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Comment by HWR_14 | Hacker News Reader

> . If you rent a $1500/mo apartment you actually have managed $18k of debt.

I agree. And slowly credit scores are starting to take rent into account.

> There's no difference at all for someone who works a dayjob.

But there is a difference. If you put your living expenses on a $500/mo credit card, you can have a $120k job and be eating ramen, living in a flophouse and spending the rest on drugfs or supporting people who cannot work. You cannot afford to service a mortgage. If you commonly service larger debts, then they don't have to worry about hidden things sapping all your funds.

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Your friend often asks for you to spot them $5 when you are out at lunch, it’s no big deal and they’ve always paid it back.

Now they want to borrow $5k all of a sudden. Do you give it to them, just based on the above history?

Let's make this more realistic since it's just mortgages but divided by 100. I'm bank of Spivak and you just submitted your loan application to me.

As part of your loan application I can see your savings, income, employment history, and credit history. The payment on a 30-year fixed $5000 loan is $35/mo with current interest rates so that's the bar I need to hit.

* I see that your monthly cash flow is $200 which puts your loan payment at 17.5% of that.

* You're putting 20% down or $1250 which demonstrates to me that you're capable of saving 35x the loan payment.

* Your borrowing history is sparse but you pay of your $5 Spivak CC every month which is 20% of the loan payment right there.

* The loan is collateralized by an appreciating asset whose market value is $6000.

Yes. Obviously I'm giving the loan. To second order no one has a six figure credit history. Their first mortgage is likely to be the first and last loan of that magnitude in their lives.

You gave them an income (post-tax?) of $200/month. Of course that makes it easy to loan them money.

It's also very easy to qualify for a $500k mortgage if you are clearing $250k a year. It makes me wonder how old you are, as "house prices are 2.6x a household income" is something that last existed in most places in the mid-1990s.

> To second order no one has a six figure credit history.

It is remarkably incorrect to treat it as a flat "no six-figure history means they are all are equivalent to a $500 history". Almost everyone has four-figure credit history based on credit cards, most people have five-figure credit history based on car loans and many people have six-figure student debts.

I'm '96 and currently looking to buy a house. I wouldn't expect to qualify for someone to give me a $500k 30yr/fixed loan unless I was pulling in $10k/mo. post tax which yeah, is in the neighborhood of $200k household salary and even then I would be stupid to take it.

I absolutely don't spot them $5k all of a sudden, based on that history. I may based on other factors, but certainly not based on a long history of them borrowing $5 and returning it.

That seems like such an obvious answer to me I want to ask if you intended to ask that of me or the person I was responding to.

You’re right, mine should have gone to the person you were responding to, sorry about that :)

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