at one bank branch in
                the Bay Area, and it was a local credit union.
       
                throwaheyy wrote 3 days ago:
                That would be because they have so many locations. You could
                walk down the street and around the corner to find another one.
                
                Or are you saying that a bank manager is actually hard to find
                in NYC?
       
                  7speter wrote 3 days ago:
                  NYC isn’t only manhattan island
       
              HideousKojima wrote 4 days ago:
              Well if they can't get their shit together long enough to do
              something like that then this credit score system for checking
              accounts sounds perfectly reasonable to me.
       
                TameAntelope wrote 4 days ago:
                I've been thinking about this a lot, and I think this is a good
                example of how we could do better as a society; some people who
                can't get checking accounts definitely can't handle the
                responsibility.  Most of these people however, handle
                responsibility 10x as complex as this on a regular basis, and
                something is missing, either in a lack of shared cultural
                values (a lot of the unbanked are foreigners I think), or a
                lack of understanding of consequences (how many times have you
                heard the "I didn't know I'd fall down this well of overdraft
                fees"?).
                
                In other words, the people involved usually are trustworthy in
                a generic "is it safe to bank with them", they're just not
                plugging into the system in a way that fits the defaults.
                
                I'd almost argue that the banking system ought to be more
                flexible to maximize its compatibility with as many people as
                possible, and thus far hasn't because of the drive to maximize
                certainty and minimize all forms of risk.
                
                I have no answers or real solid ideas for how to do this, but
                "it's all on them" doesn't quite feel right. These are (mostly)
                good people who will pay you back if you lend them money, and
                that should matter!
                
                I think my comment got construed as "people can't change so
                it's all their fault" and I meant it more as, "financial
                systems should be willing to move closer to where these people
                are already at, and stop demanding these people make all the
                changes."
                
                I also don't know how feasible that is, so... IDK!  Just
                thinking via writing, I guess.
       
              ARandomerDude wrote 4 days ago:
              It's not a narrative, it's my life experience.    I saw it first
              hand, many times, which is why I commented.
              
              Sadly, there are many who will not become more responsible with
              time.  But there are also many who will, and I'm glad to have
              been able to play the smallest role in helping people who
              genuinely want a fresh start.
       
                TameAntelope wrote 4 days ago:
                Sorry I didn't mean to suggest what you had said didn't happen,
                I very much believe you that people came in and said those
                words.
                
                What I have a harder time believing, and not just in this
                situation but in a lot of conversations about the unbanked, is
                that these people will, after a lifetime of having problems
                with the banking system, suddenly "see the light" and start
                behaving in ways that are compatible with that same banking
                system.
                
                This "fresh start" seems like the bad narrative, to me.  I
                believe people seek it, and I believe they're hopeful about it,
                but I don't believe it's realistic to just assume.  I
                definitely want to live in a world where people can choose to
                change, but suggesting that they actually will do that is, to
                me, not realistic.
                
                I feel like a more effective approach would be to change how
                the banking system works, but I imagine that comes with a
                myriad of undesirable costs.
       
                  digisign wrote 4 days ago:
                  This is very "fixed" mindset you're applying to others.
                  Some portion of the populace grows up every year.  There
                  should be a path to re/build your life once that happens.
       
                  bluefirebrand wrote 4 days ago:
                  > I feel like a more effective approach would be to change
                  how the banking system works, but I imagine that comes with a
                  myriad of undesirable costs.
                  
                  It seems likely to me that people who can't navigate the
                  current banking system at a basic level would struggle with
                  any banking system you introduce.
                  
                  Or just any system in general.
       
              jhartwig wrote 4 days ago:
              Thanks for being a realist! I was thinking the same thing.
       
                hyperdimension wrote 4 days ago:
                I'm apt to be that cynical as well, but if what the original
                commenter said is true, that provides me with a little hope.
                
                It's so easy to slip through the cracks in the system, so to
                speak. A sudden medical bill or car problems, for instance. I
                realized on my drive to work today that my car is the only
                thing keeping me from poverty. Luckily, I have tools in the
                back and would probably be able to fix it myself. :) Also, once
                you're in it, you're in it, and it's a strong cycle. You don't
                always have the luxury of things we often take for granted like
                having a nice outfit to wear, reliable transportation to an
                interview, and finally not even having a mailing address if you
                even end up getting a job offer.
                
                It's like the places that offer a free shower and "nice" outfit
                (for an interview) to homeless people. Sometimes all it takes
                is that little boost to get (to be sure, the right person with
                the right attitude) someone back on their feet.
                
                I've luckily never been in that situation, but I can empathize
                and understand how a completely ordinary person could quickly
                end up there.
       
            gkop wrote 4 days ago:
            How about a solution to the structural problem?
            
            This isn’t my domain, but just spitballing, we could use public
            funds to advertise credit unions in low income neighborhoods. Would
            credit unions want this, or would it lead to harmful consequences?
            Another way of asking this is, how come credit unions take these
            customers that banks won’t?
       
              pandemicsoul wrote 4 days ago:
              Postal banking would be a good solution. It would allow the post
              office to offer basic banking services for folks like this that
              can't access it at commercial institutions.
       
                mjevans wrote 4 days ago:
                You need to allow everyone to do banking via this resource and
                they should also want to use it as a bank.  Otherwise you'll
                run into a situation where that bank is associated with risky
                customers and is thus treated based on that reputation.
       
                  pandemicsoul wrote 2 days ago:
                  Yeah, I did not mean to imply that postal banking would just
                  be for high-risk customers. There are no postal banking plans
                  where that's a restriction – everyone would have access to
                  it, including many who are too far from a bank to have
                  regular access. The post office is the government's widest
                  reaching physical presence in this country with more
                  locations than any other part of government, so it makes
                  sense that this would be an inroad into banking for lots of
                  people.
       
                  jumelles wrote 3 days ago:
                  Easy, give every SSN a corresponding USPS/public bank account
       
                  sokoloff wrote 4 days ago:
                  Don’t let the perfect be the enemy of the good/better.
                  
                  If USPS banking helps the unbanked by only 50 units of help
                  instead of a maximum of 100, it’s still a 50 point
                  improvement. If Morgan Stanley or JPMorgan can offer me a
                  better banking deal than the post office could, that’s no
                  reason to not have the post office offer banking.
                  
                  I agree it should be open to everyone, but don’t agree that
                  there can be a maximum of zero-point-zero difference in
                  customer base vs other banks.
       
          formerkrogemp wrote 4 days ago:
          Oh it's a little more pernicious than that. ChexSystems and a few
          other companies are used to check a database when cashing a check at
          major retailers in the US. Walmart and Kroger utilize this
          third-party vendor to deny check cashing (including payroll checks)
          to people who're on the same list as those who can't open bank
          accounts. Good luck getting that check cashed for less than $20-30.
          
          Source: I used to work in retail.
       
            nradov wrote 4 days ago:
            That's why many larger employers (including Walmart) now offer
            unbanked employees the option of getting paid with a pre-paid card
            instead of a paper check.
       
            kkielhofner wrote 4 days ago:
            Wow, I wasn't aware of this use of ChexSystems but from the
            standpoint of banks, check cashers, etc that makes business sense.
            
            From the perspective of people trapped in this system paying 10% in
            fees to cash a $300 check is outrageous - but at this point it's
            more or less what they have to do and that's "just the way things
            are".
       
          gruez wrote 4 days ago:
          >However they've clearly figured out it's much more profitable to
          allow the charge and just hit people with (often excessive) overdraft
          and over credit limit fees.
          
          Wait, so which one is it? Do banks want to exclude people with
          overdrafts because they're bad customers (for whatever reason) or do
          they want those people because they can rake in the overdraft fees?
       
            a1369209993 wrote 3 days ago:
            > Wait, so which one is it?
            
            They want customers they can extract usurious and otherwise abusive
            fees from. They don't want the subset of those that will fight back
            against said abuse, which is what they use ChexSystems for. The
            latter also randomly hits some people from the (rest of the) former
            group, but not enough of them to impact the bank's finances.
       
            kkielhofner wrote 4 days ago:
            Why can't it be both?
            
            With the proliferation of "free checking" without so much as a
            minimum balance in most cases banks have essentially created a
            selection system to continually marginalize customers that aren't
            profitable while selecting for customers that are.
            
            From the standpoint of a business (which banks are) this is
            understandable. However as has been noted in other comments banks
            also serve a utility function and for the the type of customer that
            routinely doesn't have $2.50 in their checking account to trigger
            that overdraft in the first place several hundred dollars in fees
            might as well be a million. Of course they take off and the account
            gets closed. Now, because of a $2.50 loss to a bank, they're
            essentially excluded from the most basic functions of the financial
            system while people like us continue to benefit from free products,
            preferred interest rates, credit card points, etc.
            
            Simultaneously, if due to some perfect storm of events (cash flow,
            mistakes, etc) if customers more similar to us somehow end up in
            this situation we'll pay the fees. The bank has a "valid" reason to
            boot the poor, they make a ton from the middle-ish class, and they
            stay in good favor with those of us that are more wealthy. They
            can't lose.
            
            The extremely simple (but overall less profitable solution) is to
            just decline the charge.
            
            My preferred status at banks is being subsidized by the poor and
            that doesn't sit right with me. I've tried credit unions but
            they're almost completely unable to meet my needs.
       
            IncRnd wrote 4 days ago:
            They probably want those people as customers in order to garner fee
            payments, but they won't extend credit to those people.  Those are
            two different activities.
       
              gruez wrote 4 days ago:
              except, the parent post claims the system to "essentially keep
              unbanked populations unbanked" and "opening new accounts at banks
              that utilize ChexSystems becomes nearly impossible". Presumably
              if you want these people to be your customers and rack up fees,
              you'd want them to at least hold an account?
       
          JumpCrisscross wrote 4 days ago:
          > if you've had overdraft fees, bounced checks, etc opening new
          accounts at banks that utilize ChexSystems becomes nearly impossible
          
          To clarify, if you've had a checking account closed because of
          outstanding fees, and you never paid those fees, it will show up in
          ChexSystems.
          
          This deserves scrutiny, e.g. for bad record keeping. But at its core,
          if you're regularly borrowing via overdrafts and bouncing checks,
          you're looking for a different banking product than the
          garden-variety checking account.
       
            radicaldreamer wrote 4 days ago:
            You’re looking for a revolving credit line
       
              JumpCrisscross wrote 4 days ago:
              > You’re looking for a revolving credit line
              
              Or an account that does not permit cheque writing and will bounce
              a transaction instead of letting it overdraft.
       
                nullfield wrote 3 days ago:
                This is the requirement now-affirmative consent/opt-in: [1] If
                they make it really easy for you to opt in/a quick checkbox
                then they can make money. That said if someone is living so
                tight and wants a transaction declined if their account
                doesn’t have the funds, the financial should make that easy
                and obvious to do. Behaving otherwise is predatory.
                
   URI          [1]: https://www.nafcu.org/compliance-blog/overdraft-protec...
       
                nicoburns wrote 4 days ago:
                > Or an account that does not permit cheque writing and will
                bounce a transaction instead of letting it overdraft
                
                Seems like the problem might be that this system will also
                prevent people who have a bad reputation in it from getting one
                of these accounts?
       
                  JumpCrisscross wrote 4 days ago:
                  > this system will also prevent people who have a bad
                  reputation in it from getting one of these accounts?
                  
                  Could. In practice, plenty of banks fill this niche [1]
                  
   URI            [1]: https://letmebank.com/banks-that-dont-use-chexsystem...
       
          metacritic12 wrote 4 days ago:
          I wonder if this is statistical discrimination.
          
          Like in theory, someone who closes an account $2.50 in the negative
          does very little damage to the bank directly.  The $2.50 is a small
          fraction of the annual overhead of the bank account.
          
          Yet these behaviors are highly correlative of unprofitable checking
          customers.  The entire checking account model seems to be based on
          whales that return the bulk of the profits.  If you sneeze wrong,
          your statistically 10x less likely to ever become that whale.
          
          From a profit maximizing POV, it totally makes sense for banks to do
          this.  But from a "banks are a basic utility" point of view, it
          doesn't seem to make sense.
       
            gscott wrote 4 days ago:
            Bounce fees are highly profitable. Large banks earn over a billion
            dollars in bounce fees yearly each.
       
              metacritic12 wrote 3 days ago:
              This is true, but bounce fees are a minority of bank revenue.
              
              I just pulled the BofA 2021 10K [1] and it shows $3.5bln in
              service charges, but $24bln in interest income.
              
   URI        [1]: https://imgur.com/a/cGjM5Gi
       
            throway782 wrote 4 days ago:
            Why must profitability to a banker matter to public optimization of
            agency? If anything the banker just becomes a thought policing
            grifter who empowers agency of some without any oversight.
            
            A banker is nothing more than a fallible human. Why record in my
            inner monologue they’re to be seen as more than that?
            
            Prior to open discourse online, public relations teams did a
            stellar job convincing people financiers are special. I’ve been
            in the room with people that attend Davos. They mock and ridicule
            the public as they decide who is worth what to their bottom line.
            They’re uniqueness is a hallucination.
            
            Contemporary society is leveraging well understood propaganda
            techniques to take advantage of the same biological quirk religion
            stumbled upon by accident.
            
            One person is one person. Not some figurative thought leader we
            must kowtow to.
       
            xeromal wrote 4 days ago:
            It seems like there could be two kinds of customers at a bank. One
            who doesn't get to operate on credit or overdraft protections, but
            still can us the bank as a means to keep their money safe while
            allowing customers who can be trusted to still use those extra
            resources.
            
            Seems like a win win for everyone. Banks should probably be
            required to allow at least a minimal bank account even to people
            who aren't the best with their money.
       
              dalyons wrote 4 days ago:
              Win win for everyone except the banks, they make huge amounts of
              money off punitive overdraft and are not interested in letting
              that go. $12.4 billion in overdraft fees in 2020
       
                samstave wrote 4 days ago:
                A credit union I used to belong, had a piece of paper hanging
                on the wall right next to the tellers, it had their running
                income monthly from overdraft fees.
                
                Before the 2008 real estate collapse, this number was less than
                $100,000 per month.
                
                During the recession, I noted it was going as high as $600,000
                per month. At one location in Sunnyvale Ca.
       
                  sjostrom7 wrote 4 days ago:
                  I don't doubt you, since you saw this first-hand and didn't
                  hear it from your friend's cousin's dog.  But what purpose
                  could a sign like that serve for tellers?
       
                    samstave wrote 3 days ago:
                    It wasnt for the tellers, it was literally for the banking
                    customers.
                    
                    It was the statement of revenue the credit union had - the
                    overdraft section was a single line on the document... I am
                    uncertain as to why they posted it, aside from a
                    "transperency" for the credit union members...
       
                xeromal wrote 4 days ago:
                I could be outdated, but weren't overdraft feels turned off by
                default during the Obama era? You have to go out of your way to
                turn them on now.
       
            Retric wrote 4 days ago:
            Many banks actually make most of their profits from fees not
            whales.  A X$ overdraft fee quickly enters payday loan territory in
            terms of profit vs capital at risk.
       
              dalyons wrote 4 days ago:
              Exactly. Most banks lose money on servicing a standard checking
              account with debit card for people with no cash flow issues. They
              make it back in fees(mostly overdraft) off those who struggle -
              it’s a direct subsidy of the better off by preying on the poor.
              
              Disclaimer: I work for a neobank (chime) which inverts this model
              and has none of these fees and does free overdraft
       
                nullfield wrote 3 days ago:
                Then you’re just making all your money on interchange, right?
       
                clairity wrote 4 days ago:
                > "Most banks lose money on servicing a standard checking
                account with debit card for people with no cash flow issues."
                
                that's simply not true. the marginal cost of a checking account
                is on the order of a dollar. the breakeven on that is on the
                order of holding (and otherwise using) a deposit of a $100 for
                a month or two. banks are not losing money on the balance of
                their checking deposits in any conceivable way.
                
                that's a just-so story told and retold uncritically to convince
                the gullible that fees are "necessary". they're not. they're
                pure profit, and borne of pure greed. no bank requires fees to
                function profitably.
       
                  Retric wrote 3 days ago:
                  Marginal costs can be deceptive, yes sending a debt card in
                  the mail is cheap and you don’t need extra staff or
                  locations for a single customer.  However, the infrastructure
                  need to support a million additional customers is expensive 
                  even if a single customer doesn’t seem to add any
                  significant cost.
       
                    clairity wrote 3 days ago:
                    it's tricky but not deceptive. raising that point in this
                    context indicates you've fallen for form of the sunk cost
                    fallacy via conflating two separate business decisions (the
                    investment decision with the pricing decision).
                    
                    we need to say no to these unsubstantiated, regressive
                    fees, full stop.
       
                      Retric wrote 3 days ago:
                      I don’t see how acknowledging the truth is somehow
                      supposed to support a bank argument.  I would happily ban
                      these fees until the industry adapted to a new normal.
                      
                      That said, don’t let your views blind you to the truth.
                       Unscrupulous actors will often drive an industry into
                      predatory practices, it’s correctable but only when
                      people understand the dynamics involved.
       
                        clairity wrote 3 days ago:
                        > "don’t let your views blind you to the
                        truth....correctable but only when people understand
                        the dynamics involved."
                        
                        indeed.
                        
                        those sunk costs don't matter in this context, which is
                        why they were originally, and should continue to be,
                        excluded. it's extraneous, obfuscating, and most
                        damningly, apologetic.
       
                ntoskrnl wrote 4 days ago:
                It seems like customers who get rejected by ChexSystems would
                be more likely to overdraft frequently and be profitable to the
                bank. Why are banks using the system to deny them accounts?
       
                  FireBeyond wrote 4 days ago:
                  I ran into this many years ago with the transaction
                  reordering scandal, when KeyBank turned a series of
                  transactions on a given day (that were all cleared funds, to
                  be clear) that should never have overdrawn me, and left with
                  me with roughly $100 in the bank, instead ended up with me
                  being $400 overdrawn, thanks to an absolute slew of overdraft
                  fees, that the bank (and I) refused to budge on.
                  
                  My ChexSystems entry wasn't removed until there was a lawsuit
                  against the bank.
       
        AnIdiotOnTheNet wrote 4 days ago:
        People always told me growing up that I should get a credit card, to
        start building credit for when I eventually wanted to buy a house. I
        didn't bother, because buying things on credit always seemed sill to
        me. Come time to buy a house and those people were still all "oh boy,
        you're going to have a hard time!", but you know what? Having no credit
        history wasn't a problem at all. I had to arrange for bank
        representatives to talk to some bill collectors and authorize them to
        talk about my payment history, that's it. Sure, maybe I didn't get the
        best rate in the world, but it was a pretty fair one. I feel like
        stories like this are intentionally played up for the benefit of the
        credit industry.
       
        bryans wrote 4 days ago:
        There are actually very few regulations regarding the credit score
        "system" -- if it can even be called that -- and it shows. The system
        is grossly abused by everyone involved, and typically the only people
        experiencing the effects of that abuse are already in the most
        vulnerable positions. It's quite reprehensible what humans are willing
        to do to each other over an unpaid bill, almost universally
        representing a completely non-relevant amount of revenue for the
        companies. How many lives have been disrupted or ruined over sending
        $15 to collections?
       
          pessimizer wrote 4 days ago:
          It was a prelude to the modern private surveillance industry.
          Virtually any legislation affecting that would effect the credit
          rating agencies.
       
          kube-system wrote 4 days ago:
          Because it's just math applied to the highly regulated credit history
          system.  The way that the score is calculated is inconsequential, as
          long as the underlying credit history is correct.
       
          bluedino wrote 4 days ago:
          You never opened a single account other than that? You in essence
          have no credit, then.
       
        throwoutway wrote 4 days ago:
        This is exactly why China implemented a “social credit” system,
        which is an authoritarian version of this kind of power.
       
          TuringNYC wrote 4 days ago:
          The US system is also authoritarian:
          
          - There is almost no easy way to fix bad problems. The fixes require
          huge bureaucracy that only highly motivated people can solve
          
          - We like to pretend it works. It does, except for 5% of a population
          and it really sucks if you aren't in the 95%. People in the 95% dont
          realize how bad it is for the 5%. By the 5% i'm talking about
          legitimately credit-worthy individuals being unfairly denied by the
          system (not un-credit-worthy legitimately denied.)
          
          - We like to pretend it is private market driven, but the private
          orgs driving it have almost government-level power to control your
          life by cutting off funding
       
            gruez wrote 4 days ago:
            >>This is exactly why China implemented a “social credit”
            system
            
            > The US system is also authoritarian, except
            
            >- There is almost no easy way to fix bad problems
            
            ...as opposed to the chinese system? The whole aim of the social
            system seems to be to allow punishing people for infractions
            without having to go through the messy process of criminal
            prosecution.
       
          pessimizer wrote 4 days ago:
          If "authoritarian" here means virtually identical, except that they
          also include crimes and misdemeanors. I bet we could do that in the
          US if the oil on the slope was inclusion of "hate speech/crime."
          Hiring someone with a history of that is a liability, and lending to
          those people could lead to losses if they are fired.
       
          ProfXponent wrote 4 days ago:
          The US credit system is plenty authoritarian in its own right.
       
            jimmaswell wrote 4 days ago:
            Banks, private entities, deciding who to do business with based on
            a number they calculate is absolutely not authoritarian. It comes
            nowhere close to the concept of authoritarianism unless you think a
            dress code at a club is also authoritarian.
       
        TrackerFF wrote 4 days ago:
        Here in Norway, we don't have any credit score in that sense. Rather,
        we have sort of a "credit history" system, which shows the following:
        
        -When there's been registered wage garnishment (by court) against you.
        
        -When there's been registered a lien against your property.
        
        -When you've entered a court-ordered debt payment program.
        
        -When you've been registered as bankrupt.
        
        And by law, these things have to be deleted when you've settled your
        debt. In any case, it's difficult to get those things by accident.
        Usually you're at the end of the process, and have been through civil
        court.
        
        With that said - it should be mentioned that Norway is a INCREDIBLY
        creditor friendly country, as far as the law goes. If a creditor really
        want their money back, they can / will take you to court, and
        eventually get a garnishment on your wage or welfare money. Or
        property/vehicles/personal belongings lien if you don't have any
        income.
        
        I like the system as it is. I really don't like the idea of constantly
        having to do things with respect to a credit score - and I'm not
        talking about gaming the system or being a deadbeat, but trying to
        maximize my credit score for the sake of keeping it high.
       
          josephcsible wrote 4 days ago:
          > And by law, these things have to be deleted when you've settled
          your debt.
          
          So if I paid off my debt on time, and you made your creditor fight
          tooth and nail for five years and get a court judgment to get your
          debt paid (but it is paid now), future lenders would have to treat us
          the same?
       
          kube-system wrote 4 days ago:
          We don't have "a credit score" in the US either.  We have a credit
          history, much like you describe.  For the businesses that review
          someone's credit history, the credit agencies provide some assortment
          of algorithms to help quantify it for them.  This is colloquially
          called your "credit score", but in reality, there isn't a single
          credit score, there's a bunch of different algorithms and everyone
          uses a different one.  The equivalent to a US "credit score" in
          Norway would be, a creditor's formula for determining
          creditworthiness from your credit history.
          
          The alternative to algorithmic scoring is often worse: someone making
          a subjective judgement call.  Which, historically, is fraught with
          discrimination.
       
            IncRnd wrote 4 days ago:
            > We don't have "a credit score" in the US either. We have a credit
            history, much like you describe.
            
            Not exactly. There are MANY credit scores in the US and several
            credit agencies. Different score calculations occur for different
            purposes, mortgages, credit card, automobile, and so forth. Plus
            there are different versions of each credit score's model.  Each
            credit reporting agency keeps a separate credit file per person.
            Each person's credit file contains credit histories from various
            creditors. Not all creditors report to all credit reporting
            agencies. Not all credit reporting agencies receive the same
            information from a creditor, even when receiving information.  The
            score for a particular person may differ between different credit
            reporting agencies, credit scoring models, or any of various other
            factors.
       
              kube-system wrote 4 days ago:
              You are just rephrasing what I said.
       
                IncRnd wrote 4 days ago:
                That's incorrect. Each borrower has multiple credit histories
                not a single credit history.
       
            david927 wrote 4 days ago:
            No... we very much have a "credit score."  I'm American and don't
            like credit cards.  I have a shockingly low credit score simply
            because I choose to pay using debit cards and I don't take loans. 
            I never miss a payment and I earn a very good living but you
            wouldn't guess that based on my credit score.  In Norway my credit
            history would be golden; it's the opposite here.
            
            Edit: I stand corrected.  Thanks, I understand now.
       
              jedberg wrote 4 days ago:
              > because I choose to pay using debit cards
              
              This is not a very smart way to do things.  You'd be much better
              off getting a credit card with no fees and rewards points, buying
              everything with that, and then paying it off every month.  You'll
              have stronger legal protections on your purchases, and you'll
              earn reward money without paying any extra.  You can even pay off
              your bill with the reward points.  And as a bonus you'll build up
              your credit score, which can affect you in lots of ways unrelated
              to loan rates.
       
                nebula8804 wrote 3 days ago:
                So I do this but I'm beginning to suspect the real reason they
                have all these rewards is partially due to data selling of
                spending habits. Usually when you get a new card there is a
                little slip that details what you can and cannot opt out of
                when it comes to data collection and selling to third parties.
       
                  sgjohnson wrote 3 days ago:
                  > So I do this but I'm beginning to suspect the real reason
                  they have all these rewards is partially due to data selling
                  of spending habits.
                  
                  No. Rewards are funded by merchants (interchange) and by
                  people who actually pay the 19.9% annual interest.
       
                david927 wrote 4 days ago:
                I know but I hate the system and don't want to be bullied into
                participating.
       
                  zhynn wrote 4 days ago:
                  I wish i could afford to do what you are doing, but I can't
                  survive in 2022 USA and support my family without access to
                  credit.  It is maybe possible, but it is wildly impractical.
                  And the ability to borrow helps to smooth out the turbulence
                  of life (unexpected emergencies or broken things).  When I
                  was in my 20s my credit was so bad I couldn't get loans and
                  when life threw a curveball, it could take a ton of energy to
                  sort out how I was going to deal with it.  Now I just dip
                  into the credit that I have available to deal with the
                  situation.
                  
                  But I hate it.    It feels insane to me that we as citizens
                  don't have more regulatory control over credit systems.  I
                  envy you, but I also know that what you are doing is not
                  practical for me.
       
                  jedberg wrote 4 days ago:
                  I mean, you do you, but you're really only hurting yourself
                  here.  You're literally throwing away money to stick it to
                  "the system" which doesn't care.
       
                    kubanczyk wrote 4 days ago:
                    david927 is not hurting himself, he's simply paying a bit
                    more for a setup which prevents him from spending money he
                    doesn't have. Understandable approach.
       
              waynesonfire wrote 4 days ago:
              doesn't take much to get some history.
       
                astura wrote 3 days ago:
                You don't even have to actually use revolving credit to build
                credit history - it's good enough to apply for a credit card
                then shred it when it comes. "Not running up the credit card"
                is significant points in your favor.
                
                They'll likely close your account for inactivity after a few
                years, and the account stays on the credit report for a decade
                after it's closed.
       
                  david927 wrote 3 days ago:
                  That's an amazing idea.  I had no idea.  I'm going to do
                  this.  Thank you!
       
                  fragmede wrote 3 days ago:
                  Not all credit cards are zero-fee, so if you chose to do
                  this, make sure you choose one of those (or just close the
                  card).
       
              bee_rider wrote 4 days ago:
              You have a credit history, which multiple companies will apply
              their algorithms to to get a score. The algorithm will take into
              account things like "this history doesn't have a lot of debt, so
              we don't know if they repay," and generate a lower score.
       
              gruez wrote 4 days ago:
              None of what you said contradicts the parent post, which is
              simply refuting the claim that we have some sort of "official"
              credit score. In reality we have credit history, and various data
              vendors apply your history to their models to determine a rating
              for you.
       
          2rsf wrote 4 days ago:
          More or less like Sweden, and everything is digitally interconnected
          to the main population registry so things like that usually don't
          happen:
          
          > TransUnion, one of Canada’s two main credit bureaus, had reported
          her as deceased.
          
          We also moved out of the stone age and faxes practically don't exist
          and all certificates are digital:
          
          > Two years of faxing in detailed documents—including Dave’s
          death certificate
       
          marvin wrote 4 days ago:
          I was about to point out the obscene creditor friendliness of Norway
          when I saw you extolling the virtues of our credit system, so I'm
          glad you did it first. The part of fairly tracking poor payment
          history is good, the rest, not so much.
          
          We effectively have a form of wage slavery by law. If a person has
          debts that are unpayably big and is not (or no longer) eligible for
          the once-each-lifetime-only "personal bankruptcy", where one signs a
          contract to pay all property and incomes for five years towards one's
          debts before the remaining is erased, one is on the hook for the
          remaining debt for the rest of one's life.
          
          No recourse. Economic damage judgements in court do not qualify even
          for the five-year 100% garnishment contract. Someone impacted by this
          has no incentive to work ever again, because everything they earn
          above the survival minimum will be garnished. I'd hazard a guess that
          most of them end up on welfare.
          
          So it's not all good, unfortunately. I mentioned social unity
          punishments in our culture in a different thread the other day; this
          is another example of that.
       
            gruez wrote 4 days ago:
            >If a person has debts that are unpayably big and is not (or no
            longer) eligible for the once-each-lifetime-only "personal
            bankruptcy"
            
            source for bankruptcy being "once-each-lifetime-only"? A quick
            search says that's false:
            
   URI      [1]: https://www.findlaw.com/bankruptcy/after-bankruptcy/how-of...
       
              kube-system wrote 4 days ago:
              The US has very forgiving bankruptcy code, notably so.    Much of
              the world is less forgiving.
       
              TrackerFF wrote 4 days ago:
              He's was quoting me and referring to here in Norway, not US -
              where it is very much a one-time deal.
              
              Over here, we can't really just "declare bankruptcy", it's a very
              lengthy process - which takes years. It's more like a court
              ordered program where the debtor and creditor agrees that the
              debtor is going to pay as much as possible towards the debt owed,
              for the next N years, and after that - all debt is erased. You're
              allowed to keep just enough of your salary to cover the most
              basic living expenses, everything else goes to the creditor.
              
              This also means not being credit worthy, which in turn could mean
              no cellphone plan, no insurance, no mortgage, no auto loans, no
              consumer loans, etc. Everything you buy, you have to buy with
              cash up-front.
              
              From start to finish, all that could take 5-10 years. And before
              you even sign a contract where you and the creditor agrees upon
              such a plan, the debt collection agencies are probably hounding
              you down on a daily basis, making whatever debt you had to begin
              with N times more expensive.
              
              The good news is that when you've held up your end of the
              agreement, it's gone. 
              But you only get once chance. If you - for whatever reason, any
              reason at all - end up in the same situation, you're practically
              a debt slave. Which could mean wage/welfare garnishments for the
              rest of your life. This is especially true if you have multiple
              debt collection agencies bogging down individual debts with added
              and compounding fees.
              
              But to be fair, this is not normal. Very few end up being
              two-time losers - but sadly it could be entrepreneurs and small
              business owners, if they haven't structured their companies the
              right way.
       
                buescher wrote 4 days ago:
                When you hear Europeans get horrified that in the USA a medical
                problem (or whatever) could drive you into bankruptcy, this is
                the context.  They are usually more horrified than you might
                realize, because there is a bit of miscommunication going on.
                
                Can you inherit debt in Norway?  You can in Germany.  You don't
                in the USA.
                
                Can you as a Norwegian declare bankruptcy in the UK or is that
                off the table now that they're out of the EU?
       
                  marvin wrote 3 days ago:
                  > Can you inherit debt in Norway?
                  
                  You can, but it would be voluntary. Inheritors can choose all
                  assets and all debts, or nothing.
                  
                  Unsure about the bankruptcy tourism idea. I'm pretty sure it
                  would take many years. Moving countries for tax purposes, for
                  instance, takes five years for all obligations to clear.
       
                  krastanov wrote 3 days ago:
                  Would it matter that UK is not in the EU given that Norway is
                  also not in the EU?
       
                    buescher wrote 3 days ago:
                    Oops.  Well I suppose there’s that.  I’ll add that I
                    have no idea how “bankruptcy tourism” works, other than
                    that people do it. It’s odd that one can do it at all.
       
              kleinsch wrote 4 days ago:
              They’re talking about Norway, which doesn’t follow US
              bankruptcy code.
       
          sgjohnson wrote 4 days ago:
          > trying to maximize my credit score for the sake of keeping it high.
          
          Just being a deadbeat will do exactly that. It takes 0 effort. Put
          your purchases on a credit card, and settle it in full every month.
       
            chociej wrote 4 days ago:
            Put some charity donations on autopay using a dedicated credit
            card, then configure the card to autopay the balance every month.
            Or, get hyperoptimal and set it up so that your overall credit card
            utilization stays at 1%, which is better under the FICO system than
            0%.
       
            Nextgrid wrote 4 days ago:
            > Put your purchases on a credit card, and settle it in full every
            month.
            
            If you don't need credit then taking on credit is an extra thing to
            manage. I personally like all my spending being on my debit card
            and coming out of my account so I have a single balance that
            reflects how much money I have. I don't want to deal with an extra
            company especially when their business model ultimately relies on
            trying to get me to miss a payment so they can charge
            fees/interest.
       
              xeromal wrote 4 days ago:
              I don't like anyone having access to my bank account so I tend to
              see a credit card as an abstraction. If someone skims my debit
              card, that's my problem. If someone skims my credit card, that's
              my credit card's company's problem.
              
              I don't give out my debit card and I only use it at trusted ATMs.
       
              EliRivers wrote 4 days ago:
              Do you not have an option to just automatically have the full
              amount paid off from your account every month? I've never had to
              do anything involving paying a credit card; on getting the card,
              I tell them to just take the full amount every month from my bank
              and that's what happens until years later for whatever reason I
              cancel the card. They might well like me to miss a payment so
              they can charge me interest, but it's never going to happen.
              
              This is a genuine question; I know that other countries do things
              differently. Is that not an option where you are?
       
                Nextgrid wrote 4 days ago:
                It does, but that payment takes several days to clear and
                messes up your bank's analytics. I use a modern bank that gives
                me a real-time overview of my spending and categories it, but
                this all goes out the window if all your spending is on a
                credit card and the only thing your bank sees is a single
                payment (to your credit card provider) once a month.
       
                  kube-system wrote 4 days ago:
                  Does your bank not offer a credit card?
                  
                  Here in the US it is common for banks to both provide
                  traditional banking services and credit cards, and when you
                  open your banking app, both accounts are together.
       
                  gruez wrote 4 days ago:
                  >I use a modern bank that gives me a real-time overview of my
                  spending and categories it
                  
                  You depend on your bank for this type of stuff? Isn't that
                  basically begging for vendor lock-in? It makes far more sense
                  to have a vendor-agnostic solution (eg. mint or personal
                  spreadsheet), so your analytics aren't at the whims of your
                  bank.
       
                    ikr678 wrote 3 days ago:
                    In Australia at least, all banks/institutions provide those
                    transaction analytics as the registered business number of
                    the company you transact with has a category attached to it
                    by our tax office.
                    
                    If I look at my recent expenses in my banking app, I can
                    see that I got a coffee (food&beverage), bought fuel
                    (transport) and paid freight cost on a case of wine from my
                    frequent flyer miles rewards program (incorrectly classed
                    as travel).
                    
                    It's not 100% accurate but gives a good enough overview in
                    the app week by week, and I sit down quarterly to look at
                    things properly in a spreadsheet.
       
                    Nextgrid wrote 4 days ago:
                    I don't have enough money to care seriously about this yet,
                    so I don't mind if my bank discontinues the service (and
                    can reevaluate then). However, in the meantime it's there
                    and it's convenient so I use it and the simplicity of my
                    financial "stack" (one account for everything) makes it
                    work well.
                    
                    A credit card would break that and introduce unnecessarily
                    complexity including another company that I'd rather not
                    have to deal with (also, I'm not aware of any modern credit
                    card providers that would give me a decent experience).
       
                      nradov wrote 4 days ago:
                      Almost every major US bank also issues Visa or MasterCard
                      credit cards, and integrates spending on those cards into
                      their account analytics.
       
                  pnutjam wrote 4 days ago:
                  Just a customer, but I use Cap1 and I can make a payment on
                  my card and unless it's Fri/Sat/Sun, it will post to my bank
                  the next day.
                  
                  It always shows as pending in the morning and clears that
                  evening.
                  
                  I can also make a payment and it will update my CC limit the
                  same day if needed.
       
                  jkaplowitz wrote 4 days ago:
                  The vast majority of my monthly spending (with a few notable
                  exceptions like mortgage and electricity bill) goes on a
                  single credit card. That card's website and app also gives me
                  an overview of my spending and categorizes it. What you say
                  can work in the credit card world.
                  
                  And as the other commenter's reply says, all my credit cards
                  pay me cash back or a points system which is redeemable for
                  things with high cash value. There's a real quantifiable cost
                  to not using them.
       
                  teakettle42 wrote 4 days ago:
                  Not a very modern system if it cannot account for a credit
                  card.
                  
                  If you’re not using a credit card, you’re:
                  
                  - Adopting significant risk (debit card protections are not
                  as strong as credit card protections)
                  
                  - Failing to establish a credit history
                  
                  - Giving away a significant amount of money.
                  
                  Credit card transaction fees are included in all prices.
                  
                  I use a card that gives me 2% cash back on all purchases —
                  effectively, most or all of the transaction fee.
       
                    ikr678 wrote 3 days ago:
                    Other countries have stronger/ better enforced consumer
                    protection laws so credit card chargebacks are less
                    necessary.
                    
                    I fail to understand how you are giving away 'significant'
                    money by spending from your own account? Are you referring
                    to being able to earn interest on savings for the month
                    before you have to settle the credit line?
       
                  kzrdude wrote 4 days ago:
                  I don't enable these bank analytics (sweden) since that
                  accepts their laundry list of terms for that service,
                  suddenly opening for the bank to mine that data. Without
                  agreeing to it, I have more protection.
       
              is0tope wrote 4 days ago:
              While I see your logic, ultimately using a credit card makes a
              lot of sense as long as you pay it off on time. Not only do you
              get the (small) benefits of the cashback or points, but you have
              added fraud protection also.
              
              Not sure how it is where you are, but where I am the payment is
              automatically done every month from your bank account. There is 0
              chance of missing a payment, as long as you have a sufficiently
              positive floating balance in your account. If someone do not,
              then I would question their suitability for a credit card in the
              first place.
       
                steelframe wrote 3 days ago:
                > you have added fraud protection also
                
                My bank provides fraud protection for my debit card. A card for
                my account got skimmed and was used to withdraw cash from an
                ATM. Got my money back with a single phone call to report the
                fraudulent activity.
       
                bee_rider wrote 4 days ago:
                These companies are making money somehow. If they are
                exploiting people more clever than me, then I'll probably fall
                for it too. If they are exploiting people less clever than me,
                seems pretty evil, I don't want anything to do with that.
       
                  CPLX wrote 4 days ago:
                  How they are making money isn't a secret. They take a
                  percentage of the transaction from the merchant you pay every
                  time you make a charge. It's effectively free from your
                  perspective, the merchant is willing to share some of your
                  money to allow you the convenience of paying by card.
       
                Nextgrid wrote 4 days ago:
                > Not only do you get the (small) benefits of the cashback or
                points
                
                Maybe in the US - in Europe where interchange is capped, credit
                card rewards aren't worth it. Not to mention, I like my privacy
                and don't want to deal with any rewards or offers programs
                anyway.
                
                > but you have added fraud protection also.
                
                In practice, all the fraud I've been victim of always fit
                within the card networks' dispute resolution rules. The only
                time I can think of this being necessary is airlines that go
                bust (where a card network dispute would technically succeed
                but fails because there's literally no money to claim back
                anymore).
                
                > where I am the payment is automatically done every month from
                your bank account. There is 0 chance of missing a payment, as
                long as you have a sufficiently positive floating balance in
                your account. If someone do not, then I would question their
                suitability for a credit card in the first place.
                
                See my other comment here:
                
   URI          [1]: https://news.ycombinator.com/item?id=31504046
       
                  sgjohnson wrote 4 days ago:
                  > Maybe in the US - in Europe where interchange is capped,
                  credit card rewards aren't worth it. Not to mention, I like
                  my privacy and don't want to deal with any rewards or offers
                  programs anyway.
                  
                  Not if you have an American Express card. Interchange is
                  capped only if there's more than 3 parties to the
                  transaction, which is not the case on AmEx.
       
                  jsmith45 wrote 4 days ago:
                  > In practice, all the fraud I've been victim of always fit
                  within the card networks' dispute resolution rules. The only
                  time I can think of this being necessary is airlines that go
                  bust (where a card network dispute would technically succeed
                  but fails because there's literally no money to claim back
                  anymore).
                  
                  Does the dispute process have all disputed money be instantly
                  returned to the account? With a credit card, you can simply
                  turn off the auto payment system, and simply not pay the
                  fraudulent part, and you still have your money in the bank
                  account. With a debit card, in the US the banks typically
                  have 10 business days to determine if there was fraud and
                  give your money back. (If the investigation takes longer they
                  return the money on the tenth business day pending the
                  results of the investigation, and if they determine it was
                  not fraud they will take the money back again.)
                  
                  And in the US many people life paycheck to paycheck with
                  effectively zero savings. If their account is zeroed out due
                  to fraud, Things can get expensive quick.
                  
                  For example, your rent payment is probably too large to be
                  covered by banks overdraft protection, so you will likely get
                  hit with three bounced check fees. of at least $25. One from
                  you bank from the first attempt. Then a later re-presentment
                  attempt will also fail, and you will get a second fee from
                  your bank. Finally, you will get a bounced check fee from
                  your landlord. Of course since your payment did not go
                  through, you will likely end up with a late fee. etc.
                  
                  For other bills they could be small enough that you only get
                  hit with overdraft fees, and not the rest. But if not, then
                  things can snowball VERY quickly. And There could be other
                  consequential damages like losses from being unable to get
                  certain items while they are on sale, or even things like the
                  stress of all of this preventing you from closing a sales
                  deal, meaning you lose out on a substantial commission, etc.
                  
                  And while you can typically get the bank imposed fees waived
                  due to the fraud, as long as they can determine that you
                  would not have suffered those fees if the money had been
                  there, the bank won't always cover all the the incidental and
                  consequential damages. (The terms of service always exclude
                  those).
       
                  gruez wrote 4 days ago:
                  >> but you have added fraud protection also.
                  
                  >In practice, all the fraud I've been victim of always fit
                  within the card networks' dispute resolution rules
                  
                  I think there's an element of "fraud protection" that you're
                  missing. If your debit card gets breached and someone racks
                  up $2000 worth of charges on it, the $2000 is immediately
                  gone from your bank account. If rent/bills are due soon, that
                  might be bad. On the other hand if you have a credit card,
                  you have at least 3-4 weeks since the bill is issued before
                  you have to pay, which means 3-4 extra weeks to get it
                  resolved/refunded without having it affect your finances.
       
              2rsf wrote 4 days ago:
              That. I was addicted to credit cards and small payments but now I
              pay everything debit, cash in other words, and life became much
              more simple and predictable
       
              maxerickson wrote 4 days ago:
              Their business model is a 1 to 3 percent fee on every transaction
              they are involved in. My credit card company sends me a
              notification when a statement is ready and another friendly
              reminder a week before the bill is due.
              
              They make money on interest also, but they would rather have
              someone that spends and pays off a lot than someone that carries
              a modest balance.
       
                Nextgrid wrote 4 days ago:
                > Their business model is a 1 to 3 percent fee on every
                transaction they are involved in.
                
                In Europe and the UK, interchange is capped to a level that
                wouldn't support running a financial institution.
                
                > They make money on interest also
                
                Interest only gets charged a month after (at least on most UK
                credit cards), so if you're using it "the right way" and paying
                it off every month you will never incur any interest. It's good
                for you but ultimately proves that credit card providers rely
                on the (generally less financially-savvy) people who
                don't/can't use it "the right way" and incur interest or fees.
                That's honestly a pretty predatory business model I have no
                interest in supporting.
                
                > My credit card company sends me a notification when a
                statement is ready and another friendly reminder a week before
                the bill is due.
                
                True but why should I even statements and bills for spending
                what is my money in the first place? My argument is that you
                should only use a credit card when you actually need credit and
                not to merely game a broken system.
       
                  sgjohnson wrote 4 days ago:
                  >  My argument is that you should only use a credit card when
                  you actually need credit and not to merely game a broken
                  system.
                  
                  Credit cards are literally the dumbest way to borrow money,
                  second only to payday loans. So you definitely shouldn't use
                  them when you _actually need credit_.
                  
                  But you should use them to build up your credit score, so you
                  can get extremely cheap credit when you actually need it.
       
                  maxerickson wrote 4 days ago:
                  The article is about North American credit scores, so I guess
                  it isn't completely ridiculous to assume that if it is
                  unstated.
                  
                  Does your bank not have a system showing you what
                  transactions you did in a month? The credit card statement is
                  the same thing, for a different account.
       
        mcntsh wrote 4 days ago:
        I've been working since I was 16 years old and I've had sparkling
        credit my entire life. I pay my cards in full every month; never missed
        a payment for 10+ years, paid off my car early.
        
        I moved abroad and forgot about a $30 dollar balance with AT&T which
        brought my FICO score to 600. One 30 dollar bill means I can no longer
        qualify for a mortgage or a car payment or anything.
       
          MisterSandman wrote 3 days ago:
          This is a bit misleading. One missed payment doesn't lead your score
          to drop by so much. I'm assuming you never found out about it and it
          went to collections because you never paid the bill for a year or
          more.
       
          bcassedy wrote 4 days ago:
          I've had a similar experience when changing mobile provider. For
          whatever reason it seems like that last bill posts late and never
          shows up. In the past I didn't have autopay turned on so I just
          didn't even know about the debt until I started getting letters from
          collections firms 6 months later.
          
          I imagine that these last bill things end up dinging a lot of
          people's credit. Luckily I've paid them when I find out about them
          and my credit bounces back once the payment in full is reported.
       
          daniel-thompson wrote 4 days ago:
          A grey-hat method of dealing with this would be to dispute it with
          Equifax, TransUnion, and Experian and choose a plausible dispute
          reason ("I never knew about it" or whatever). Regardless of the
          merits of the claim, it's likely their "investigation" will resolve
          in your favor and they'll just remove it (and your score will bounce
          back immediately).
          
          It doesn't necessarily feel great... but remember that you're
          literally just a number that they couldn't care less about.
       
            FireBeyond wrote 4 days ago:
            When I was going through the mortgage process, my broker
            recommended a credit repair company, whom I learned had three broad
            purposes (the reason I mention this is in point three):
            
            1. Relieve the psychological / emotional stress of debt collectors
            hounding you by redirecting that to them.
            
            2. Offering to settle debts. Realize, though that "Paid in full"
            and "Settled in full" are different statuses to a CRA. And both
            have an entirely negligible impact on improving your credit score -
            the damage is done when the negative tradeline is reported.
            HOWEVER, for mortgages, there's some merit in resolving this. "Yes,
            it got to that point, but I did take care of it" is better that
            "Yes, it got to that point, and then I continued to ignore it."
            
            3. How do these agencies also "improve" your credit? They dispute
            every negative tradeline, regardless of accuracy. If the tradeline
            isn't verified (because smaller/more manual agencies don't have the
            time/inclination, especially if they've got their money now), it is
            removed, like it never happened. If it IS verified? They dispute it
            again. And again. In the hope that at some point the creditor will
            fail to meet the verification requirements. Nothing magic.
       
            ryathal wrote 4 days ago:
            I doubt this would work. Credit reports are for lenders, and credit
            bureaus side with their true customer.
       
              daniel-thompson wrote 3 days ago:
              YMMV but it's worked for me.
       
              astura wrote 3 days ago:
              The FCRA requires them to prove you owe the debt. Debt collectors
              often can't do this, especially if your debt has been resold -
              these are often resold as an Excel spreadsheet.
       
            PascLeRasc wrote 4 days ago:
            If this doesn't work, submit another dispute around Thanksgiving -
            the creditors have 30 days to respond before it's automatically
            resolved in your favor. In my experience it does actually feel good
            to do this.
       
            brundolf wrote 4 days ago:
            At some point, when a system is so broken and unjust, I think it's
            no longer unethical to exploit it given the opportunity
       
              bondolo wrote 3 days ago:
              When was it ever just or working?
       
          leet_thow wrote 4 days ago:
          I had a similar thing happen to me. I disputed the charge via Credit
          Karma, explaining that the service never worked so I never paid.  It
          was removed within a few days.
       
            upupandup wrote 4 days ago:
            for me it was AWS/DO billing. I lost the original phone
            number/email attached to it which makes it impossible for me to
            login to that account.
            
            I just no longer rely on credit or use credit cards anymore. I buy
            everything with cash.
            
            Funny enough my bank is constantly calling me that they can lend me
            money.
            
            Our modern Credit/interest/rent system is parasitic at best. In
            some cultures, it is deemed immoral and outright banned. However I
            don't know what the alternative is. Who would lend money without
            any expectation of return? Who would buy bonds    if they cannot sell
            it for a higher price?
       
          throwaway98797 wrote 4 days ago:
          credit scores recover quick
          
          you could cause six figure loses to a bank by short selling your home
          and still have workable credit within 2 years
       
            Mezzie wrote 3 days ago:
            I declared Chapter 7 two and a half years ago and I currently have
            a score in the mid-700s. Granted, my bankruptcy was due to medical
            stuff rather than irresponsibility.
       
              MisterSandman wrote 3 days ago:
              That's awful to hear, hope you're doing better now.
       
                Mezzie wrote 3 days ago:
                My fortunes have improved dramatically, mostly due to the
                pandemic, ironically.
                
                I need remote work and have some background in Instructional
                Design. I'm FAR more valuable now than I was 3 years ago. Odd
                how that works.
       
          goatherders wrote 4 days ago:
          Pay it off. Wait a month.  You'll be fine.
       
            mcntsh wrote 4 days ago:
            It went to collections. That stays on your credit for 3-5 years.
       
              goatherders wrote 4 days ago:
              Incorrect. Pay it off in full. They will report that to the
              credit folks and it will be removed.
       
                roflyear wrote 4 days ago:
                This is incorrect. They do not have to remove it. They can, if
                you ask nice, but they do not have to.
       
                valeness wrote 4 days ago:
                This is patently false. They will remove it if they are feeling
                particularly jolly when you call and ask. But they are under no
                obligation to do so and they have denied this action to me
                before.
       
                  goatherders wrote 4 days ago:
                  Rephrase: my credit was a disaster in my 20's. I paid off
                  dozens of collections accounts in my 30s. All of them were
                  removed.
                  
                  My personal experience has been that it is 100% true that, if
                  paid in full, the item is removed.
                  
                  Better?
       
                  parkingrift wrote 4 days ago:
                  I’ve been in this situation and you can make repayment
                  contingent upon deleting the negative remarks. As in you send
                  me a letter certifying you’ll delete the remark, and I will
                  remit payment.
                  
                  If they refuse then you can just refuse to pay until they
                  relent. Their only alternative is to take you to court or
                  sell to the next collection agency down the line. Creditors
                  and collection agencies won’t take that action except as an
                  absolute last resort.
       
                    FireBeyond wrote 4 days ago:
                    One of the challenges with this is that technically the TOS
                    between a creditor and the CRA forbids the practice of "pay
                    for delete". So you may get lucky, but oftentimes, you may
                    not.
       
                  gaadd33 wrote 4 days ago:
                  They do have to mark it as paid at least under the FCRA if
                  you are in the US.
       
              bryans wrote 4 days ago:
              That's actually not true. If you pay the collection agency, the
              derogatory mark gets removed within weeks. You also typically
              only need to pay half the amount. If they try to get you to pay
              the whole thing, just tell them you're using your tax refund to
              pay off debts, but you only have $X left, where X is half the
              amount owed.
       
                alostpuppy wrote 4 days ago:
                That’s not my experience. The only derogatory items on my
                credit report are medical debts I have long since paid off.
       
                  bryans wrote 4 days ago:
                  You have the legal right and ability to remove any mark if
                  you've paid it off. Both of the agencies have online options
                  for removal requests. [1]
                  
   URI            [1]: https://www.experian.com/disputes/main.html
   URI            [2]: https://www.transunion.com/credit-disputes/dispute-y...
       
              bluedino wrote 4 days ago:
              Other creditors are worried you would move abroad and forget to
              pay them for years.
       
                mcntsh wrote 4 days ago:
                For sure it's a valid concern and warrants a mark on my record
                probably but a 30 dollar bill after 10+ years of pristine
                activity basically removing my ability to take out a loan is a
                little unfair.
       
        kome wrote 4 days ago:
        Credit Scores in the USA is basically developed into a social score. No
        European countries (with the possible exception of the UK) use a
        similar system. I wonder why Americans just keep going for it.
       
          ramesh31 wrote 4 days ago:
          >I wonder why Americans just keep going for it.
          
          We trade one for another; there's no social caste, royalty, or
          nobility here. Your worth as a human being is determined entirely by
          the sum of your assets.
       
            jimmaswell wrote 4 days ago:
            You don't need a vault of gold to have a good credit score. All you
            have to do is have some credit and use it responsibly. Too much for
            some people to handle so they decry it as unfair.
       
          nisegami wrote 4 days ago:
          The credit score system benefits the ones who have the most power to
          change it. That's why there's no real motivation to remove it.
       
          mcntsh wrote 4 days ago:
          > No European countries (with the possible exception of the UK) use a
          similar system
          
          There's SCHUFA here in Germany
       
            csunbird wrote 4 days ago:
            Yup, and you are not able to even rent a house without a positive
            score.
       
        bsenftner wrote 4 days ago:
        Credit scores can only affect your life if you live on credit. I spent
        20 years without a credit card, and the only impact was being a hassle
        to rent a car. but as far as cars go, I do the unthinkable: I save and
        buy with cash. I simply do not use credit. Beyond my house payment, I
        purchase everything up front, including the nice and hefty discount
        when paying insurance in full for the year. It is a pain in the ass to
        get used to not using credit, but it is so, so worth it.
       
          andrewmcwatters wrote 4 days ago:
          I have also had this experience. Renting a car is very strange in
          that regard, but other car rental businesses are happy to take my
          business with a refundable security deposit, so not my problem.
          
          In fact, I find it strange and shortsided, because the people without
          credit are generally going to be the people who have less of a hard
          time fulfilling their payment obligations.
          
          Other than that, it has never affected my life. You can get a
          manually underwritten mortgage still today.
          
          There is always someone else who wants your money more.
       
          throw8383833jj wrote 4 days ago:
          this seems like the logical conclusion to me.  I was scanning the
          comments for something like this and surprised that others didn't
          come to this conclusion.
       
          digianarchist wrote 4 days ago:
          I've leveraged credit quite a lot in my life and paid very little in
          the way of interest. That leverage has netted me quite a lot of money
          be it actual return on investment or being able to position myself to
          earn more, by moving countries.
       
          nisegami wrote 4 days ago:
          This is simply not true. Your credit score is frequently taken into
          consideration applying to rent a place to live.
       
            AnIdiotOnTheNet wrote 4 days ago:
            I rented my first two apartments with no credit history whatsoever
            before buying a house (and acquiring a mortgage) with no credit
            history at all.
       
              MisterSandman wrote 3 days ago:
              In 2022, in most large American cities, searching for a place to
              rent with no or a bad credit score can be a death sentence.
              You're limiting your options drastically.
       
              bsenftner wrote 4 days ago:
              How's about staying in the same rent controlled apartment for 32
              years, so I can save? That was amazing, as I was still paying
              $950 when my neighbors were paying $2200 for a smaller place.
       
          technothrasher wrote 4 days ago:
          > It is a pain in the ass to get used to not using credit, but it is
          so, so worth it.
          
          Using credit to buy things you can't afford is a bad idea, but using
          credit to better leverage your money is very useful.  Especially with
          increasing inflation, having debt that you have no trouble servicing
          isn't a bad thing.
       
          adrr wrote 4 days ago:
          How did you get home loan if you didn't have any debt to build up
          your score and credit history?
       
            AnIdiotOnTheNet wrote 4 days ago:
            It was easy in my case. As I recall, all my bank wanted to do was
            3-way call a few bill collectors so I could authorize them to talk
            about my payment history.
       
            bsenftner wrote 4 days ago:
            It's called putting down $150K in cash, and having a stable job.
            Also, my credit "score" is "N/A".
       
              avgcorrection wrote 4 days ago:
              Certified stud.
       
              adrr wrote 4 days ago:
              Putting $150k down is like standard since you need to put down
              20% anyway.   Are you paying like significantly higher interest
              rate like a jumbo loan?   If you don't have a credit score, the
              government won't back it so its more risk on the bank and you're
              paying a much higher interest rate.   Banks also don't keep the
              loans and package them up and sell them.  If you don't have a
              credit score, not sure how they would do that.     No score would
              qualify as subprime.
       
                bsenftner wrote 4 days ago:
                Most people's 20% down is also a loan. Plus, in addition to
                that $150K down payment, I can point to my savings account with
                more than the loan debt inside. The only reason I have a loan
                is for the tax relief, if not for that I'd have purchased the
                home completely. My home loan is under 2%.
       
                  ryathal wrote 4 days ago:
                  That's a stupid reason to have a loan, unless you really like
                  paying banks more than the government. It's still a loss to
                  you with the tax deduction.
       
        adenozine wrote 4 days ago:
        How can we cooperate to get rid of them?
       
          jimmaswell wrote 4 days ago:
          I don't want to. Any system will have mistakes (and there are legal
          remedies for this particular system already), but for the vast, vast
          majority of people, their score is a fair reflection of whether you
          should lend to them. I've been responsible with credit my whole life,
          never had a bad mark appear on my report, and consequently never been
          denied an application.
       
          kome wrote 4 days ago:
          changing the legislation and the credit market, copying (dunno) the
          french or italian system and regulation. German system is pretty bad,
          but not as bad as in the US.
       
          sokoloff wrote 4 days ago:
          Starve them of their income stream by committing to never take
          credit, saving and paying cash ahead of time for every purchase? Get
          everyone else to agree to do the same. Demand for credit scoring will
          plummet (and with it, the income stream to the scoring agencies).
          
          Open a lending institution that will lend money to anyone with no
          credit checking? Hope that you don’t get adverse selected out of
          business, but if you don’t and can compete without it, demand for
          credit scoring will plummet.
          
          Or petition your representatives to make this particular type of
          service illegal.
       
            throw8383833jj wrote 4 days ago:
            And, also need to get rid of all regulations that prevent
            shopkeepers from charging credit card fees (or discounts for cash
            buyers).  If you're paying for everything with cash/debit, you're
            paying those credit card fees unless merchants can charge different
            prices.
       
              sokoloff wrote 4 days ago:
              In the US, cash discounts have been explicitly allowed since
              around 2010 (via the Durbin amendment to the Dodd-Frank law).
              Merchant agreements were updated to reflect these possibilities.
              (Visa's is under 1.5.4.14 Discount Offer – US Region and US
              Territories, 5.6.2.1 Convenience Fees – AP, CEMEA, and US
              Regions, 1.5.5.2 Surcharges [and possibly others].)
              
              Accepting, handling, counting, accounting for, and securing cash
              (against insider and outsider threats) is not without cost
              either.
       
            RHSeeger wrote 4 days ago:
            > Open a lending institution that will lend money to anyone with no
            credit checking? Hope that you don’t get adverse selected out of
            business, but if you don’t and can compete without it, demand for
            credit scoring will plummet.
            
            This seems unlikely to succeed. You'd wind up having to give the
            same rates to everyone, because you have no real way to assess risk
            individually. As such, you wouldn't be able to compete on rates for
            people with good credit.
       
        lisper wrote 4 days ago:
        The solution to the particular problem reported in TFA is simple and
        obvious: allow people to sue credit reporting agencies for damages if
        they report false information.    You will be amazed how fast these
        things will get resolved if that reform is adopted.
        
        Of course that won't happen because regulatory capture, but let's not
        wring our hands and pretend that this is a fundamentally difficult
        problem.  It's not.
       
          boatsie wrote 3 days ago:
          You absolutely can sue under the FCRA for violations, but there’s a
          few major problems.
          
          First, even if you find a lawyer to take it on contingency, there are
          quite a few hard costs that are still out of pocket. Postage,
          document prep fees, travel expenses for depositions, expert
          witnesses, etc. It can literally be thousands of dollars.
          
          Second, if your state does not allow for punitive damages for this
          type of violation, you need to prove damages. It is hard to quantify
          what the economic damage is of a credit denial or difficulty finding
          a lender is, and thus they will tie you and your lawyer’s time up
          with arguing this, even if they concede they erred.
          
          Third, there is a serious time commitment to make in a lawsuit.
          Interviews, timely filings, certified mailings, depositions, etc.
          Easily tens of hours possibly hundreds.
          
          Now, the type of person who can afford the time and expense of doing
          these things is generally also the type of person who can ignore a
          small hit to their credit score or a higher interest loan. Thus,
          these types of suits are not commonplace.
          
          That said, I know someone who did this and was successful in getting
          a settlement.
       
          partiallypro wrote 4 days ago:
          You can report incorrect information to the credit rating agency
       
            TheOtherHobbes wrote 4 days ago:
            In the UK you can also sue for defamation, which can be worth
            substantial damages if you win.
            
            Not many people realise this.
            
            Not speaking from personal experience, but I'm aware of a small
            number of cases where credit agencies, shops, and banks were sued
            for downgrading a credit score because of their own mistakes.
            
            I suspect this would be less likely to succeed in the US. But it's
            interesting that technically a downgraded credit score - especially
            with proof of consequent harms and expenses - is very close to the
            legal definition of defamation.
       
          londons_explore wrote 4 days ago:
          In many cases the information is true.     Ie. you really did pay a
          $1.50 bill 17 years late because the bills were sent to your old
          address.
          
          The real fix is to only allow credit reporting systems to report on
          current debt, not any past debt or behaviour.  (on top of the
          liability for mistakes you propose).
       
          FollowingTheDao wrote 4 days ago:
          Here is a better solution. Just do not care about your credit score.
          Seriously. It is all BS. They make you think you need these things,
          it is all marketing.
       
            scarface74 wrote 4 days ago:
            Unless you need silly stuff like a place to stay or car insurance  
            Landlords check your credit if you rent and most people can’t pay
            cash for a house.
       
            londons_explore wrote 4 days ago:
            Depends if you need a mortgage or credit card to buy stuff...
            
            And remember even if you don't technically need those things, you
            might be much wealthier by the end of your life if you use those
            things, since both are effectively leveraged investment vehicles,
            allowing you to invest more and get more returns in good economic
            times.
       
              FollowingTheDao wrote 4 days ago:
              If you need credit to buy stuff your problem is not going to be
              solved by going into debt. Tell me how buying a TV on a credit
              card is a leveraged investment.
              
              You know who gets rich? People who do not spend their money.
              
              And don't make it sound like "investment" is always a positive
              thing. many people are still paying for their "investments" from
              2008.
       
                scarface74 wrote 4 days ago:
                So should people just wait to buy a house until they cab pay
                cash?
       
                  TheOtherHobbes wrote 4 days ago:
                  Perhaps the economy should be structured in a way that allows
                  people to do that without being forced into debt.
       
                    thrwyoilarticle wrote 3 days ago:
                    I work for an employer who pays me in arrears. They are
                    indebted to me. They could pay me up-front, but then I'd be
                    indebted to them.
                    
                    Maybe there can be a system where dollar bills slowly peel
                    out in front of me as I do my daily work?
                    
                    Debt exists for a reason. It's more useful than cash.
       
                    scarface74 wrote 4 days ago:
                    So how would you “structure the economy” to allow
                    someone to buy a house without debt and that allows them to
                    both save for a house and pay for some place to live while
                    you are saving?
       
                    tristor wrote 4 days ago:
                    Perhaps it should... but it isn't.  It's perfectly
                    reasonable to believe that it should be this way, but it's
                    irrational to behave as if it /is/ this way, when it isn't.
                    
                    The reality is that, at least in the US, it is a
                    requirement for nearly everyone to have a mortgage to
                    purchase a house and even for those who can afford to
                    purchase without a mortgage it makes more sense to get one
                    anyway since mortgage interest is usually lower than the
                    rate of returns for other investments you would be keeping
                    the cash in, and you get tax benefits both by not realizing
                    gains to liquidate investments to buy a house and the
                    interest for the mortgage is tax deductible via the
                    mortgage interest credit program.
                    
                    Acting as if anyone is realistically out here buying houses
                    in cash other than corporate investors / REITs, is silly. 
                    Even people on significant tech salaries are both better
                    served and much more probably to have a mortgage even in
                    LCOL areas.
       
                kleinsch wrote 4 days ago:
                Investment or not, you’re claiming people should only buy
                cars and houses for straight cash? News flash - most of this
                country isn’t sitting in six figures of tech savings.
       
                  FollowingTheDao wrote 4 days ago:
                  I live on disability and bought the van I live in with cash
                  so do not tell me you need credit to buy a car.
                  
                  Housing may be the exception, but you do not need a good
                  credit score to get a loan for a house. Banks do not make
                  these decisions on credit score alone. [1] What I am saying
                  is that people should be spend less, save their money, and
                  never going into any kind of debt, and ignore their credit
                  score.
                  
   URI            [1]: https://www.ramseysolutions.com/real-estate/no-credi...
       
                    scarface74 wrote 4 days ago:
                    Please don’t quote Ramsey.  His whole mission is to
                    funnel people into his high cost advisor and loan products.
                    
                    He also says that you should give 10% to the church while
                    getting out of debt.
       
                      FollowingTheDao wrote 4 days ago:
                      Sorry, I don’t look at people with an all or nothing
                      attitude. I disagree with Ramsey on so many things,
                      specifically his greed, but he’s not wrong about the
                      ability to buy a house without a ton of leverage.
       
                        scarface74 wrote 4 days ago:
                        He very much encourages buying a house with 20% down. 
                        He just encourages you to do it through non standard
                        underwriting criteria with high interest rates where he
                        gets a cut.
       
          avgcorrection wrote 4 days ago:
          > Of course that won't happen because regulatory capture, but let's
          not wring our hands and pretend that this is a fundamentally
          difficult problem. It's not.
          
          Regulatory capture is a huge issue, it is difficult to solve, it is
          the real mother-issue of many other issues (like this one, you
          argue), and is fundamental to modern governance. Credit scoring is
          transitively a fundamentally difficult problem.
       
          kome wrote 4 days ago:
          Or just regulate credit better.
       
          tyingq wrote 4 days ago:
          There's also the issue of various creditors giving them bad
          information.  I don't know how successful you might be suing a credit
          reporting agency if they were given bad info by some debt collector.
       
            londons_explore wrote 4 days ago:
            In the USA, in most cases, you can't in court point to someone
            supplier and say 'it was their fault, not mine'.
            
            Instead, the correct approach is to pay damages, and then, in a
            separate case, try to recover damages from that other party that
            you claim is at fault.     If the other party is bankrupt or can't be
            found, you're gonna lose out.
       
            eberkund wrote 4 days ago:
            Credit reporting agencies are publishers of information. Publishers
            have editorial responsibility for the information they distribute,
            the excuse that they were given bad info by some random tipster
            doesn't hold up.
       
              IncRnd wrote 4 days ago:
              The FCRA already is a law that governs credit reporting agencies.
              Given that, are you sure they are publishers in the manner you
              imply?
       
              gruez wrote 4 days ago:
              Do you think hacker news should be sued for inaccurate
              information posted by its users?
       
                triceratops wrote 4 days ago:
                Hacker News is protected from this by Section 230 of the CDA.
                
                Credit bureaus aren't covered by the CDA since they aren't
                online or interactive information providers.
       
                ascagnel_ wrote 4 days ago:
                Hacker News allows basically any user with an account to submit
                posts and comments, and generally do not deal with data that
                has a material impact on others; there is no financial or
                contractual arrangement between HN and individual users beyond
                a standard ToS and moderation.
                
                Credit ratings bureaus enter into contractual agreements with
                both data suppliers and their customers and frequently deal
                with data that has a material impact on those who have no
                direct arrangement with the ratings bureau.  I don't think it's
                unreasonable to expect a higher degree of data integrity and
                reliability in that case, and HN vs. a credit bureau is a
                terrible comparison.
       
              tyingq wrote 4 days ago:
              I'm not understanding how that works exactly, outside of very
              basic vetting that things like name, ssn, etc, match up.  A fair
              amount of disputes, for example, are identity theft.  The loan
              company sharing into with a credit reporting agency would be
              supplying data that looked right.
       
          lelandfe wrote 4 days ago:
          Those most affected by incorrect credit scores will have no financial
          ability to sue a multibillion dollar credit agency.
          
          Those with the financial ability will have little incentive to do so.
       
            mywittyname wrote 4 days ago:
            These kind of cases can be streamlined by law firms.
            
            Not every case drags on for years.  People regularly sue, for
            example, insurance companies.  Both parties kind of know where they
            stand, and judges prefer that parties find a settlement that works.
       
              nevi-me wrote 4 days ago:
              Or simpler than law firms, an ombud process that fights for the
              consumer.
              We have something like this in my country, where we have laws
              against reckless lending.
              
              My mom is unemployed and medically unfit to work. She was given a
              credit card, which I found out about after a few years. I spent 2
              years passively trying to sort the issue out with the bank, to no
              avail.
              
              I finally went to the banking ombud earlier this year, and the
              bank wrote off her debt a few days after. I could have gone
              further and tried to get her "bad credit" from the bank expunged
              (there's a complaints process), but it disappears after 2 years,
              so I just left it to be.
       
            BobbyJo wrote 4 days ago:
            This is simply not true. Plenty of lawyers work for a cut of the
            proceeds, and big companies don't like going to court.
            
            My sister, who works for 15$ an hour, has successfully sued two
            very large companies when they don't hold up their end of a
            contract.
            
            Even if only 'some' of the people wronged sue, it will lead to
            better practices for everyone.
       
              luckydata wrote 4 days ago:
              yeah, suing a corporation with a pro bono lawyer is a low
              friction way to deal with systemic economic injustice and
              consumer hostile business practices.
              
              In what world? c'mon.
       
                BobbyJo wrote 4 days ago:
                It's high friction, but doable. Companies generally settle when
                they know they're in the wrong (get everything in writing kids)
                thanks to a wonderful concept known as "juries".
                
                Juries hate when companies do wrong by the little guy, because
                they are themselves the little guy.
       
              orzig wrote 4 days ago:
              I would love to hear more of that story. I’d also assumed it
              was impossible and could definitely be convinced by evidence
       
                BobbyJo wrote 4 days ago:
                She sued my grandfather's home-owners insurance for not paying
                the full price of plumbing work (they offered half, knowing
                that wasn't the contract) when some pipes collapsed under his
                house. She won, plus got extra money for having to wait, which
                allowed my grandfather to make some other fixes to his house.
                
                She also sued a large solar-panel installation company because
                their installed panels didn't work after several months of
                techs coming over. This was only a partial success as the
                company liquidated. They had apparently done the same thing to
                a few other people, and got sued into oblivion.
                
                Lawsuits are a good thing for society sometimes.
       
                kube-system wrote 4 days ago:
                Any ad you see in the US for a lawyer is a lawyer that operates
                this way. (otherwise we wouldn't have ads on the side of bus
                stops for them)
                
                It's an arrangement called "contingency": [1] The downside is
                that a lawyer is likely not going to work with you unless
                they're sure they can get some decent money out of the case.
                
   URI          [1]: https://www.legalmatch.com/law-library/article/conting...
       
                  jrockway wrote 4 days ago:
                  "Works on contingency?    No, money down!"
       
                  mikestew wrote 4 days ago:
                  The downside isn't a downside. For no charge to you, a
                  professional will tell you that it's a good thing there are
                  contingency lawyers because otherwise you would have wasted a
                  bunch of money to find out that you don't have a case. And
                  even the "wasted money" part isn't true, because my limited
                  understanding and experience says that just about any lawyer
                  will give you a visit for free, even if they intend to charge
                  for every 1/16th of an hour afterward.
       
                  dixie_land wrote 4 days ago:
                  Better Call Saul!
                  
                  it’s a fictional character but that really sums up the
                  type.
       
            Maakuth wrote 4 days ago:
            Isn't that what class action suits are for?
       
              swat535 wrote 3 days ago:
              Right and how did it out ended up working in case of the Equifax
              breach?
              
              "Class actions" achieve very little; the only thing they do is
              make lawyers wealthier and if by some miracle the case succeeds,
              everyone else will get a 5$ coupon.
              
              Real change requires changing laws by the democratic process and
              that can only happen when the population unites to hold the
              government strongly accountable.
              
              I would argue that any other solution is a bandaid.
       
              Frost1x wrote 4 days ago:
              How do you class action "my specific credit report is false
              because of this specific information."
              
              There needs to be a third party regulatory agency with real teeth
              where you don't need a pile of money to refute claims, just a
              little time for the regulatory agency to pressure them on your
              behalf. The courts aren't it although they probably should be.
              
              The problem with our legal system is that in large part pointed
              out by GP, there's often a financial correlation in just how much
              you can utilize it which makes it ripe for exploitation by those
              with piles of capital laying around.
       
                dvtrn wrote 4 days ago:
                > There needs to be a third party regulatory agency with real
                teeth
                
                The CFPB could probably use sharper teeth
       
                zie wrote 4 days ago:
                You are right, in an individual case like that, it's hard to
                make it a class action, but I'm sure there are plenty of cases
                where they get some bad data from some vendor, and then
                promptly update 100k accounts with this bad data.  Well that's
                100k class action participants. :)
       
          smitty1e wrote 4 days ago:
          The fact that we have zero politicians of any stripe running on
          actual reform platforms is all one need know about politics.
       
            SpicyLemonZest wrote 4 days ago:
            I’m not sure that sends any real lessons beyond the fact that
            credit scoring isn’t a top political concern for many voters.
            There were bills introduced to reform the system in 2016 and 2021.
       
              smitty1e wrote 3 days ago:
              That Elizabeth Warren thing is the opposite of what's needed.
              
              Teaching budgeting in schools would be a good start.
       
          refurb wrote 4 days ago:
          Why not just sue them in small claims court for some small monetary
          damages right now?  You can do that, people rarely do.
       
            tyingq wrote 4 days ago:
            Small claims court usually requires a very concrete definition of
            damages, things you can show in a receipt, invoice, estimate, etc.
       
            lisper wrote 4 days ago:
            It's complicated.  The Fair Credit Reporting Act gives agencies
            very broad latitude to blame mistakes on the parties that furnished
            the information, and the resulting legal situation is a mess [1]. 
            As a practical matter, you can bring such a suit, but your odds of
            prevailing on the merits are indistinguishable from zero.
            
   URI      [1]: https://www.courthousenews.com/high-court-wont-review-immu...
       
              refurb wrote 4 days ago:
              Understood.
              
              But just like suing a large firm, when sending a $1000/hr
              corporate lawyer to small claims court, it makes more sense to
              just settle quickly.
       
                lisper wrote 4 days ago:
                Lawyers are not usually allowed in small claims court.    But I'm
                pretty sure that all of the credit reporting agencies have a
                trained staff of non-lawyers who are nonetheless sufficiently
                well versed in this particular aspect of the law to destroy any
                prospective plaintiff.
       
                  tssva wrote 4 days ago:
                  Small claims courts are not intended to force defendants to
                  give up their right to be represented by legal counsel;
                  therefore, once served defendants usually can file to
                  automatically have the case moved out of small claims where
                  they can be represented by legal counsel.
       
                    londons_explore wrote 3 days ago:
                    They're also a good way to 'bluff' by moving the case to an
                    expensive court with lengthy and expensive processes, that
                    you know the court costs will massively outweigh any
                    potential judgement.    In that case, as claimant, it's
                    usually in your best interests to give up when you're
                    risking millions of dollars of legal fees to probably win
                    $200.
       
        Tycho wrote 4 days ago:
        I’m surprised that credit scores are even legal, to be honest. I
        wonder if there’s been any class action lawsuits.
       
          jimmaswell wrote 4 days ago:
          What do you propose? Everyone gets a loan, no questions asked, no
          consequences for anything?
       
            Tycho wrote 3 days ago:
            I wasn’t proposing anything, just expressing surprise that
            corporations are able to conspire against members of the public in
            this manner. That someone can just go and find out your personal
            history and sell it to parties you’re trying to transact with.
       
          whywhywhywhy wrote 4 days ago:
          Can't believe it's legal or that people happily participate in this
          complete scam.
          
          If I never borrow money and survive on my own terms my score should
          be perfect. Instead I'm marked down for never risking getting in to
          debt.
       
            seattle_spring wrote 3 days ago:
            "If I've never taken a math test, then it should be assumed that
            I'm great at math because I've never failed a math test."
       
            kube-system wrote 4 days ago:
            That's simply not logical.  The absence of responsibility is not a
            demonstration of responsibility.
       
          pessimizer wrote 4 days ago:
          And we play superior to China and their "social credit" although the
          US/UK/Canada/Germany are the only places that allow something
          similar.
       
            kube-system wrote 4 days ago:
            Not true.  The big "US" credit bureaus have operations all around
            the globe, and there are many regional players in this market too.
            [1] "Social credit" is an entirely different thing.
            
   URI      [1]: https://en.wikipedia.org/wiki/Credit_bureau#List_of_credit...
       
          kube-system wrote 4 days ago:
          Credit scores are just math, applied to your credit history.  What
          about that is surprisingly legal?
       
            Tycho wrote 4 days ago:
            If I wanted to start a business that would involve collating the
            private financial transactions/history of individuals and then
            sharing it (via a summary statistic) with clients in a context
            where there might be adverse consequences for the individual,
            without them granting permission, I would expect to get laughed out
            of the licensing office.
       
              kube-system wrote 4 days ago:
              Maybe you'd be surprised then.    There are many consumer credit
              operations in the EU, operating under GDPR.
       
          maxerickson wrote 4 days ago:
          The US has extremely weak privacy rights.
       
            kube-system wrote 4 days ago:
            Credit reporting exists nearly everywhere.  Regulations vary by
            region, but the general collecting and reporting of credit
            information is legal most places.
            
            Many of the places where people think they don't have a "credit
            score" are just places where credit worthiness is quantified
            differently, or local regulations don't have the same transparency
            requirements that exist in the US.
       
            tediousdemise wrote 4 days ago:
            As intended. There is no better way to influence someone's behavior
            than when they have the feeling of constantly being watched. It's
            about control.
       
              maxerickson wrote 4 days ago:
              Intended by who or what?
              
              Like if there is some entity that just gets what they want it
              doesn't really matter that you feel controlled, because you are.
       
                tediousdemise wrote 3 days ago:
                Intended by the US government.
                
   URI          [1]: https://en.wikipedia.org/wiki/XKeyscore
       
          legalcorrection wrote 4 days ago:
          Credit scores from the major credit bureaus are such a big deal
          because handing out credit on an ad hoc basis is de facto illegal.
          You will be sued and accused of discriminating against black people.
          You will probably lose, or spend enough money on legal fees to have
          lost anyway. To defend against that, you have to make the process as
          rigid and impersonal as possible. The best approach is to use the
          government-blessed credit bureaus.
       
            solarkraft wrote 4 days ago:
            The joke behind that is that there's just as much discrimination,
            just hidden behind some intransparent algorithms.
       
              legalcorrection wrote 4 days ago:
              Making the process rigid and algorithmic helps make sure that you
              aren't using race itself as a variable in your analysis, but it
              doesn't change facts about the world. Black people have lower
              credit scores because as a group, they are less likely to pay
              their bills on time or at all. But because race isn't considered
              as a factor, a black person who is financially responsible is not
              dinged just because other black people aren't.
       
          javagram wrote 4 days ago:
          It’s regulated and allowed by law.
          
   URI    [1]: https://www.investopedia.com/terms/f/fair-credit-reporting-a...
       
          kkfx wrote 4 days ago:
          Neoliberals want a society of Ford-model obedient
          workers-subject-citizens to master them as a shepherd keeps his
          flock, since most humans actually obey but only "a certain bit" they
          invent ways to judge humans like a farmer who price his livestock as
          a way to reach such obedient flock they dream.
          
          The "class action" should be a public imposition against such scoring
          simply saying in Democracy People rules, we rule that no such things
          is allowed, you are a minority who can obey or being crushed. But
          since we are not in Democracies, they are just
          corporato-dictatorships dressed as formal, not substantial,
          democracies and most are not Citizens but just subjects...
       
          sokoloff wrote 4 days ago:
          For me, the pull quote about 40% of the way down the article is key.
          ("A credit score, at its most basic, is a predictive model of
          behaviour.") It seems fairly obvious that there's a lot of possible
          efficiency (read "cheaper and more accessible credit in aggregate" as
          the consumer benefit) to be had if implemented correctly.
          
          Lenders want to lend money to people who will pay it back as agreed.
          Lenders want to avoid lending money to people who will not (or want
          to charge an amount sufficient to cover their increased risk and
          costs). Borrowers want to borrow money at the cheapest possible
          terms. A system that correctly predicts who is likely to pay back
          borrowed funds as agreed serves both borrowers and lenders. That
          means it's unlikely that it should be made outright illegal.
          
          Regulations around data quality, challenging suspect data, removing
          erroneous data, how long correct-but-negative items can stay on the
          report, etc. are entirely appropriate of course.
       
            galoisscobi wrote 4 days ago:
            This is a really good explanation as to why my credit score dropped
            by ~30 points each time I finished paying off a student loan early.
       
              xeromal wrote 4 days ago:
              The drop is usually temporary anyways. Credit scores are best
              seen as an average similar to looking at your weight. If you
              weigh yourself every day, you're going to get a different weight
              every day. Same with a credit score. Best to look at the change
              over time.
       
            p49k wrote 4 days ago:
            > A system that correctly predicts who is likely to pay back
            borrowed funds as agreed serves both borrowers and lenders.
            
            Such a system can't be built without being unfairly biased against
            some people who don't fit a certain mold, and thus it should be
            illegal.
            
            Most of Europe has a much simpler system: Your ability to obtain
            credit is based on the past several years of income, with a penalty
            for instances over the past ~7 years in which you didn't pay back
            debts. That's it; no predictive modeling or scoring or other
            nonsense; everyone has an even chance at credit.
       
              SkyBelow wrote 4 days ago:
              >Such a system can't be built without being unfairly biased
              against some people who don't fit a certain mold, and thus it
              should be illegal.
              
              Where is the difference between this and any other time where a
              choice to offer a contract or not occurs?  If you are hiring, no
              matter your interview process, you are looking for a certain mold
              and good workers who don't fit that mold will be discriminated
              against.  When renting, same thing.  When picking a contractor to
              do a job, same thing.
              
              >Your ability to obtain credit is based on the past several years
              of income, with a penalty for instances over the past ~7 years in
              which you didn't pay back debts.
              
              Which is still a certain mold predicting future performance based
              on past behavior.  What about someone who has had poor income and
              many poor payments but who has just turned their life around and
              will have great income and be payable and willing to pay off any
              future debts.  You are still discriminating against them because
              most people with a similar history won't have a similar positive
              outcome.
       
              gommm wrote 4 days ago:
              The European system is not the panacea you make it out to be. I'm
              French, I lived abroad for most of my professional life, when I
              came back to France after 14 years of living abroad, no banks
              would give me access to mortgages, I also wasn't able to rent
              most apartments because I had no history of working in France and
              I was a freelance contractor so I didn't have a fixed long term
              contract.
              
              In France at least, contract workers and entrepreneurs have poor
              access to mortgages compared to people who have a long term
              contract (CDI).
              
              Instead, I haven't really lived in the US besides a short stint
              as a student there a long time ago. But despite that, I have
              credit cards in the US and have a good enough credit score to be
              able to get a mortgage.
              
              I actually prefer the credit score in the US, it's relatively
              easy to manage, there's quick feedback as to how well you are
              doing (much less opaque than what's there in Europe) and it's
              more flexible for people not fitting the mold.
       
              zo1 wrote 4 days ago:
              Maybe I'm missing something, but you just described a credit
              score system.
       
                mortenlarsen wrote 4 days ago:
                Yes. But we don't have the stupid gaming aspect where people
                take on debt that they don't need in order to "build a credit"
                score.
                
                It is only a proof of income, outstanding debts (that you are
                required to reveal), and the hopefully lack of past
                non-payments that count. You can't "build your" score buy using
                a bunch of credit cards and paying every month.
                
                I live in Europe, and do not have a credit-card (only debit)
                have no need for credit, since I do not spend money that I do
                not have.
                
                If I was in the US, I would probably have a credit card to
                "build my credit".
                
                It is like if I asked my neighbor to lend me money every month
                and pay them back a second later to build their trust. It is
                just a stupid game, with no real meaning.
       
                  leetcrew wrote 3 days ago:
                  there is a performative aspect to "credit building", but it's
                  not all a meaningless game. the fact that someone has access
                  to a $5k credit line and doesn't go crazy with it is a
                  positive signal itself.
       
                bombcar wrote 4 days ago:
                I suppose the difference is that the bank has to refuse you in
                the EU system, instead of pawning the refusal off to a third
                party that does the calculation.
       
                  sokoloff wrote 4 days ago:
                  In the US, the refusal is still from the lender, based on
                  information from zero or more credit reporting agencies.
       
                    bombcar wrote 4 days ago:
                    Yeah, but they always word it as blaming the agency.
       
                      sokoloff wrote 4 days ago:
                      That is likely a consequence of a requirement of the Fair
                      Credit Reporting Act under which you must be told when
                      information in your credit file is used against you to
                      deny your application for credit, employment or
                      insurance.
                      
                      I haven’t been denied in a long time, but my
                      recollection was the refusal was from the lender and
                      included “we may have used information from ; here’s
                      how you can get a free copy of the information in your
                      file…”
       
              MadeThisToReply wrote 4 days ago:
              > Your ability to obtain credit is based on the past several
              years of income, with a penalty for instances over the past ~7
              years in which you didn't pay back debts.
              
              Okay, and using these inputs, what function is applied to
              determine whether or not to grant the loan? How does that system
              differ from a "credit scoring" system, apart from that your
              perceived ability to repay isn't explicitly mapped to a single
              variable?
       
              sokoloff wrote 4 days ago:
              “Instances over the past ~7 years in which you didn’t pay
              back debts” is used precisely because of its value in
              predictive modeling your likelihood to pay back prospective new
              debt.
       
            usrn wrote 4 days ago:
            Racial stereotyping is, in it's most basic form, a predictive model
            of behavior. It's also illegal in nearly any financially meaningful
            situation.
       
        danuker wrote 4 days ago:
        > It took two years for her old credit score to be reestablished. Two
        years of faxing in detailed documents—including Dave’s death
        certificate—only for the mistake to reappear. During that period, her
        life was effectively stalled. She considered moving, as it was painful
        to stay in the house she had shared with her late husband, but having a
        credit score stuck at zero meant she couldn’t get a new mortgage.
        
        Indeed, these glitches have the potential to ruin people's lives.
        Reminds me of Kafka's "The Trial".
       
       
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