Comment on Anon tries to understand credit scores
piecat@lemmy.world 3 weeks agoCredit score bad. Next.
Nah, it’s good for me to know the risk before I lend to someone. Only bad borrowers are against their reputation re repayment history not being public.
Without credit scores, nepotism and bigotry are what decides who gets loans, since lenders will have nothing but ‘vibes’ to go off of. No thanks.
Huh?
In my country there’s debt registries (that you can only be put into when you’re late enough on a payment) and lenders will usually ask you for proof of income and list of obligations, or account statements for the last 6 months, to determine if you’re capable of paying back.
The disadvantage is, they’ll see your account statements. The advantage is, you don’t have to have a credit card, or any sort of debt, to build credit. You don’t need credit history. If your income is high enough and your expenses are noticeably lower than your income, and you don’t have an outstanding debt registry entry, you’re eligible for a loan.
Our mortgage delinquency rates are lower than in the US. And home ownership rates are pretty high so it seems people are getting mortgages no problem
In my country there’s debt registries (that you can only be put into when you’re late enough on a payment) and lenders will usually ask you for proof of income and list of obligations, or account statements for the last 6 months, to determine if you’re capable of paying back.
So you have a system that’s only different than the US’s in the minutia—fundamentally, it’s still lenders using information from the to-be borrower’s past to try and determine how risky it is to lend to them.
Which is what the person I was replying to is saying is a bad thing for lenders to have access to.
If your income is high enough and your expenses are noticeably lower than your income, and you don’t have an outstanding debt registry entry, you’re eligible for a loan.
This doesn’t protect lenders from people who are plenty capable of handling a debt with the income they have, but don’t, because they’re irresponsible with that income. But that may be more of an issue in the US than in your country overall, culturally.
Our mortgage delinquency rates are lower than in the US.
What’s your rate, if you don’t want to reveal your country of residence directly? Just to make sure you’re not using figures from around the 2008 scandal (primarily caused by a bunch of lenders giving mortgages to people who shouldn’t have qualified); It’s 1.78% in the US presently.
And home ownership rates are pretty high
Define “pretty high”, so I can get a better idea; it’s 65% in the US presently, for reference.
If you’ve never fallen behind, or it’s been over 5 years since you paid off your delinquent debts, there’s no record. There’s no need to play around for a good credit score.
The country is Estonia. Mortgage delinquency rates are 0.17% over 60 days late as of last year.
Home ownership rate is about 80% and a lot of those are mortgaged.
There are good reasons to avoid delinquency. The bailiffs can get your bank accounts even in other EU countries arrested if you keep refusing to pay. Also the debt registry system is fairly effective. You won’t be getting any major credit for at least 5 years once you’re in on it.
Banks are also willing to work with people on alternative payment schedules if they get in trouble. I’d wager that saves everyone involved some money and time too.
ronl2k@lemmy.world 3 weeks ago
I started paying cash for everything about 30 years ago. Haven’t needed my credit score since so I froze my credit score access. There have been no downsides.