What I hate the most is how your score goes down for paying off a loan early. Getting penalized for actually being financially responsible is infuriating. I paid off my car less than 2 years into a 5 year loan and my score went down a couple dozen points. Just because they couldn’t get more money from interest.
usually I love to shit on muricans, But Germany has something similar. A private company called "Schufa". This private company secretly calculates your credit score (no one knows realy how they calculate it) which determines if you get an apartment (for rent) or not. Living in the wrong street already kills your credit score here.
If the Schufa doesnt have information about you, it counts as negative.
You don't actually need a good credit score to get a loan. The only reason FICO scores exist is to reduce the amount of work banks have to do to investigate potential customers. However, many smaller banks are willing to do a manual underwriting, where they look at your history and make a decision based on that instead.
Obviously if your credit score is low that is indicative of poor borrowing habits which will probably be corroborated by manual underwriting. However, if you have no credit history at all, you will probably get a better outcome than if the bank only looked at the FICO score.
Look for community banks, which are very small banks that serve your local community. Those banks are far more willing to give customized service like manual underwriting.
Your "score" is only there to sell you more score. This is the side effect of being able to access your own credit history (how very generous of them)
Every lender has their own criteria, and uses your credit history to generate their own score.
I refuse to participate in this and I have no idea what my credit score is.
I bought my land and house through owner finance, my debt was to a single individual. No banks involved, no credit check. Obviously this isn't always an option, but it still is an option in some cases, and it's a damn valuable option when it does present itself.
I buy used cars only, either through owner finance or paid in full. No banks.
I have never had a loan from a bank.
By "arbitrarily take on debt for years", are they referring to myth that you need to carry a balance on a credit card to help your credit score?
If you aren't aware, that is very much incorrect. All you're doing is lining the pockets of the credit card company. Pay your credit card statement in full each month and don't carry a balance to avoid paying interest.
There are certain exceptions, but I'm considering them out of scope for this case.
Unpopular opinion, not really opinion but...
Credit score system is designed for the people with money to allow you to borrow that money. It's based on a curve system so... If your at the bottom of the list is because 99% of the population is better than you at learning how to play the score system. Tldr: the score system was not designed with me in mind.
Idk, doesn’t seem like magic to me. Just pay your bills. Grow your existing credit cards. Spend responsibly. Keep below 30% utilization of credit limit of each card and overall.
Start early (when you are 18) and by the time you actually need to use it (car or mortgage products). Then you will be gucci.
It’s a shame basic financial literacy is not taught in schools.
I know a guy who's a multimillionaire. He came up from nothing and always had the mindset that if you have to finance it, you can't afford it. A few years ago, he wanted to purchase an apartment complex, but was short by something like $500,000. He tried to get a loan, but the bank wouldn't give him one because he had no credit. Instead, he sold two of his supercars to cover the difference and bought the complex.
not much different than china's "social credit" it seems
"I want your money but I don't want you to see how trustworthy I am. Just give me money"
Seriously how entitled is everyone these days. It is not a human right to borrow money, you are at the mercy of the banks because your are asking them for a favour. If you don't like that, don't ask them for money.
You always have the other option. Build savings instead, but then you have to wait for the things you want and you might have to live with family while doing so. I'm not saying this path is easy, but I'm not the one objecting to a lender wanting to know how good or bad I am with money before expecting them to risk theirs.
Imagine having to shoulder the burden of unfucking the litigation meth feces garbage destruction wrought on your house because you didn’t do a credit check on your tenants. All this on top of the property taxes, mortgage, insurance, and upkeep of your property. Pay your bills and maybe you won’t have to live in your car, stupid.
