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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

#311

Post by nradov »

RankingMember wrote: post #300
beowulfey wrote: post #270

Earlier quoted context omitted.

People aren't going to learn to be skeptical or think critically because we've been literally removing that from the curriculum in schools. How can someone be skeptical of something if they don't even know how to be skeptical? Social media runs rampant with a form of skepticism, but I would call that closer to paranoia than critical thinking, and I don't think it's really being helpful in the same way.

I see this as directly correlated with the gradual denigration of liberal arts education, a core tenet of which is critical thinking.

Liberal arts education leaders haven't been doing themselves any favors. During the recent COVID-19 pandemic we saw many college administrations abandon all critical thinking to enforce blind obedience and mandatory compliance with pointless and counterproductive policies around lockdowns and mandates. Scientists were condemned for daring to even discuss alternative views.

I absolutely see value in classical liberal arts education. But popular denigration is inevitable when people see hypocritical academics casting aside true liberal thinking and using their platform to promote pernicious ideologies.

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

#312

Post by wat10000 »

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.

Why would they put rumors and bullshit in your file? The credit bureaus aren’t out to get you. Their goal is to help their clients (lenders and similar) to make money by identifying how risky their clients are. An accurate risk assessment is good for them. If you’re a good risk, they want your score to be high. They don’t gain anything by putting crap on your file to tank your score.

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

#313

Post by wat10000 »

xyst wrote: post #205

yet another vague data point mortgage underwriters can use to deny your loan In corporate back room, "persons score is high enough to qualify and income is good enough but there’s a strong history of bnpl usage. Over 200 accounts ranging from food to groceries and luxury items. Risk to default has increased, thus approval for slightly higher APR compared to peers with none to lower BNPL usage.” Rinse and repeat this…

How do banks make more profit by issuing fewer mortgages?

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

#314

Post by 9rx »

LinXitoW wrote: post #222
rayiner wrote: post #179

Earlier quoted context omitted.

There is no “system.” It’s all just people making choices. My wife puts straws in the dishwasher to reuse them. She grew up in America the same as everyone else.

There's no system the same way there's no Facebook, just some databases and servers. Or there's no Java language, it's all just UTF-8 characters. Or there's no government, there's just people voting for other people. Or there's no society, it's all just fancy apes existing and making decisions. It's quite frankly ludicrous to be a software engineer and pretend systems don't arise from "individual" "independent" eleme…

> Or there's no Java language, it's all just UTF-8 characters.

Some programming languages explicitly require UTF-8 in the language specification. Java is not one of them.

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

#315

Post by conradev »

lm28469 wrote: post #91
PostOnce wrote: post #13

Theoretically, credit should be used for one thing: to make more money. (not less) However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later. At some point, you run out of hours available and the house of cards collapses. i.e., credi…

> the average person is using The "average person" is told from birth to consume as many things and experiences as possible as it if was the only thing that could give their life a meaning. The entire system is based on growth and consumption, I have a hard time blaming "the average person"

I find meaning in understanding ever so slightly more about the world we live in, and so I love consuming as many things and experiences as possible to have a rich understanding of myself and to some extent, humanity as a whole.

I don't like the word "consume" though. Am I consuming a surfboard or am I surfing? am I consuming a song, or am I listening to it? singing along to it? This perspective feels tired.

The entire system (evolution) is based on growth and consumption. Blame agriculture! Too much free time to consume now – we are full-time entropy farmers.

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

#316

Post by lokar »

potato3732842 wrote: post #269
devmor wrote: post #255

Earlier quoted context omitted.

Or you end up with the opposite end of the problem. I grew up in destitute poverty and was told all my childhood that credit was an evil trap - I should absolutely never use it. Well, spring forward to me starting a pretty good career as a software developer and wanting to get my first reliable car. I had no credit history and ended up with a 19% APR. That really, really sucked. It's been 10 years since then and I st…

You didn't get fucked with 19% apr because you had no credit history. You got fucked with 19% APR because either the parameters of the loan were really bad or there were some other circumstances. Income less existing obligations vs payment size account for the lion's share of interest rate on an auto loan or just about any other consumer loan. Credit history is massively over-sold as being impactful by the kind of id…

I agree. My first use of credit was a car loan when I graduated. I had the offer letter to show income (I had not started yet) and some up front sign on / relocation money for the down payment.

It was fine, I paid it off quickly.

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

#317

Post by lan321 »

barchar wrote: post #295
lan321 wrote: post #223

Earlier quoted context omitted.

This is a bit too romantic imo. From my eyes, it's mostly: "An old AMG at 20 is better than a new Ferrari at 60." There's a slider for how well you want to live your early vs late life. If you work hard, you'll be better off later, and if you go crazy early on, you'll be worse off later. However, there is a point in that you can't catch up on 20-year-old sex, getting drunk or drugged up out of your mind or general fu…

There is a ceiling on how much you can spend on these things. Generally it is not fun to get drunk or high that frequently, and in the limit you die.

I'm not and never have been into drugs, alcohol and clubbing, so I don't know the limit.

The most I've seen was a ~1k EUR monthly budget for drugs by a person I knew whose main hobby was drugs. It's not astronomical, but we were both students in ~300 EUR/month dorms. It also affected his career progress. Lectures at 8 AM don't mix well with coke the night before.

With cars, the sky's the limit. I'm making 6 digits, and I can still ruin myself financially in a weekend.

And it's not just financially. I love motorcycles because they're cheap, but if I have a proper accident, it'd set me back months if not forever.

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

#318

Post by jltsiren »

JKCalhoun wrote: post #280
jltsiren wrote: post #130

Earlier quoted context omitted.

Often, houses are depreciating assets that are expensive to maintain, but people take mortgage and buy them anyway. Often, renting is cheaper than buying, but people buy anyway, because they like the idea of owning their home. Often, people buy a home, because suitable homes are not available to rent. Money is only a means to an end. It has no inherent value. And very often, the subjective value of a thing is essenti…

You can believe that if you like of course, but I am definitely not teaching my children that. Renting cheaper than owning sounds like a very short-term view. My dad explained to me the nice thing about a 30 year fixed mortgage in simple terms: 10, 20, up to 30 years later ... your "rent" is the same. It's a simple experiment to see what a person's rent was going for 30 years ago in your community and then see what a…

There are plenty of places where many people can afford market-rate rentals, while there is nothing they can afford to buy. That includes some major cities, where land is inherently scarce, as well as other desirable locations, where the locals have chosen to ban sufficient housing.

Rents are ultimately based on what people can afford to pay. Home prices, on the other hand, also reflect the viability of the home as an investment. If the market believes that housing will not become more affordable in the foreseeable future, homes in that area are low-risk investments, and investors will accept lower returns for their money. Home prices grow very high relative to rents. Taking a mortgage to buy then becomes the financial equivalent of taking a loan and putting the money in a savings account.

The city where I live in California is one of those places. Before Covid, home prices were high but tolerable. Then the prices jumped due to WFH, while rents grew at a much slower pace. And then interest rates went up without making a dent in home prices, making homes too expensive for those poor enough to need a substantial mortgage.

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

#319

Post by 9rx »

janalsncm wrote: post #52

What is the functional difference between BNPL and credit cards that can explain why it’s become popular? A credit card is literally “buy now pay later” so is it just the ease of onboarding?

A credit card is for gaining access to the electronic payment monopoly's network[1]. BNPL is explicitly a loan. Yes, a credit card transaction may effectively turn into BNPL if you fail to complete your end of the transaction in a timely manner, but that is a hindsight outcome, not the reason for choosing the method in the first place.

[1] Nowadays you can often also use the network with other methods, like a debit card, but those alternatives still aren't universally accepted like credit cards are.

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

#320

Post by jvanderbot »

PostOnce wrote: post #13

Theoretically, credit should be used for one thing: to make more money. (not less) However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later. At some point, you run out of hours available and the house of cards collapses. i.e., credi…

Credit cards however, can be used to get free stuff from rewards.

Credit loans or payment plans can also be used to get a higher credit score, making the first item easier.

Conversely to your example of credit making cash, Cash can make you money through investing, so Credit can also be used to keep higher amounts of cash on hand when purchases are made. , e.g., buying a car on credit and using the car money to invest. But we're saying the same thing there.

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