Regular credit scores existing isn't dystopian at all (though there are some issues with exactly how they're implemented). In principle, they're just a formalization of the concept that if you've broken promises to pay people in the past, they're less likely to trust you to keep your promises going forward.

The entire credit score industry is completely dystopian.

If the court system worked at all, you could just pull court records checking for judgments saying the applicant defaulted on a loan.

That won't work because courts are too expensive, and also because it's less profitable than extortion via debt collection.

Also, it would prevent the banks from creating protection rackets (no house for you unless you have and use credit cards!), or being "accidentally" racist/classist/etc (oops! The algorithm says your type need not apply. Our hands are tied.)

If the court system worked at all, you would be able to sue credit reporting agencies for libel when they lie to others about a credit line that you never took out.

Especially when the only reason that credit line was taken out was because they leaked your SSN and DOB during a period when their CISO was a music major.

But the FCRA protects these liars from consequences, so here we are.

Such reports say nothing about circumstances. It has nothing to do with your "trustworthiness." It typically reflects economic precariousness. Did you not pay because you lost your job? Or maybe you incurred a huge medical bill which required you to skip out on some bills...etc.

Cold ideological dismissals like this that ignore what is actually happening to people are making me increasingly bitter. It's almost like you're saying "Let them eat cake."

When requesting credit, you’re basically stating that you’re good for the money. If you’re economically unstable, that might not be true.

No sense in getting offended at the idea someone is saying you’re dishonest.

Some people have no control over their environment. Suddenly getting laid off isn't a mark of "dishonesty."

It is offensive when "unforeseen circumstances" is casted as "dishonesty." This kind of thing is routinely done to criminalize the poor.

It’s not about dishonesty. That’s my point. It’s likelihood that you will pay back. You can be an honest person and be unlikely to pay me back.

If anything, we just need mandated personal finance classes in high school since not everyone has parents/family to teach them.

It would go a long way.

It's the "thrift" argument all over again. You're projecting systematic economic problems onto the poor. Wages have been stagnant for many years. Inflation and cost of living is rising incredibly.

Can we at least make the government take a financially literacy class first? It is the biggest debtor in the world.

> Can we at least make the government take a financially literacy class first? It is the biggest debtor in the world.

Having debt isn't the problem. Defaulting on it is, and the government doesn't do that.

Isn't the government, for practical purposes and intentions, effectively insolvent?

HN posters are mostly corporate workers, or institutionalized in some way. The individual is always wrong in their eyes, institutions are always right.

If an individual goes broke wracking up medical debt, "Too bad. You should have been more economically useful." If the government goes broke, "Uh, it's no problem."

I get it. They were trained to despise individuals and worship institutions. They stop singing this song when they get edged out of the system though. I've met many middle aged programmers that gave up all hope in life because they lost their economic value.

Hope you people aren't one of them.

In the old days, if you wanted a mortgage, you and the wife put on your Sunday best and went down to talk to the banker in person. If he didn't already know you, he'd grill you. You better have a good job and a good reputation, mister. Should have thought ahead and got yourself some good standing in the Rotary Club or Elks. Have you been seen in church lately? Etc, etc. Credit scores replaced all that crap.

We get regular HN threads about "company X auto-terminated my account and there's no way to get a human involved". Is that really a better way to run society?

Maybe local bank managers having connections to the local community, and actually knowing their customers, rather than sitting behind opaque algorithms and data brokers, wasn't entirely a bad thing after all.

Historically, the "human" way could certainly bad thing for you if your skin color, religion, etc. didn't match the local bank manager... As I understand it, that's why the government pressured banks to move away from that system.

No they haven't. Rent an apartment. You need paystubs to prove your income. You need two references to vouch for your moral character or whatever references are supposed to do for a landlord. You have to throw down a security deposit equal to x months rent. Then you also get that credit check hit. The credit check is saving you from none of that crap, it is just more crap on top of all that other crap that hasn't gone anywhere.

As someone from a Western country, what replaces it?

How do you buy a car on a loan for example?

It's not perfect but unlike both your examples it isn't based on things that could be consider political. You can't lower your credit score by attending a protest for example. Or posting things for or against causes on the internet.

I am just honestly wondering what else is our there? It has always seemed like a tool that can be used by both individuals and lenders.

At my home the approach is a central registry of defaults that can be accessed with your permission (which is required by some but not all lenders to evaluate you). It's kind of an extreme version of a credit score, where everyone who has never defaulted - or where the cause of default wasn't their fault e.g. identity fraud - has a perfect "credit score".

The key values used by banks is essentially two ratios, loan vs collateral, and monthly loan payments vs monthly income; so the question isn't about whether to grant a loan but what is the maximum amount they are willing to risk given your income.

Doesn't this system also require a central registry of outstanding debt per individual? Otherwise if the bank ratio calculations say they're comfortable lending you $1000, what prevents you from going to 100 banks and getting 100x that amount (which, presumedly, would be beyond each individual bank's risk tolerance)?

This is exactly what happened with https://en.wikipedia.org/wiki/Archegos_Capital_Management#Ma... - they had what basically amounts to loans to several different banks (with each bank largely unaware of his other leveraged holdings at other banks).

When the stock price dropped and started to make margin calls on the loans, some of the banks had to take a loss as there wasn't enough liquidity to sell into.

banks don't like to be in this sort of situation - in this particular case, the banks just didn't do enough due diligence presumably.

That's exactly what a credit score is - only the defaults disappear after a certain number of years to give people another chance.

As far as I understand, people in USA with zero credit history get a poor credit score, which is a major difference from zero history being as good as it gets.

If you have nothing on your credit report you don't have a poor credit score, you have no credit score.

Plenty of European countries don't have credit scores.

A car loan is collateralized so I don't really see what's complicated.

The cost of repossessing a car isn’t zero, and even finding the car can be hard. What if the car is trashed when you repossess it? Say they wrecked it and don’t have insurance? This isn’t an uncommon scenario.

No insurance = no registration = no plates.

That's a pretty serious offense and it's extremely uncommon over here.

Sure, repossession can be costly but debt collection agencies will make your life hell very quickly, it's not something you can drag for years without big consequences.

It’s pretty much exactly like the one in China, if you compare facts and not just propaganda about both.

It's basically your uber rider rating but in terms of debts and shared with banks and other financial agencies.

My Uber rider rating is abysmal because I used Uber in developing countries a lot and kept noping out of the ride when the seatbelts were absent, were broken, the driver was texting on the highway, the driver was drunk, etc

Drivers don't like passengers like me, who want to get into a car, put on a seatbelt, and have the driver keep their eyes on the road until the destination.