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Comment by hectormalot | Hacker News Reader

Where I live there is a central register that identifies total exposure as well as red flags (late payments). Exposure is weighed differently. E.g. a 25k car loan might lower the acceptable mortgage by 25-100k because it’s backed by a depreciating asset and has higher interest rates. Similarly, a 5k credit card limit can have 2-5x the impact on a mortgage application.

loan/credit application is mostly based on your income (you can maybe borrow up to 4.5-5x your gross income for a mortgage), how certain your income is, for example whether you have a temporary or permanent contract, and if there are no red flags in the last few years.

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Sounds like my country, but, I don’t know anyone who has a credit card to increase their funds nor do I know anyone with a loan for a car.

It also sounds to me that the difference between how we live here and the American system (I feel most people have loans for stuff in the 1–10k €/$ range in the US?) is a couple of months of living a bit more frugal, and the result is a lifetime of profit because you avoid all this interest everywhere.

Here it is common (and recommended by the government and banks) to have a 5k buffer. It could be my bubble but most people I know maintain that buffer. It pays for a new washing machine or even a new (crappy) car if needed.

Is it my view of the US based on Netflix that everyone has loans for the smallest of thing (like TVs) or is it really true?

No. Everyone does not pay interest on common purchases.

There is much more access to credit in the US, most Americans use that credit a moderate amount to smooth cash flow for bumpy purchasing.

It is certainly the case that there are outliers who overuse credit, and many people who abhor credit like it sounds like you do.

One of the biggest differences between US borrowing and the rest of the world is that bankruptcy is very very easy to access, has very little stigma, and clears out most debts.

This makes the perceived costs of carrying a large debt load quite different.

It is surprisingly true. Debt is a way of life for many people.

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