GP's comment was written in present tense.

Your score goes down if you simply inquire about loans a bit too often...

All of these are "rules" made up unilaterally by the credit bureaus.

Not by that much, but it is surprising that leaving these cards open is incentivized whereas the more secure and less risky thing to do would be to close those accounts.

In general, credit scores are optimized for the average consumer - and so behaviors around the edges don't always make sense in terms of your score going up or down. If you think about the system that was replaced by credit cards (i.e. keeping a tab open with many different stores), you'd be hard pressed to say that the amount of credit extended is lower now (overall), than under the old system. Whether that's a good thing or not is a different question.

Almost everyone significantly disenfranchised by bad credit are actually for things that would obviously lead to bad credit (to their fault or not; i.e. identity theft could be involved).

This is not true. Many places will deny an applicant for zero loan history, effectively forcing people to get a credit card in order to obtain housing.

I get it, there must be some place that denies rental based on lack of credit history, but I would guess it is so rare that you’d have to stretch really hard to find an example.

So yes, the lack of a credit history makes you look artificially like a bad risk, leading to rejections, but not because the system reports you as "normal person with low credit score" -- that would actually be an improvement!

For those who want to know, I eventually got out of the catch-22 by following up with the service department of a financial-advisor-affiliated credit card, and answering some questions like about employment history.

Saying essentially "just don't do bad things to your reputation" is at most a very hand wavy "rule of thumb", but it's not a codified "rule" of the sort we should expect to see of such a consequential system.

The exact formulas might not be, but the general factors aren't exactly a secret. Hell, the "free credit score" service my bank offers even provides a simulator tool to estimate what would happen to my credit score if I did certain things (eg. get a car loan, or pay off an existing loan).

(For an example, Google for AskSebby - How to Increase Your Credit Score)

Google Search: AskSebby - How to Increase Your Credit Score

First AskSebby result. https://www.asksebby.com/blog/how-to-improve-your-credit-sco...

I'll keep digging.

Credit Karma has been one of my most useful resource for improvements because they break down the factors very well. Many banks have stepped up their game but some don’t give you as much detail.

I'm pretty sure my application was only valid when signed by the requester by that was in Europe and rules may differ. I do know you can open them for shared accounts, but that is not what I am talking about.

Unless you're on the Equifax blacklist. Journalists who wrote anti-equifax articles tend to find their way there, as do ex-girlfriends of upper management. And conversely women who do NSA hookups with a VP or above tend to find their way onto a whitelist that boosts your credit score by 150 or so - it's considered an unwritten perk of the job.

(The above is purely speculation, I have no idea whether any of it is actually true, but honestly, why wouldn't it be?)

I did not get a credit card. I did not have any loans, for school or anything else.

My credit score wasn't even a number, it just didn't exist. Even the bank I banked with, which could see that I had more than $8k USD deposited monthly, that could see I had $30k in an account with them, would not give me a loan to buy a car.

Even if I were to get a credit card and pay it back on time, my credit score would be quite low due to having no history, and I still could not get a loan.

I'm fortunate that the apartments I have rented so far have not done credit checks, only background checks and looked at salaries / offer letters, but there are many apartments I simply could not rent since I would obviously fail their credit check, despite never having had any debt.

Right, because it's a credit score, not a finance score. I'm not sure what you want here. Do you want credit bureaus to collect even more information about your financial life so they can have a more accurate picture?

Like, I believe they're right that going to college on a full-ride scholarship was better than going to a more expensive one on a loan.

I also believe they're right that credit cards are bad. Like, banks make money on credit cards by: 1. hoping you miss a payment, and collecting interest, and 2. charging merchants, thus raising the price of goods for everyone (typically)

I guess you're saying that we should teach people "Yes, use credit cards, these tools designed to put you in debt, but be careful. Why use something designed to put you in debt? Because there's another private company that will punish you by not letting you rent certain apartments if you don't use a credit card"

Overall, credit is not advantageous to most people that use it for consumerism. Credit should only be used for investments with a commensurate return above the interest rate.

My parents were quite well off, and my dad often times tried to get me to use a credit card, not because it was free money (i was very well financially educated by them) but because things like credit scores do get checked by employers (sometimes) or housing companies to determine all sorts of things, so it would make sense to buy 1-2 small things (say, like a pack of gum or a sandwich) a month on the card to immediately pay it off, so the credit score would be good.

I protested, and to this day have never owned a credit card. I live within my means, don't splurge on stupid shit, and do money-saving things as much as I can. I don't own a car, and since I'm fortunate to live in a dense city in a warm environment, I can walk almost anywhere at any time of year. There's also free public transportation.

The only "credit" I have is a small amount of margin I have in my trading account, which I only use on topping up low-risk, dividend-paying investments that I also sell deep OTM calls against. It's a slight risk, yes, but it's as delta-neutral as I can get while still making consistent money.

I mean, if instead it was the government, and they could also draw information about my salary, yeah, that sounds kinda nice. Not having to own a credit card to prove that I exist to a landlord does seems pretty good to me.

But my overall point here is that a credit score is not as simple as the above poster made it sound. Someone who's been financially responsible can still run into issues because of this weird system leaking into so many places.

To some extent _yes_, if that's how this has to work. If my ability to make significant life steps is based entirely on their view of my ability to pay debts then I would rather they at least have the full picture. As it is it's extremely inconsistent, one place I rented reported my rent payments to some of the credit bureaus (but not all of them), the others did not. Additionally utility bills don't appear, despite them probably being a reasonable gauge of whether you can pay for stuff on time (at least as reasonable as everything else they use).

It is what it is, but I was in that poster's same position and agree with them that it feels like a very dumb situation. I'm lucky that I at least saw it coming and a few years before buying a house I opened a credit card with the only purpose being to build my credit history. I have one thing that charges about ~$8 a month to it and it gets auto paid, and apparently _that_ was a big key to determining whether I'll be able to manage paying for a house. IMO that's just silly.

https://www.consumerlawfirm.com/credit-reporting-agencies.ht...

https://www.consumerfinance.gov/consumer-tools/credit-report...

Finally I asked my most recent apartment complex "WHAT THE FUCK IS GOING ON?" and they were like "uhh this report..." and I spent 3 months getting LeasingDesk to deny, deny, and finally admit/accept my claim that they had bad data.

It was a nightmare to get it fixed. They just said "No, the data is correct because we called your old apartment complex and they said it was correct." Because LeasingDesk was acting in good faith I could only sue my old apartment complex for misreporting it, I couldn't use CFPB to force LeasingDesk to fix it.

So yeah, its not just Experian/TransUnion/Equifax....there are dozens and dozens and dozens of data brokers acting as credit bureaus. Right now the only protections consumers have from them come from the CFPB but if that's ever abolished we'll only have lawyers and torts.

Let’s be honest, credit score pretty accurately reflect what they are supposed to measure - credit worthiness.

The real problem is more likely that wages and living expenses are not in sync, which just fucks over the poor people. Using credit to avoid literally dying on the street is more a symptom of wages making no sense.

It's sad. I don't like it either. I don't trust these people either. Equifax fucked me and millions of others, and I got a check for $5.21. There is no justice and there never will be.

People will tolerate even the harshest laws if they feel like they are applied fairly.

But in this case there is no published rule book, and no published methodology for calculating credit scores. There is not even the most basic transparency.

Rules don't need to be trusted, they need to be written down and available for reading.

They don’t even do a very good job of what’s intended as people can literally have an 800 score the week before declaring bankruptcy.

Being bad at that because of inherent inaccuracies in their methodology is a problem.

The parent poster already mentioned that it's "not a crystal ball". It doesn't have to be perfect. Sure, there are some edge cases where it fails, but if it works 99% then it's good enough. On the flip side, do you really want a minority report like system that can predict your future credit with 100% accuracy?

Do they?

If that was true, how could we verify it, beyond an initial gut feeling? There is no published rule book or methodology for credit score calculations!

Presumably these lenders find these scores accurate enough to prevent enough bad loans while not turning away too many credit worthy customers.

That said, obviously the models can be improved with more data. I worked for a lender for a while whose edge was giving people a slightly lower rate (or lending to some folks that just missed the cutoff with other lenders) because we thought our model was a bit more accurate than the credit scores / models used by other lenders.

But even we admitted to ourselves that these were just marginal improvements, by and large the credit score is a super meaningful indicator.

And this is precisely the point. If there was an error in your score, you'd have no way of knowing, no reasonable basis for any appeal, and it just sucks to be you. Lenders don't care if individual scores are accurate, they only care about whether they're making more money than they're losing.

It's analogous to doing AI gender prediction: it works fine in the aggregate, but you run into issues at the individual level, and it's the individual's rights that I care about.

I don't think that's true. I remember many years ago getting a free credit report on myself (it may have been a free trial from a monitoring service but I believe you can also just get it from the agencies itself)

You get to see the data that is factored into your score. Anything that majorly dings your credit should be obvious (eg Experian thinks you are delinquent on something that is actually paid off)

I never had to deal with that but likely the error then is with the reporting bank so you call them to fix the issue.

Is there a reason you think this isn't possible?

> Is there a reason you think this isn't possible?

The methodology for the calculation of credit scores is secret. You can't go on the internet and figure out how they do it. They don't tell you, they don't publish it, you can't know. Therefore you don't have the ability to check their work.

The more likely scenario where someone is going to troubleshoot is "I paid off all my debts and have a lot of unused credit, how come my score is too low for mortgage lenders to talk to me" - and likely a gross mismatch like that is going to be obvious.

They give you a pretty meaningful guide on what to look for in determining your score [0] that should be enough.

Note, I am not arguing that I think it's good the exact formula is not known, I just think it's not a real problem for either the lenders (who are the ones who actually base their business on this data) or the consumer.

[0] https://www.myfico.com/credit-education/whats-in-your-credit...

Don't they, though? How do you know? For a person who gets refused access to some important service or product because they're just 1 point under some arbitrary and unknown threshold, yes there's an impact.

Generally credit scores falls in wide bands that give a general credit risk.

573 vs 605 are both very high risk and you’re getting slammed regardless.

The scores are no more arbitrary than the requirement that bankruptcies roll off your score after 7 years.

Those were just random numbers I made up. With only a little bit of imagination, you can consider the significance of other number discrepancies.

Presumably you're talking about the case where somebody never checks their credit report, goes out to get a car loan or whatever, and gets a worse interest rate because there's an error on their report. My question is, what are they supposed to do? They're already required to give you a free report per year. There are various services that give you your score and report for free multiple times per year. I guess a push model would work better, but would you want all the credit bureau to send you a letter to your address on file every time your credit report changes?

Just because I haven't been repeating myself enough, the first thing I'm suggesting they could do is publish their credit scoring methodology.

Your comment is irrelevant to what I said.

What's that supposed to accomplish? At the end of the day, a credit score is ultimately supposed to tell the lender what % chance you're going to default. Suppose the data is already accurate (remember, you can already request your credit report to check whether it's accurate), what additional value does having the methodology provide? Are you doubting their ability to correctly execute the model? Or do you want to dispute the fact that their model gave you a credit score of 573 when you think it should be 605?

Also you have to admit it’s kind of fucked up that there’s no total opt out mechanism.

How does “checking if people are credit worthy” reinforce inequity? If you can’t repay, you shouldn’t be taking on debt. If anything it prevents people from taking on debt they can’t afford, stopping them from further inequity.

And you can opt out. Don’t use credit at all.

This sounds like a bunch of people complaining “why can’t I just borrow whatever I want without people checking whether I can repay?”

Nope. Whether you use credit or not, the credit bureaus collect information about you and share that with all manner of other companies, including employers.

Also these systems have inherent racial biases.

https://www.forbes.com/advisor/credit-cards/from-inherent-ra...

Again, this seems like people want low interest borrowing without the “icky” problem of having to answer for their past failure to pay debt.

The world doesn’t work that way.

I already mentioned that some well paying jobs (the kind that people stuck in debt traps would most benefit from) require an active credit score to obtain. So “not using credit” is not an option. As well, credit is a primary way that the people who hold generational wealth got that wealth. Oh, and they run the system.

You’ve created a straw “poor person” and insist on shadow boxing it. If you ever decide to confront the complex systems that these fellow humans face, I encourage you to read up on the modern credit system. Wikipedia has a good rundown with active sources.

Either you can pay your debt or not. If you can't, others will use that to infer other things about your suitability for various things like jobs.

The credit score isn't the issue, it's just the medium for transmitting information. Background checks can uncover the exact same issues. I can call your neighbor and ask if what kind of a person you're like and decide not to give you a job based on that answer.

That's just life - actions have consequences.

And no system is 100% accurate, so your point is moot anyways.

Anyway, your argument's been refuted more eloquently than by me, so I'll leave you to it.

Sure, it "reinforces existing inequality" but what should we do about it? I'm pretty sure punishing people for stealing stuff "reinforces existing inequality", but does that mean stop doing that? Giving high paying jobs to the most qualified candidate also "reinforces existing inequality", but does that mean we should allocate jobs via lottery? Many things "reinforces existing inequality", but they exist for a reason. "reinforces existing inequality" is just a thought terminating cliche.

> the ways this system is used outside its original scope.

What are some examples?

>Also you have to admit it’s kind of fucked up that there’s no total opt out mechanism.

I mean, you can sort of opt out by refusing to give consent for people to run credit checks on you. The problem is that if you don't they assume you must have terrible credit, so you get denied for a lot of things.

Credit bureaus remain uninvolved with cash transactions since, er, well, there's no creditor to be concerned about creditworthiness? I don't see how "supercapitalism" changes that

What's preventing a "communist hellhole" from implementing something similar? Is it something about state ownership of capital that prevents a third party from interfering in two consenting parties from engaging in transactions? Actually, now that I think about it, aren't communist regimes pretty famous for shutting down markets? Isn't that a variant of "all transactions will require the approval of more than the two involved parties"?

Nothing? I referred to a fantasy, not reality. (Don't get confused.) It's possible I missed one of the cautionary tales I was supposed to catch to truly inculcate the proper American fear and hatred of foreigners. If you can point me to some 1980s-era capitalist propaganda that features this particular horror, I'll concede the point.

Back in the real world, it seems possible that e.g. China already has this, or will soon. I wouldn't take either side in the "is China communist?" argument, for fear of offending. I don't care very much, because I don't live in China. I'm concerned with the particular drain that my own nation is circling. You apparently share my apprehension; otherwise you would have argued that this wouldn't happen here rather than that it will also happen there.