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Comment by HWR_14 | Hacker News Reader

I'm not sure what a better system than credit scores would be. How else should a bank determine if you are likely to repay a loan?

To answer your other question about how it's determined, it does not measure how much banks make off you. It measures how well you pay off debts. So taking out debts (or using a lien of credit) and paying it back shows that. As does making regular mortgage payments. You can have good credit in the US while paying no extra money to any banks, with interest free car financing and no-fee credit cards you can pay off in full.

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>How else should a bank determine if you are likely to repay a loan?

Not this way, or not at all for all anyone else should care. Banks are paid interest for taking a risk, so let them take the risk. No other country on Earth has credit scores like the US, and they don't want them because credit scores are disgusting, inhumane.

That's complete horseshit. Easily disproven with a single counter example: the UK has credit scores.

The UK has credit reports, which is a document containing all of your lending history (and previous addresses, current accounts, etc.). Credit scores are commonly thought of as an add-on by consumer credit reference agencies to try and sell people a monthly subscription: they are generally regarded as useless.

Canada has the exact same system (with the exact same companies) as the US.

They're basically just presenting the same information in a different way. Lenders will still do a hard pull on the credit report as they do in the US.

https://en.m.wikipedia.org/wiki/Credit_score

Sorry, what you said is false and easy to verify.

But people have varying levels of risk and the credit score is how they categorize that risk. If you force banks to not look at past history (all a credit score is), sure, they will accept that risk but be prepared to pay 30% interest on a car loan.

There are plenty of creditors today who have no or poor credit, and they can still get loans (especially for cars) it’s just at absurd interest rates. Eliminating credit scores will just put everyone in the same (very high) bracket.

If you want to actually fix the system, substantially raise the barrier to non-revolving accounts reporting debts and make a reasonable process to dispute that debt.

Credit agencies should be more mediators than data-sellers.

> Not this way, or not at all for all anyone else should care

Well, clearly they have to have some way to tell. Or would I be able to borrow hundreds of billions to buy TSLA because I think it's undervalued in your example.

Clearly, banks assess how much to loan at what interest rate, and those numbers are different for different people. How else do you think they should make their decisions?

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