Kudos (?) to the team. My guess is that they will want to roll out their own credit score system when paying by installments, rather than rely on Barclays as the credit broker as they currently do.
I bought a new iPhone with Apple's 0% interest financing in the UK in December, and the financing is provided by Barclays. Goldman Sachs doesn't have much of a presence in the UK yet, only Marcus AFAIK and no credit products.
own credit score system when paying by installments
These are good ideas. Many people have debt from all kind of life issues and it kind of seems insane to lock them out of financing for … a phone or the like.
The credit score system is the OG social credit system that China ain’t got nothing on.
>> These are good ideas. Many people have debt from all kind of life issues and it kind of seems insane to lock them out of financing for … a phone or the like.
Why is that insane? Why would a company essentially loan money to people they think are unlikely to pay them back? A £1200 iPhone is certainly not essential when there are serviceable equivalents for < £100 without the need for a contract.
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.
The same reason they loan out the money in the first place. Do they ever actually check if a young person will have the earning potential to pay back a 50k loan? Not really right, but they hand out that loan. I’ve gotten credit cards with 20k credit line 1 year out of college, no questions asked. That’s insane to hand that out and then blackball the receiving party. Liability is on both sides here but only one party suffers in an unbalanced way. For a large company, writing off 50k is nothing even at scale, but for the individual the scarlet letter is haunting.
Overall, I cannot fathom how we tied the credit system to something necessary like housing. It’s absurd to think you are fucked out of housing options for 7 years.
1. Those credit card numbers are crazy and not something I've experienced in the UK.
2. Taking a huge loan out when you have little prospect of being able to pay it back is a persons own responsibility. I've been in debt, I know lots of people in debt, and in almost all cases it's due to my/their own poor decisions. This conversation changes if you live in the US and experience medical debt (not something we deal with in the UK).
3. Again, depends on your jurisdiction, but housing is typically available in some form (just not ownership) even to people with poor credit ratings.
i do not own a credit card. in our immediate family, taking loans is seen as a terrible thing. the result? i do not "own" a car because i can't afford it. same for going on expensive holidays or owing iphones. if i can't afford it with the cash i have, i am not getting it.
growing up, this has been my idea and i cannot imagine tying myself "in future" to an item of convenience or luxury if i can't already pay it in cash.
a large part of it comes from the reason that i am not a government employee who traditionally have enjoyed a "get employed and you will get your salary till you die", those people can certainly portion off their salary, future even because there is essentially 0 risk of being let off. OTOH, being a professional with no "assured" income, this is not possible.
i know people, like many who sport a credit card, own a vehicle for the lulz and the "experience" of making heads turn but i can't care less about neighbours idea of me owing or not owing an iphone or a top line car. meh
Unfortunately your approach is not very efficient when it comes to buying a house/apartment. If you are renting until you can afford to buy, you are essentially wasting your money. (Maybe you are lucky and have a place to live already, e.g. from your family, but that doesn't apply to everyone)
agreed. the idea behind that is i live in my family home that was built by my father and there is no reason for me to "move out". not me nor hopefully the next generation would need to build a new house so we wouldn't need to worry about that.
you are right about housing though. i agree. in my town, the property prices double in 4-5 years. In the 25 years we have built our home, land prices have gone up 68x and they are growing fast.
my argument was on credit cards and disposable income spending.
> if i can't afford it with the cash i have, i am not getting it.
With that attitude, about 99% of people couldn't ever afford a house because there is no way on saving the cash needed and paying rent at the same time.
I totally agree, here in Romania, prices have skyrocketed since the banks became involved... one might argue they fund new construction but the downside is it's destroying a lot of the authentic inner cities with "ugly" high rises...
Also somewhere there is a succinct explanation of how when you want a loan from a bank for a new property, they go to the central bank and get one to finance you, thereby creating money out of thin air, and adding to monetary inflation... but please correct me if I'm wrong
Student loans, if that's what you're referring to, are basically 0-risk because they'll either get wiped out by the government at some point, or the person will eventually pay it off within their lifetime; this is helped by how you can't discharge student loan debt in bankruptcy.
There is a lot of opportunity in issuing credit to folks with thin or no credit files where you can rely on other signals to determine creditworthiness, and it’s win win. The lender makes a profit, and the borrower is able to obtain credit they otherwise wouldn’t be able to, or credit at a lower cost.
So I’ve heard but for the thing that really matters, renting and certainly buying a home, you are more or less fucked (at least for the 7 years they put you in financial jail).
That's certainly not true. I relocated to the U.S. in 2015 with zero credit history, and was able to get a jumbo mortgage in 2016 because I worked with a lender that was willing to look beyond a credit file with zero seasoned tradelines.
The article is interesting and well-written, but the author's initial in the sticky navbar difficults the reading. I hope that he notices that, but then again many people pay for an online journal and have a worse reading experience, so it's not that bad.
I think that behave (https://behave.readthedocs.io/en/stable/) is more useful for testing these more real-life usecases. I tend to have a `test_my_function` in pytest tests and the more integration and functionality-related testing in the behave tests.
