The thing that gets me about this model is that it is based on 'having credit', good or bad.
Credit scores are determined largely by whether you pay off your debts on time. Which basically means, in order to have a good or bad credit score, you need to have some debt, otherwise you will have no credit score.
The reason why I'm bringing this up is because I experienced this myself moving to the US 6 years ago from Europe. Coming from a country in which debit cards are much more the standard rather than credit cards, I never got a credit card. Neither have I needed to take out any loans since my philosophy is not to spend any money I don't have.
Result 6 years later- I have to pay more for my car lease, because I have not enough credit history. Meanwhile I have a ton of money in the bank and no need to have taken any loans. But I need to be punished for that somehow?
Though that plight certainly gets our sympathy, especially if you're in the habit of being financially responsible, you're coming from the position that credit is something you're owed. The question is really why a creditor should trust you, since they're putting their assets on the line. Relying on past repayment history may not be a perfect solution (it can't detect responsible people with no borrowing history, and it can't detect people who are going to be delinquent for the first time), but on average it allows creditors to make money, which is their purpose in being creditors.
Armed with this knowledge, you can deliberately build a credit history by (for example) using a credit card and paying off each month so that you never pay any interest. If you intended to move to the US and have a car lease, you arguably should have done exactly this. In short, you're not being punished - you simply didn't do your homework.
While I understand what you're saying, you're missing my point. Because what I don't agree with is the philosophy that you 'have to get a credit card' here. I am fundamentally against that idea.
There is no doubt in my mind that that is one of the drivers of pushing people into debt, because while you and I may be able to handle it responsibly, I can guarantee you that there are scores of people out here that have no clue about how to handle credit cards responsibly or for whom it's just a way to buy all sorts of crap they don't need which in reality they can't afford.
Yet the system seems to be rigged in such a way that that's how you 'have to operate' here, otherwise you'll be punished for it. There is no reward for behaving in a financially responsible way.
Do you think that creditors have an altruistic duty to give large loans to people who are incapable of being responsible with a credit card? Or to anyone asking for money about whom they know nothing?
Credit is not a right, but a privilege that has to be earned - and even then, it's no one's duty to give you their money. Credit is an extremely useful tool that is founded on a mutual demonstration of respect for the other party's self-interest, including their need for information to determine what is in their interest.
If you accept all of that, then maybe what is left is a kind of language barrier: American lenders want to have this trust-building conversation in creditese, and you insist on speaking debitese.
> Do you think that creditors have an altruistic duty to give large loans to people who are incapable of being responsible with a credit card? Or to anyone asking for money about whom they know nothing?
No, but they do have a moral responsibility to lend money in a responsible way. Otherwise we get into messes like the one we're in now.
It's true; it's one of those things that if you don't somehow have the inside scoop, you will suffer. Life is very unequal. Hopefully you have some things going for you that others don't.
I don't know if you're looking for any practical advice, but: get some credit cards! Then put them in your sock drawer, or just throw them away (cut up). They will then begin to make your life better.
Credit scores are determined largely by whether you pay off your debts on time. Which basically means, in order to have a good or bad credit score, you need to have some debt, otherwise you will have no credit score.
The reason why I'm bringing this up is because I experienced this myself moving to the US 6 years ago from Europe. Coming from a country in which debit cards are much more the standard rather than credit cards, I never got a credit card. Neither have I needed to take out any loans since my philosophy is not to spend any money I don't have.
Result 6 years later- I have to pay more for my car lease, because I have not enough credit history. Meanwhile I have a ton of money in the bank and no need to have taken any loans. But I need to be punished for that somehow?
Reply
Armed with this knowledge, you can deliberately build a credit history by (for example) using a credit card and paying off each month so that you never pay any interest. If you intended to move to the US and have a car lease, you arguably should have done exactly this. In short, you're not being punished - you simply didn't do your homework.
Reply
There is no doubt in my mind that that is one of the drivers of pushing people into debt, because while you and I may be able to handle it responsibly, I can guarantee you that there are scores of people out here that have no clue about how to handle credit cards responsibly or for whom it's just a way to buy all sorts of crap they don't need which in reality they can't afford.
Yet the system seems to be rigged in such a way that that's how you 'have to operate' here, otherwise you'll be punished for it. There is no reward for behaving in a financially responsible way.
Reply
Credit is not a right, but a privilege that has to be earned - and even then, it's no one's duty to give you their money. Credit is an extremely useful tool that is founded on a mutual demonstration of respect for the other party's self-interest, including their need for information to determine what is in their interest.
If you accept all of that, then maybe what is left is a kind of language barrier: American lenders want to have this trust-building conversation in creditese, and you insist on speaking debitese.
Reply
No, but they do have a moral responsibility to lend money in a responsible way. Otherwise we get into messes like the one we're in now.
Reply
Reply
I don't know if you're looking for any practical advice, but: get some credit cards! Then put them in your sock drawer, or just throw them away (cut up). They will then begin to make your life better.
Reply
Leave a comment