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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

#201

Post by Forgeties79 »

tnel77 wrote: post #160
mathgeek wrote: post #97

Earlier quoted context omitted.

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.

It takes a lot of work to be a parent and also monitor all that media consumption/stop all ads. The “average person” isn’t as tech savvy as most of us here and that stuff just doesn’t come as easily to them.

For instance I am very comfortable letting my kids play video games. I play a lot myself, I can make good judgments about what is appropriate for them, what is an appropriate amount of time to play, what is good/bad behavior when playing, what systems are a good choice or if online access (if any) is appropriate. I barely need to think about these things, but for some people this is an incredibly time-consuming, intimidating task.

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

#202

Post by boroboro4 »

msgodel wrote: post #140
hnbad wrote: post #103

Earlier quoted context omitted.

Whatever you put aside is not going to be enough to prevent complete financial ruin if shit hits the fan. You might be able to cover smaller emergencies like an appliance breaking or your car needing repairs but literally just giving birth or being in an accident can bankrupt you in the US. I'm not at all surprised low to medium income Americans would just give up and accept their inevitable financial ruin instead of…

People need to stop moving out of their parent's house if they can't be stable. That's the root cause of a lot of the problems in the US.

We need to change money flows and redistribute wealth so people can have a hope of saving some money, because they actually can make more money than they absolutely need.

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

#203

Post by wildzzz »

dzhiurgis wrote: post #126
Tadpole9181 wrote: post #71

Earlier quoted context omitted.

BNPL is 0% interest over N months. A credit card is 20% APY over the total balance over minimum payment. And it's offered by my CC providers. For some larger purchases on a 12 month plan, leaving the money in savings loses me 1.5% cash back but gains me around 3% interest (after accounting for the depleting principle). It would be stupid not to do it sometimes. I don't really get the financer's benefit. Though maybe…

I bought tons of solar panels with 24 month 0% interest CC for my DIY installation. Kinda makes entire system free. I wish BNPL were offering longer payment periods, few months is not worth the risk at all.

Subprime borrowers use BNPL a lot and often don't pay it all back. Extending the terms would likely mean Klarna and Affirm will make back less money before the loan defaults.

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

#204

Post by [deleted] »

al_borland wrote: post #145
varjag wrote: post #129

Earlier quoted context omitted.

No, an average person uses it to improve liquidity atop overall solid fundamentals. Literally hundreds of million people worldwide do it with no adverse effects and improved quality of life. Irresponsible people are relatively a minority (although they tend to make the news). And aversion to financing is in itself a poverty marker more often than not.

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"…

[deleted]

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

#205

Post by xyst »

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 for hundreds of thousands of loans and now bank is raking in (more) profits

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

#206

Post by phkahler »

QuadmasterXLII wrote: post #193
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 bought a house when I did because the interest on a mortgage was lower than any reasonable prediction fir inflation, which seemed a lot like free money; but at the time it felt a lot more like a dirty hack taking advantage of terrible government policy than any idealistic system where credit is used to bootstrap productive capitalization.

Low interest rates tend to just push housing prices up. The average expenditure on housing as a percent of income have been nearly constant in the US for 50 years.

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

#207

Post by wildzzz »

dh2022 wrote: post #87
loeg wrote: post #39

Earlier quoted context omitted.

> What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time? Slightly longer repayment time frames. (Multiple months instead of just one.)

This sounds like a consumer that does not pay the balance each month…

CC gives me 30 days to pay it back interest free. BNPL gives me 2, 3, 6, or more months with very little or even no interest. If I know I'm not going to be able to pay it off in a month, I'd rather do a BNPL loan since it's so cheap. Additionally, you can have awful or no credit and still be approved for BNPL. It may be beneficial to have some repaid loans on your credit if you ruined your credit earlier in life like this credit builder CCs that have a super low limit.

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

#208

Post by datameta »

razakel wrote: post #156
mathgeek wrote: post #97

Earlier quoted context omitted.

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.

You mean corporations regulating the government? Oh wait...

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

#209

Post by therealpygon »

Yizahi wrote: post #123

They didn't before? It's a credit like any other type, increasing debt burden like any credit. Seems like corru... ahem, lobbying of course. :)

They also didn’t destroy people’s credit when they got upside down and had to return the $5k couch or $15k car they were talked into buying on their fixed income, but that’s usually “other people” problems.

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

#210

Post by ricardbejarano »

therealpygon wrote: post #209
Yizahi wrote: post #123

They didn't before? It's a credit like any other type, increasing debt burden like any credit. Seems like corru... ahem, lobbying of course. :)

They also didn’t destroy people’s credit when they got upside down and had to return the $5k couch or $15k car they were talked into buying on their fixed income, but that’s usually “other people” problems.

Being "talked into" is one hell of an excuse not to take accountability for your own purchases.
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