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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

#511

Post by groos »

mcherm wrote: post #143
focusgroup0 wrote: post #107

Why do some ancient traditions ban usury?

I suspect actually MOST ancient traditions ban usury (or ban lending altogether). Christianity banned usury, Islam banned essentially all lending, Hinduism banned some casts from lending and regulated the lending of others[1]. I think the practice was found to be corrosive to societies and thus at one point or another many of them tried to ban it. (Lending is also very helpful for commerce, so most societies also rei…

All Abrahamic faiths ban lending where the returned amount is greater than that borrowed, i.e. charging interest. Judaism "worked around" it by banning it amongs Jews but allowed lending on interest to non-Jews. Christianity originally followed Jewish law in this regard but abandoned it later on. Islam, adheres to banning interest strictly, but this is subject to different interpretations. E.g., buying an item at a higher price but paying in installments is allowed by some schools of jurisprudence, while others disallow it, while there is unanimous condemnation of a loan whose interest "doubles and redoubles" [explicit in the Quran], which is the typical credit card or mortgage. The main difference in buying at a higher price + installments from a conventional interest based lone is that the profit gets agreed to at sale, and it holds regardless of whether the full payment is made early or not.

Muslims have got around the problem of not being able to pay for houses in cash by constructing a joint ownership scheme, where the lender and buyer enter into a joint ownership of the house; the buyer pays rent and adds extra to buy more equity, and the rent goes to both the buyer and lender in proportion to their equity as a business partnership. Over time, the rent part decreases and the equity buying accelerates. There are other models, but this is the most popular one. Due to Federal and state laws, such mortgages are often reported with interest rates even though, technically, interest is not being charged.

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

#512

Post by BobaFloutist »

JamesBarney wrote: post #491
BobaFloutist wrote: post #440

Earlier quoted context omitted.

Taxes? That can't possibly be right. Average American household pays a small fraction of their income in taxes. Unless they somehow got a huge, expensive house and have the mortgage paid off, I don't see how their income could possibly be dominated by taxes over, say, healthcare, or food.

A family that makes 80k spends about - 9400 on federal income taxes - 12,000 on payroll taxes (including corp chunk b/c of economics) - 3000-9000 on sales/property/stage income taxes That's a pretty big chunk.

I guess I don't really count payroll taxes since it's not a line item in my budget. Anyway, that's certainly a bigger chunk than I was envisioning.

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

#513

Post by BobaFloutist »

ndileas wrote: post #437
BobaFloutist wrote: post #330

Earlier quoted context omitted.

I do wonder if there's hidden benefits to using Klarna to get, like, bulk discounts. Buy three months of toilet paper/chicken broth at once at Costco, pay it off over three months, save a few bucks each time.

You don't need klarna for this. Credit cards already fill this need, and with careful use are free. Most people (in my circles) already do this type of thing

Credit cards fill this need for a month of spend, but if you want to go three months at a time you need to figure out a different solution.

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

#514

Post by FireBeyond »

firesteelrain wrote: post #242
astura wrote: post #185

Earlier quoted context omitted.

Urban myth. I successfully applied for a mortgage with ~30 credit cards open. Nobody batted an eye, or even commented on it. They looked at balances and credit score. Balances were almost all zero and credit score was excellent. A hundred small loans that were all paid off on time over the last decade is extremely helpful getting you a mortgage, it doesn't hurt.

> Balances were almost all zero and credit score was excellent Not the same. > hundred small loans that were all paid off on time over the last decade is extremely helpful getting you a mortgage Again, not the same. Affirm can be worse than credit cards because credit cards are a single line of credit of X size. The people using it don’t realize that a bunch of tiny lines of credit add up to a larger one ultimately a…

I wonder how it will be implemented. Because for me, Affirm shows my "purchasing power" almost like a credit card, even if it's currently utilized across multiple purchases. So I could see a difference between "making payments on an open balance of $X on an account with $Y purchasing power", even if those payments are subdivided into the original purchases, versus, "You have 7 open Affirm loans".

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

#515

Post by nobody9999 »

DHPersonal wrote: post #508
lurk2 wrote: post #489

Earlier quoted context omitted.

This is conspiratorial nonsense.

It sounds very familiar to a fundamentalist Christian, taught in either private or home schools that fostered that sort of thinking.

>>This is conspiratorial nonsense.

>It sounds very familiar to a fundamentalist Christian, taught in either private or home schools that fostered that sort of thinking.

That's as may be, but it doesn't make it any less "conspiratorial nonsense," does it?

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

#516

Post by dredmorbius »

jerf wrote: post #484
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.

The system will never tell you how to escape from the system. Don't hold your breath waiting for that to happen. "Critical thinking" was never really taught in schools. It was always just training in how to dismiss any proposition by "criticizing" it selectively, with a heavy bias towards criticizing anything outside the system, and a token zone of approved disagreement to convince yourself that you really are free t…

Something I'd stumbled across a few years back:

First, the universities were given the task of providing an unceasing supply of ideologically correct candidates for vital positions in government, church, and business. The state was able to make the faculties of the "venerable institutions" of higher education, or rather indoctrination, assume this duty because it controlled appointments and held the purse from which "emoluments" flowed into the coffers of academics. Hence the members of the university "hierarchy" made it their "business, the business for which they ... [were] paid," to "uphold certain political as well as religious opinions," namely those of the "ruling powers of the state" (J.S. Mill, Autobiography and Literary Essays, p. 429 (1981), J.S. Mill, Journals and Debating Speeches, p. 350. (1988) ). Thus the universities pursued with vigor their assignment to inculcate in their students those political and ideological views that were cherished by the power elite. The graduates of the ancient universities were, therefore, well prepared for employment in, and by, those institutions that were instrumental in perpetuating the existing maldistribution of income. All of this might come to naught, however, if the masses of the underclass should achieve anything approaching success in potential attempts at throwing off their fetters.

The state devised a second educational strategy in order to prevent such a calamity from occurring. According to Mill, the "elementary schools for children of the working classes" were given the task of ensuring that the poor would continue to accept docilely their dismal station in life. It was very easy for the state to force the public schools to assume this role. It did so simply by failing malignantly to allocate sufficient funds for the operations of what Mill identified contemptuously as "places called schools" (J.S. Mill, Essays on England, Ireland, and the Empire, p.200; emphasis in original). These places were therefor understaffed. Moreover, the few teachers who were actually employed were completely "unfit for their work." The pupils therefore were so "wretchedly ill-taught" that they "did not ... even learn to read." And, said Mill with disgust, no attempt was "made to communicate ideas, or to call forth the mental faculties" of the children". (J.S. Mill, Public and Parliamentary Speeches, November 1850 - November 1868, p. 322 (1988). J.S. Mill, Essays on England Ireland, and the Empire, p. 200 (1982)).

Hans E. Jensen, "John Stuart Mill's Theories of Wealth and Income Distribution" https://web.archive.org/web/20190828233020/http://www.tandfo...>. Review of Social Economy. Pages 491-507. Published online: 05 Nov 2010.

Previously noted: https://web.archive.org/web/20190828233020/https://old.reddi...>

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

#517

Post by alkonaut »

bananalychee wrote: post #482
alkonaut wrote: post #251

Does anyone else live in a place where there isn't a visible "score" for how valuable you are, but rather only a "credit check" for how risky you are, which is performed if you apply for new credit (buying anything with an invoice, getting a credit card, or taking any other kind of loan)? Meaning that if you have a good income and no history of failing payments, you are basically passing the check with flying colors,…

Credit scores in the US function similarly to this risk assessment you describe, with the caveat that there is no standard way to measure risk without a credit history. In my experience, it does not take very long to establish that baseline, and there are inexpensive vehicles to do so, such as secured credit cards. Small-scale lenders are likely to accept alternative documents like income statements or proof of payme…

I suppose it may be related to the overall "looser" grip on who exists, and what counts as collateral. If I "default" on a loan, the lender is still pretty safe to get back most or all of it, since any loan is secured by my future income. So there's not as much need to prove my credit history - my income is public and always was, and my future income is collateral for any loan, including mortgages if my house is suddenly under water in a recession.

That means that barring any failures to service credit in the past, I don't need a history of successfully servicing credit in order to get credit.

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

#518

Post by Whoppertime »

sagarm wrote: post #465
ta1243 wrote: post #239

Earlier quoted context omitted.

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.

https://www.npr.org/sections/money/2010/11/05/131105373/the-... I still remember an old Planet Money podcast they did covering a Rent or Buy calculator, It didn't allow for the possibility that the value of a house might fall over time. If you put a negative appreciation rate it would spit out an error. Which in the immediate aftermath of 2007 meant the tool was unable to capture reality.

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

#519

Post by spacedcowboy »

johnnyanmac wrote: post #449
vdqtp3 wrote: post #426

Earlier quoted context omitted.

In Southern California, surfers were arrested for surfing on an empty beach. Parks were closed. This was hailed as a safety measure. I suspect these sorts of policies are what GP was talking about, rather than vaccines or masking.

You picked two odd examples. A beach is debatable as being capable of being opened and closed, and whether or not a person is tresspassing, but parks are generally managed by the state or country. Of course they can close down. They typically close from subset to sunrise.

The idea of a beach closing at night-time was novel to me, when I first came to the US. In the UK beaches are ... just beaches, their status is that of "beach", and access is not controlled at all.

Generally there's a fine for being caught sleeping on the beach I think, but that's really to discourage people being swept away.

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

#520

Post by const_cast »

jerf wrote: post #484
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.

The system will never tell you how to escape from the system. Don't hold your breath waiting for that to happen. "Critical thinking" was never really taught in schools. It was always just training in how to dismiss any proposition by "criticizing" it selectively, with a heavy bias towards criticizing anything outside the system, and a token zone of approved disagreement to convince yourself that you really are free t…

Critical thinking was taught in schools. That’s English class and, to a lesser extent, history or social studies.

Naturally a lot of engineer-types blew those off as subjective mumbo jumbo. But that’s critical thinking.

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