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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

#461

Post by johnnyanmac »

bryanlarsen wrote: post #345
kiba wrote: post #326

Earlier quoted context omitted.

Average American household budgets are dominated by housing, transportation and taxes. Maybe some of that problem is about spending too much money, but it cannot be denied that housing are unaffordable and that transportation is inefficient and is a mess.

That's a two-edged sword. Food, clothing, cars and all sorts of factory produced stuff are significantly cheaper today than they were 50 years ago. So they don't dominate budgets the way they used to 50 years ago.

Yes, so why are we ignoring that housing is multiple times more expensive? Even with 5 times the luxury expenses, you're not going to end up cheaper than boomers who paid $1000 on a mortgage in a high COL area. Telling people to penny pinch on buying Netflix subscriptions while rent is 70% of their budget is just political theater at this point.

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

#462

Post by bhelkey »

thomascountz wrote: post #361
LeafItAlone wrote: post #350

Earlier quoted context omitted.

Where are you now? And what is the system like there? From my extremely naive understanding, obtaining credit and low rates is, in general, much easier in the US than other places. So it makes sense to me that it has “artificial” tools to help determine risk. How do other countries handle this and provide the availability that can be found in the US?

Banks are required to prove their loans are affordable. They can only lend someone an amount that they can prove the borrower can afford. In my experience, rates are not low in the U.S. They are high because high risk loans are able to be granted. The availability of debt for things like housing and cars is very complicated, but high taxes, a high degree of education, livable minimum wages, and realistic employee rig…

What country is this?

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

#463

Post by bigstrat2003 »

wobfan wrote: post #167
tnel77 wrote: post #160

Earlier quoted context omitted.

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.

Thing is, keeping children out of Instagram, Facebook, or whatever new social media is hyping currently will probably make them kind of weirdos in their bubble, e.g. in school. At least this would be my fear (don't have children). And good luck trying to use any of these ad-infested privacy-invading platforms while trying to avoid ads.

This argument is popular but doesn't hold water. If we suppose for the sake of argument that social media is bad for kids, then it is a parent's duty to keep them off it even if that makes the kid unpopular. As an analogy, consider a kid whose social circle is all shooting heroin. Would it then become acceptable to let your kid do heroin? Of course not. Similarly, even if all the other kids are on social media, it doesn't become acceptable to let your kid use social media (going with the assumed premise that it's bad for them).

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

#464

Post by al_borland »

tristor wrote: post #348
al_borland wrote: post #145

Earlier quoted context omitted.

Of those who carry credit cards in the US, 60% of them carry a balance [0]. There are also all those reports that have come out about how nearly 40% of Americans don't have $400 for an emergency [1], with the median being just $600. If the rule of thumb for an emergency fund is 3-6 months of expenses, and we can agree that paying interest on a credit card is a bad finical decision, then I'm not sure how the "average"…

> Of those who carry credit cards in the US, 60% of them carry a balance [0]. Carrying a balance is not automatically the worst choice. I have a massively positive net worth (for a working stiff), so could effectively have $0 debt at any point in time, inclusive of my mortgage, but all debt is not equal, nor are all investments. Credit card debt is clearly one of the worst forms of debt with the harshest interest rat…

I suppose. I just did similarly priced renovations and chose to put off the whole thing until I could do the whole thing with cash. But everyone is in a different situation. While I’ve been at my job for nearly 20 years, the layoffs are frequent, and I’ve never felt any meaningful level of job security. This leads me to seek risk reduction, and part of that is eliminating as many financial obligations as possible. In theory I could probably make more investing (if we ignore the psychology aspects), but in practice it’s had the side effect of dramatically increasing how much in invest on a monthly basis after getting all the debt eliminated (which was really only the house). The peace of mind comes more from those low fixed expenses than from the savings. If I had to, I think I could make ends meet working retail, without dipping into savings/investments. I think about this more often than is probably healthy.

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

#465

Post by sagarm »

ta1243 wrote: post #239
eadmund wrote: post #125

Earlier quoted context omitted.

A mortgage doesn’t make money, but it (can) enable spending less money. If you buy a place such that interest, maintenance, insurance, taxes and the opportunity cost of not being able to easily relocate are less than rent, then you have saved the difference. It’s also a way to force saving, which is psychologically useful (and thus valuable).

If you buy a house for 500k on a 5% mortgage over 25 years when you are 25, and you plan to live until you are 85, you will live there for 60 years. It will cost you 35k a year for 25 years, or 875k a year After 25 years you have no more expenses. If instead you rent it for 20k a year, increasing with 2% inflation each year, by year 25 you're paying 33k a year in rent, and by year 60 you're paying 66k a year. Over 60…

You can use a rent vs buy calculator to do the math for your situation: https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...

The parent is minimizing a bunch of coats of owning: maintenance, property tax, included utilities, HOAs, and most importantly opportunity cost.

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

#466

Post by danans »

9rx wrote: post #377
smelendez wrote: post #343

Earlier quoted context omitted.

Most American urban areas are dominated by suburbs where it’s not practical to walk everywhere and public transit is very limited. So a car is necessary and often a car per working adult.

Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers? That completely defies the whole reason for the density. I'm not saying it doesn't exist, I question why people are doing it.

> Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers?

They don't want complete separation from other people. They want conveniences of the city/metropolis (access to jobs, entertainment, and education) while having a lot of space around their home for recreation & privacy.

They don't want farm work (required for that income) either - it's physically and emotionally hard and margins are thin and fragile depending on the weather.

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

#467

Post by johnnyanmac »

9rx wrote: post #377
smelendez wrote: post #343

Earlier quoted context omitted.

Most American urban areas are dominated by suburbs where it’s not practical to walk everywhere and public transit is very limited. So a car is necessary and often a car per working adult.

Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers? That completely defies the whole reason for the density. I'm not saying it doesn't exist, I question why people are doing it.

Because it's cheaper, if we're bring frank. The middle class is slowly being priced out of urban sprawls.

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

#468

Post by 9rx »

vel0city wrote: post #450
9rx wrote: post #432

Earlier quoted context omitted.

> That's the thing, a lot of Americans really don't like this idea of being squeezed in tightly. Sure, it isn't coincidence that the "American Dream" has always been portrayed the sizeable house on a large acreage out in the country surrounded by white picket fences. But we're talking about the people who are choosing to cram in beside one another, but aren't bringing the services and joy that such density normally o…

> the commute times end up being about the same if you ever have to leave your immediate community People routinely leave their community for their job all the time here. Go take a look at that map I shared earlier. Most of the people in that neighborhood probably don't work in Princeton. They probably don't even work in McKinney or Fairview. Good chance they work in North Plano, Frisco, Addison, Dallas, maybe Garlan…

> People routinely leave their community for their job all the time here.

Sure, where the compensation is sufficient to cover your travel costs you would reasonably consider it. But then transportation costs aren't an issue, making the unaffordability idea that started this moot. But, if we want to move beyond the topic of cost, that just brings us right back to the point that travel time ends up being the same living in the city and living in the country, so what have you gained by living in the city?

What one normally thinks you would gain is having other amenities, like bars, restaurants, healthcare, shopping, and just an all round vibrant community right there to enjoy when you get home from work. But the particular city homes we are talking about don't even have that. They are just houses upon houses upon houses all jammed up against each other with nothing in-between.

And it is that way because people want it to be that way. They don't want the restaurants, shopping, healthcare, etc. to be anywhere nearby. Even though they cry that they afford to the transportation to get to them, funnily enough. But why? What compels one to be tripping over their neighbour, but at the same time not wanting to engage in a community with them?

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

#469

Post by joshuahedlund »

darth_avocado wrote: post #458
lm28469 wrote: post #91

Earlier quoted context omitted.

> 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"

> 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 “average person” doesn’t make enough money to pay rent or afford groceries. You’re blaming the poor based on your idea of what an “average person” looks like, which is a representation of middle and upper middle class. The average person doesn’t have the…

Doesn't "average" = "middle class" by definition?

US median individual income in 2022 was $48k

https://en.wikipedia.org/wiki/Personal_income_in_the_United_...

> The “average person” doesn’t make enough money to pay rent or afford groceries

<1% of the US population is homeless, and ~10% receive food stamps. The average person makes enough money to pay rent and buy groceries.

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

#470

Post by tristor »

al_borland wrote: post #464
tristor wrote: post #348

Earlier quoted context omitted.

> Of those who carry credit cards in the US, 60% of them carry a balance [0]. Carrying a balance is not automatically the worst choice. I have a massively positive net worth (for a working stiff), so could effectively have $0 debt at any point in time, inclusive of my mortgage, but all debt is not equal, nor are all investments. Credit card debt is clearly one of the worst forms of debt with the harshest interest rat…

I suppose. I just did similarly priced renovations and chose to put off the whole thing until I could do the whole thing with cash. But everyone is in a different situation. While I’ve been at my job for nearly 20 years, the layoffs are frequent, and I’ve never felt any meaningful level of job security. This leads me to seek risk reduction, and part of that is eliminating as many financial obligations as possible. In…

I empathize with that situation, it's something that weighs on my mind a lot as well. One of my goals is definitely to get the mortgage cleared out sooner rather than later. In some ways I'm rolling the dice, but I also feel like I'm safe from layoffs at least one quarter at a time (e.g. I don't think it will be so sudden, it'll align with quarterly earnings), and anything I can pay off in a quarter of work is worth rolling the dice on, even though there's always some risk there.

My plan of the moment is to get to a point where my expenses are minimized (e.g. house is paid off) and I can cover basic living necessities on investment income, and do some type of artisan home business. I keep thinking I'm going to really seriously get into carpentry, which has been a long-time hobby, or open a mechanic's shop (my other long-time hobby).

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