Simply because the credit system is _in my opinion_ imperfect and punishes people harshly. It encourages borrowing. i.e. if a person is responsible and chooses not to open a credit line, then their credit is considered bad, and banks would consider them risky. That's just one example.
> Simply because the credit system is _in my opinion_ imperfect and punishes people harshly. It encourages borrowing. i.e. if a person is responsible and chooses not to open a credit line, then their credit is considered bad, and banks would consider them risky. That's just one example.
That's a US (and maybe some other countries as well) perspective, but not the same for all countries. e.g. in The Netherlands, your credit report is mostly concerned about how much debt you have (vs capacity to pay) and if you have debts in arrears. I understood historic debt payments don't really factor into it here.
Note that different debts do have different weights. e.g. a car loan for 20k can reduce the limit of your max mortgage by 50k because its a bigger impact on your capacity to pay.
In general that's how it works here too, people just like to watch their VantageScore rise and fall when most non-credit card credit decisions only worry about debt. The only thing that really matters is any history of late payments, but I imagine lenders in the Netherlands also wouldn't like it if you had multiple late payments to lenders every year.
> if a person is responsible and chooses not to open a credit line, then their credit is considered bad, and banks would consider them risky
If you have zero credit history, yes, you are risky because what's unknown (including to you) is how your personality interacts with debt and what's known is that you have zero experience managing debt.
Why are people entitled to credit? Everyone ascribes more credit to people they have good or neutral experience with than people they have had no experience with.
I am with you there. But unfortunately, many entities check credit to decide whether they want to rent you an apartment, whether they want to install pre-paid home internet to your house or hire you for a job in many instances.
So my argument is simple, if you want to check my credit to rent me an apartment, then the credit system should use my rent payment to increase my credit score, and this should apply to every bill I pay, be it prepaid or post paid.
As far as I understand, the reason the credit system already does not do this is due to friction with integrating data. All the small landlords probably do not have access to credit reporting bureaus, and there is probably a lot of hassle to report and verify information.
Of course, that friction has greatly been reduced due to computers and internet, so it is possible to get a more granular look at people’s ins and outs to more precisely establish credit.
I think checking accounts or an equivalent should basically be a government utility at this point, available to all.
