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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

#571

Post by lxgr »

Guvante wrote: post #564
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…

Buy now pay later at 0% is what these programs offer which does not align with what you are saying at all. Used properly these provide liquidity by spacing out payments. Certainly there are economic concerns about not being able to afford groceries today but liquidity (especially free liquidity) isn't fundamentally worthless.

Used properly, BNPLs are strictly inferior to credit cards.

That said, one of their practical advantages is that they’re harder to use improperly than credit cards.

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

#572

Post by lxgr »

jvanderbot wrote: post #446
kiba wrote: post #324

Earlier quoted context omitted.

Credit card rewards are just discounts, discounts that are charged to the merchant. It's not a free lunch by any means.

I think that's a technicality. From my perspective 100% discount is called "Free", and I get that a few times a year when flying (tickets, upgrades, etc) I calculate 100% based on the amount I get from my preferred airline for paying cash for groceries (0) vs the amount I get by using a card they issue (a few imaginary points/$). Then I trade those points for things I couldn't have had by paying cash. As long as I do…

No, you’re still paying for all of that to some extent. Less than people carrying a balance and/or paying with cash or debit cards, sure, but more than zero. (It would be a pure redistribution from cash to card payers only if issuers made no profit or even a loss on never-balance-carrying cardholders, but if they didn’t, why would they still have them as customers?)

It’s still the rational thing to do from an individual perspective, of course, which is why these rewards are so sticky.

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

#573

Post by danans »

9rx wrote: post #562
danans wrote: post #473

Earlier quoted context omitted.

> But it remains that average American lives in larger, more dense communities than that, so the idea of needing transportation is quite strange and defeats the purpose of the density. Generally, American suburbs (where most Americans live) are neither dense nor particularly walkable. Driving is the only option (since they also generally lack public transit). > That said, the 3,000 people strong town I live in has ev…

> If you live in a pre-car American town Technically it was established before the automobile, but its tenth of a mile downtown commercial strip is the only remaining remnant of that. For all intents and purposes, it was built to "modern" standards, which is to say that its density is on par with the average American suburb. – To be fair, the streets and sidewalks are sensibly laid out. Some of those winding maze sub…

> The difference is really only that people in towns of 3,000 people want all the jobs, services, and amenities as possible. Whereas suburban folk fight tooth and nail to keep it all out. But the question is: Why? Why wouldn't you want those things nearby, most especially when you are complaining you can't afford transportation to those amenities where there are found elsewhere?

Because the amenities usually require low income service employees, who then might want to live in that suburb, or just stay past their quitting time, which might then compromise some of the reasons you liked the suburb in the first place.

> when you are complaining you can't afford transportation to those amenities where there are found elsewhere

I don't think suburbanites complain about the cost of transportation. They complain about the time spent in traffic.

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

#574

Post by lcnPylGDnU4H9OF »

pests wrote: post #535
ProllyInfamous wrote: post #383

Earlier quoted context omitted.

>using DoorDash ... is a luxury ripoff I live in a working-class neighborhood and it blows my mind how often DoorDash visits my neighbors (particularly considering there are dozens of restaurants within one mile). The only time I encourage delivery service is when we're too intoxicated to drive.

I stayed with distant family for a bit around COVID when everyone was WFH. Him and his wife must have gotten 3-5 DoorDash deliveries a day pretty reliably, I was blown away. Each ordering their own thing from different restaurants. Random “I want a donut from 711 at 1am” where I’m sure fees/tip were multiples of the actual food cost. Sometimes the different drivers would arrive at the same time and we’d have a little…

> Random “I want a donut from 711 at 1am” where I’m sure fees/tip were multiples of the actual food cost.

Obviously I can’t say if this was the case for your family but a friend of mine pays for the premium dash pass subscription and this is exactly the kind of thing he would do, knowing that he won’t be charged the delivery fee. Dunno about tips but that’s optional anyway.

(Man, I sure hope that individual delivering the donut was paid for their time, though. No clue if the economics of Doordash’s subscription model actually allows for that but I can’t imagine how it would, with 3+ deliveries per day at [$10/mo](https://help.doordash.com/consumers/s/article/What-is-DashPa...). Gotta be a combination of some drivers getting screwed, Doordash losing money, and/or dash pass subscribers who rarely order. The order minimum does not apply everywhere. Maybe there are different payment tiers but that’s not detailed on their help page.)

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

#575

Post by johnnyanmac »

cyberge99 wrote: post #486
johnnyanmac wrote: post #457

Earlier quoted context omitted.

That "woth careful use" is carrying a trillion dollar industry on its back, sadly. Clearly society is in fact not careful.

Not really. The people that pay interest on credit cards are the ones that pay for the luxuries/points/rewards of those who use credit cards wisely. If I get a 0% apr credit card for 18 months, i put all of my expenses on it for 16 months. I put that equivalent cash in to a high interest yield savings account (HYSA) and pay the card off before it’s due. I pocket the difference since the bank just gave me a free loan.

I don't think we are disagreeing here, you're just describing the model on why (as usual), the credit card industry punishes the poor or irresponsible. And people who can exploit the system benefit.

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

#576

Post by veggieroll »

gamerdonkey wrote: post #566
nwah1 wrote: post #391

Earlier quoted context omitted.

Landlords like the idea of incorporating rent payments into credit scores, since it adds extra incentive to pay on time. Or, phrased differently, extra punishment for failing to pay on time. Framing the current default as a help to the rentier class is just silly. The rentier class are indeed a major cause of stagnation and inequality in our economy, but they are innocent of this one.

The current default is that missing a rent payment can harm your credit score, but paying on time will never improve it. https://www.experian.com/blogs/ask-experian/can-late-rent-pa... This benefits the landlords for the reasons you outlined, and tenants must interact with the credit industry through additional (often predatory) means in order to build a credit history that may allow them to buy their own home. Furth…

Thank you for explaining this issue in more detail.

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

#577

Post by johnnyanmac »

mrguyorama wrote: post #495
Whoppertime wrote: post #490

Earlier quoted context omitted.

https://www.cato.org/blog/new-k-12-productivity-chart It's hard to believe that education is getting less funding. There seems to be a perception that spending more money on education will result in smarter students or higher test scores but that doesn't seem to be the case. Obviously if you spend $0 on education results will suffer, but there's a point of diminishing returns where $1 more in spending doesn't seem to…

How much we spend on school systems is not a meaningful indicator of how much we spend on education . American teacher income has barely tracked inflation over the past 30 years, and it sure as shit didn't start high in the 90s. Teachers still have to buy their own supplies, still rely on old material, and still basically can't afford to live. Gee, why is it so hard to get good teachers into the American school syste…

Yeah, It's one part of the equation. But if the money is being funneled by administration and the actual teachers can't afford proper resources for kids, who wins here.

>why is it so hard to get good teachers into the American school system...

I'm sure we both know the answer, but I'll give a historical account as well. Even pre 70's, teachers were dominated by women. Since this was a single income household system at the time, most jobs offered to women would pay low wages because the roles weren't expected to support a family.

At least back then, there was still respect in the profession. But that was also stripped away in the 80's with the infamous "A nation at risk". Little did we know that the administration was the risk at the time.

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

#578

Post by danans »

9rx wrote: post #546
danans wrote: post #539

Earlier quoted context omitted.

> But not without having to travel. And once travel is in the picture, you can be to the same places just as fast from a farm as you can from another point in the city. Your phrase "having to travel" is painting with a very broad brush. There are naturally huge variations in transit time depending on where you live in a metropolis, where you are going, and how you are getting there. I can walk 15 minutes to a coffee…

> I can walk 15 minutes to a coffee shop and grocery store Not to make it sound like a competition, but I can do it in 5 not living in a city. Why does it take so long in a place that should be optimized for keeping everything close by? > drive 20 minutes to a Walmart I can be to two different Walmarts given 20 minutes. That is also an unusually long time for a heavily populated area. Are you actually living in a rur…

> Not to make it sound like a competition, but I can do it in 5 not living in a city. Why does it take so long in a place that should be optimized for keeping everything close by?

I can walk to 3 different ones in 5 minutes - I live in an actual city - but I was trying not to make it about showing off my housing privilege. Note I said "a coffeeshop", not "the nearest coffeeshop".

> I can be to two different Walmarts given 20 minutes. That is also an unusually long time for a heavily populated area. Are you actually living in a rural area with a train and I misunderstood?

Big dense city, "urban residential", not a suburb. 10 feet between my house and my neighbor's. So Walmart is not "nearby" because those tend to be in lower-middle income suburbs. However, 2 Targets & a Costco are a 10-15 minute drive away.

> But, to be fair, when I lived in a big city downtown it also took me 20 minutes to get to the station, so perhaps your situation of having a train sitting right outside your door waiting on you is a bit unusual?

> That said, perhaps you have included, say, 20 minutes to get to the station, and a few minutes waiting on the train.

5 minutes walk to the station. 20 minutes on the train. 10 minute walk to the office. If I time it right, no waiting for the train.

> > you have to want to manage that kind of business.

> You'd have to report your income to the government. What else is there?

I get that you don't do any actual physical labor, but don't you have to negotiate deals with labor suppliers (or laborers), seed/fertilizer suppliers, check on the quality of work and the condition of the land, facilities, and equipment?

If you hire people to do that all for you, then what's the ROI? It's hard to imagine that small-hold farming is as easy (and has similar returns) as buying an indexed fund, otherwise everyone would be dumping their capital into it.

But hey, maybe after reading this comment thread, everyone will!

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

#579

Post by ndriscoll »

9rx wrote: post #492
acuozzo wrote: post #480

Earlier quoted context omitted.

> What compels one to be tripping over their neighbour, but at the same time not wanting to engage in a community with them? Children, among other things. Let's make this concrete. I live ~40 minutes from Washington DC and ~30 minutes from Baltimore. I have three children. I'd need, at minimum, a four-bedroom, two-bathroom property in the city. It will need to be zoned for a good school for obvious reasons. The 30y m…

> I'd need, at minimum, a four-bedroom, two-bathroom property in the city. Check out a settler home sometime. They were tiny, one room houses that housed themselves and their eight+ children just fine. You don't need this in any way, shape, or form. I do understand why you find it desirable, though. > It will need to be zoned for a good school for obvious reasons. I don't live in crazy orange man land. What are the (…

Attitudes around education in the US vary wildly across the population. To a first approximation, "good schools" are really "good students" (i.e. "good peers"), which generally means that the families within the school's catchment area place higher value on education, which generally correlates with class.

There are feedback mechanisms at play here: the people who want a good education for their kids want to be around the types of people who want a good education for their kids, and they will pay a premium to be around the kinds of people who will pay a premium to do so, reinforcing the class effect. It can't hurt to have bright, engaged kids when trying to recruit and retain good teachers either. The net result is that in some areas the schools have literally 0% of students meeting standards while others have most of the students completing the first year or two of university during high school.

Somewhere like DC where GP lives, schools struggle to get the kids to show up[0]. Meanwhile I live a 10 minute walk from a school where over half the students are in AP classes and 80% of those pass the AP exams.

[0] https://www.nbcwashington.com/investigations/about-4-in-10-d...

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

#580

Post by 1123581321 »

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…

The US also has low interest loans for people who can probably afford the loan beyond what a credit score indicates. That is a conservative form of lending and it’s true that the US supports a wider range of lending than most countries.
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