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FICO to incorporate buy-now-pay-later loans into credit scores

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Re: FICO to incorporate buy-now-pay-later loans into credit scores

#151

Post by bonoboTP »

eptcyka wrote: post #93
Jcampuzano2 wrote: post #56

Earlier quoted context omitted.

Every single thing you mentioned outside of cc debt (though arguably you should never reach for a credit card outside of using it for the points systems they provide) could be categorized as something used as a tool to make more money.

Vast majority of new car sales will not let the new owner make more money and were financed with debt. If all of those buyers bought used for cash, nobody would be able to afford used cars for cash. It really is only businesses that can convert debt into income, most consumers do not want to. There is nothing I can spend on to get a higher hourly rate.

How can you factor in the aspect that a cool car might impress someone who might get you a better job? Or it allows you to "look the part" and "fake it till you make it"? People sometimes rent cars and watches and suits to appear higher class when talking to potential investors or other business partners.

Having a better house might allow you to invite more people over for parties or dinner, which can have downstream effects in your social mobility and status.

If you can keep up with the Joneses and chit chat about your vacation to some nice place, it may allow you to become an insider in some group.

At least that's the "logic" (even if subconscious) to chasing status symbols. Though very often it fails because faking it is hard and you can easily be clocked as a tasteless tryhard. But if you don't take too large steps up, you might get away with it and reap the social benefits.

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#152

Post by astura »

bediger4000 wrote: post #70

FICO scores are a joke. They hint at what they use to calculate them, but the algorithms are kept secret. Fair Isaac can't reveal the algorithms, otherwise they'd get gamed. Incentives to keep bad info and wrong info in dossiers are strong, too. If allowed, Fair Isaac would put rumors and other bullshit on n your file, and never take it out.

They don't really "hint at what they use to calculate them" so much as "tell you exactly what is used to calculate them, how it's calculated, and even include an estimation tool so you can calculate your score yourself"

https://www.myfico.com/credit-education/whats-in-your-credit...

>payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).

https://www.myfico.com/fico-credit-score-estimator/estimator

For fucks sake, at least keep your conspiracy theories somewhat believable.

Absolutely nobody is worried about "gaming" credit scores because the activities to "game" credit scores are identical to the activities that make you likely to pay off debt in the future and that's what a credit score measures. So it doesn't matter if you pay off your bills to "game" or to be responsible, you're still paying off your bills.

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#153

Post by matthewdgreen »

bboygravity wrote: post #149
jacekm wrote: post #133

Earlier quoted context omitted.

I do. Housing prices are constantly rising, when you take a loan you are buying an asset which (with some luck) may appreciate in value more than mortgage interest rates. That's why in some countries it's worth taking a loan as soon as possible without saving for too long. Sure, without mortgage you may not be able to afford a house at all but it does not change the fact that mortgage is a "good" loan (i.e. you benef…

Mortgages with low interest rates are also one of the (main) reasons houses are so "expensive" in the first place. The cheaper money (credit) is, the "higher" the prices will go. It's not so much that houses became expensive, it's more that money to buy a house (specifically mortgages) became relatively cheaper. Low interest rates did that.

This is a one-time effect, though. Or at least, an effect that only changes periodically (and should reverse) when interest rates change. 30-year mortgages have been standard in the US for most of my life, and houses have gotten a lot more expensive during that time.

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#154

Post by scarface_74 »

PostOnce wrote: post #121
scarface_74 wrote: post #58

Earlier quoted context omitted.

And this has nothing to do with buy now pay later since you aren’t charged interest

Owing money you don't have has disadvantages even without interest . For example, if you make 5000 dollars a month and get a 5000 dollar BNPL loan for a stereo, payment due in a month, then even without interest, you now either starve or default on the loan (or incur penalties, i.e. the interest you thought didn't apply).

You realize almost every phone in the US that you buy through the major carriers has worked like this for decades?

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#155

Post by bonoboTP »

focusgroup0 wrote: post #107

Why do some ancient traditions ban usury?

There are regulations around it even today. It's not a complete free-for-all. https://www.paidnice.com/usury-laws-by-state

But to answer the question, there's quite an instinctual aversion to earning money through apparent idleness. Same reason that people hate landlords who just get "passive income" simply for owning. (Of course the owner had to buy it in the first place, or had to inherit it - and indeed inheriting too much stuff also rubs people the wrong way - except if they themselves are blocked from passing on their things to their kids).

Same reason that merchants were distrusted, since there was no concept of economics that would allow them to understand that in fact trading and arbitrage is actually valuable contribution for the market to properly price goods, and is a much better way to price things than gut feelings about "sentimental value" or the labor theory. But this was not well understood so making money through trade was seen as witchcraft. How come he can come to the village and buy our pig for X and then go sell it for X+Y in the city? I mean that's somewhat understandable, the transport etc. Income through interest doesn't even have that. Of course the real value proposition is again a kind of resource allocation cognitive processing. The lender's contribution is in the assessment of prospects of the profitability of a venture. That apparently this is not the case in many consumption credits is indeed some kind of system failure, and some perverse incentives set up by regulations, where somehow the financial companies are not punished by reality for misallocating. See 2008 etc.

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#156

Post by razakel »

mathgeek wrote: post #97
john01dav wrote: post #95

Earlier quoted context omitted.

I acknowledge that such telling exists, but there is still responsibility for people choosing to listen to it. Skepticism is vital. Beyond being skeptical of what you see, it is wild to me that we don't have approximately everyone blocking all ads, cable news, most social feeds, and other such transparently manipulative shit. Advertisement especially is literally industrialized and research-based psychological manipu…

You can’t block all of it all of the time, and children (some of the most vulnerable) especially can’t.

And that's why government regulation was invented.

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#157

Post by astura »

mritchie712 wrote: post #142
bediger4000 wrote: post #70

FICO scores are a joke. They hint at what they use to calculate them, but the algorithms are kept secret. Fair Isaac can't reveal the algorithms, otherwise they'd get gamed. Incentives to keep bad info and wrong info in dossiers are strong, too. If allowed, Fair Isaac would put rumors and other bullshit on n your file, and never take it out.

the score is easy to reverse engineer if you have the data and pretty much every big bank has the data. source: I worked at a big bank and did this, it was easy. Most of the stuff is obvious and intuitive (don't make late payments). One that's not terribly intuitive is credit line utilization. It has a big impact and most people don't think about it. For example, it's better to have 2k in credit card debt if you have…

>the score is easy to reverse engineer if you have the data

In fact, FICO even provides you with a tool to "reverse engineer" a credit score given the data.

https://www.myfico.com/fico-credit-score-estimator/estimator

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#158

Post by RHSeeger »

jacekm wrote: post #133
andruby wrote: post #118

Earlier quoted context omitted.

Do you also think that way about buying a house with a mortgage (credit)? I don't. A mortgage isn't used to make more money. It's used so people can own a house after saving for a few years, rather than waiting until they've saved for a few decades.

I do. Housing prices are constantly rising, when you take a loan you are buying an asset which (with some luck) may appreciate in value more than mortgage interest rates. That's why in some countries it's worth taking a loan as soon as possible without saving for too long. Sure, without mortgage you may not be able to afford a house at all but it does not change the fact that mortgage is a "good" loan (i.e. you benef…

> Housing prices are constantly rising

Housing prices are _generally_ rising. It's entirely possible to buy a house and wind up selling it later, having lost money in it. Many times through no real fault.

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#159

Post by hopelite »

OptionOfT wrote: post #7

What's interesting here is that normally BNPL only does a soft check. I wonder if this is going to change. Equally, I find it weird that companies can ding your credit for not paying but have no obligation to report on-time payments. It should be both or none.

Technically it is largely already built in as an assumption that payments are made on time. You also don’t lend to a friend you will not be paid back by, will you? The credit score reduction is merely a diversion from norm, i.e., the expectation that you pay what you agree you owe.

Ironically, there is actually zero reward for being a reliable person, there is only a punishment for being an unreliable person; and with all the money printing, even the punishment for being an unreliable person has been almost totally removed and being reliable and upstanding is effectively a punishment since you don’t get to live like a king on a shoe string and then declare bankruptcy and have credit extended to you immediately afterwards because money is cheapened and consequences are void.

Re: FICO to incorporate buy-now-pay-later loans into credit scores

#160

Post by tnel77 »

mathgeek wrote: post #97
john01dav wrote: post #95

Earlier quoted context omitted.

I acknowledge that such telling exists, but there is still responsibility for people choosing to listen to it. Skepticism is vital. Beyond being skeptical of what you see, it is wild to me that we don't have approximately everyone blocking all ads, cable news, most social feeds, and other such transparently manipulative shit. Advertisement especially is literally industrialized and research-based psychological manipu…

You can’t block all of it all of the time, and children (some of the most vulnerable) especially can’t.

True, and this is why you shouldn’t just hand your kid an iPad and peace out. I’m all for technology and video games for my kids, but I’m vigilant to keep my kids’ eyes away from ads. As a result, my kids aren’t foaming at the mouth for the latest and greatest toys and games which was my experience as a child.
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