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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

#651

Post by corford »

SirMaster wrote: post #634
corford wrote: post #583

Earlier quoted context omitted.

Renting is not owning (no benefits accrue from asset appreciation). The same calc for ownership is very different. Also would love to know % of population in 1970 that rented versus today. My guess is it's much higher today.

But renting has no property taxes or maintenance costs and should cost a lot less, meaning you can take the money that would have gone to those other things and invest it to earn returns on it. I pay 600/mo in rent, so 7200 a year. A basic house around me would easily be about 7200 in property tax + average annual maintenance costs + increased utility costs + increased insurance. So how am I losing out on anything un…

I guess it depends somewhat on where you live and what interest rates are doing when you buy. Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases. So as the underlying asset appreciates (benefitting the landlord), rental prices also go up, further compounding the "loss" of not owning. This is before we talk about the possibility of using the gains in your property's value as collateral, something obviously not available to renters (or the advantage of locking in a <3.5% 20+ year loan; or the tax advantages on capital gains from property versus stocks). Also, might be different in the US, but in the UK the tenant normally pays the annual taxes.

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

#652

Post by 9rx »

ndriscoll wrote: post #650
9rx wrote: post #641

Earlier quoted context omitted.

> There are no homes in the area for under $1M, and many are $5M+. We were talking about someone who found a $575,000 home to be stretching him to his limits. Have we gotten a bit off track here? > The more relevant factor is that a bunch of doctors, lawyers, engineers, etc. I'm one to talk as an engineer living in a $300,000 ( maybe , on a good day) home, but I technically could afford a multimillion dollar home if…

They didn't say the $575k was stretching, or that it was the current value of the home. Just that it was the price when they bought it, and presumably they couldn't find something nearly as nice in a dense city without paying significantly more. In any case, you asked why people are concerned about being "zoned for good schools" and why that would be obvious to Americans, and I think I explained it to you: making sur…

> They didn't say the $575k was stretching

Not explicitly, but they indicated that for them to move into the downtown they would require the price to be the same or less. That necessarily implies that $575k is the stretch point. If they had a $1-5M budget, we could have looked at downtown homes in that price range too.

> Just that it was the price when they bought it

That is what it said, but as the mortgage sits at 30 years it is likely that it was purchased recently. Yes, perhaps it is technically possible that he has owned it for 30 years already and just remortgaged it for another 30, or that it was a 40 year mortgage initially, but these are unlikely scenarios. If the commenter is concerned about any detail inaccuracy, he can provide an update.

> it's also not "showing off" to live in an expensive area

I mean, fair enough. Growing up in a rural area that was home to many big-co CEOs and professional athletes who were clearly showing off their extensive fortunes, it's apparent that the real flex is getting as far away from the city as possible. But at the same time I don't expect these houses of which you speak are exactly crack shacks either. Would you not say that they were very nice homes? Nicer than what the janitor at the school lives in? Location, location, location. I get it. However, $5M buys a lot more than just location in a suburb.

But it remains that it would be showing off for me. What useful functionality would a $1-5M home offer that I don't already have in my current home?

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

#653

Post by lurking_swe »

suddenlybananas wrote: post #194
potato3732842 wrote: post #190

Earlier quoted context omitted.

I'm really sick of this sort of look down your nose at a huge fraction of consumers type behavior. It's the same sort of stupidity that underpins the famous "surely everyone else is wrong" behavior that is exemplified by principal skinner[1]. I eat garbage by the standards of anyone who gives a crap about food and you don't see me going around looking down on everyone for wasting resources on fancy food ingredients a…

Le Creuset pots are genuinely great though

well built and work well - yes!

However i bought one and regretted it immediately. I think i just don’t like dutch ovens in general. The pot is heavy as hell. I gave mine away to a friend for free lol.

Carrying a 25 pound weight in the kitchen / dining room is not my idea of fun. :) I use an All-Clad stainless steel pot now instead. Weighs half as much and it will last forever.

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

#654

Post by SirMaster »

corford wrote: post #651
SirMaster wrote: post #634

Earlier quoted context omitted.

But renting has no property taxes or maintenance costs and should cost a lot less, meaning you can take the money that would have gone to those other things and invest it to earn returns on it. I pay 600/mo in rent, so 7200 a year. A basic house around me would easily be about 7200 in property tax + average annual maintenance costs + increased utility costs + increased insurance. So how am I losing out on anything un…

I guess it depends somewhat on where you live and what interest rates are doing when you buy. Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases. So as the underlying asset appreciates…

>Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases.

That just seems crazy to me as rental price here is like 1/3 of what a mortgage would be on a decent house I can find.

Also property taxes seem to go up just as fast or faster than rental increases.

I mean my rent increases like 2-3% a year over the last 15 years that I have been renting.

If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.

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

#655

Post by corford »

SirMaster wrote: post #654
corford wrote: post #651

Earlier quoted context omitted.

I guess it depends somewhat on where you live and what interest rates are doing when you buy. Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases. So as the underlying asset appreciates…

>Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases. That just seems crazy to me as rental price here is like 1/3 of what a mortgage would be on a decent house I can find. Also propert…

>If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.

Setups like that just sadly don't exist in my part of the world. But, in your case, totally agree. Keep renting and just smash your savings in to other investments. I'd be doing the same.

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

#656

Post by dietr1ch »

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"

It goes beyond that when there's installment payments for burritos being paid. It's not just being brainwashed into consuming too much beyond what they should and more like a systemic problem that pushes people into not being able to easily afford daily food, yet still needing that to get enough time to work and commute.

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

#657

Post by gottorf »

bombcar wrote: post #195
bonoboTP wrote: post #148

Earlier quoted context omitted.

Societies used to understand this and put lots of limits around exploiting people, such as banning interest rates. But there is no unalloyed good. That ban also blocked rapid economic development as seen in the 19th century, where credit was absolutely critical for railroad construction and other infrastructure like electric or plumbing. It's a real dilemma with tradeoffs, where slogans and soundbites don't work. Hav…

Ban personal liability on loans (full recourse). If the lender can only take the thing (like repossession of the car or foreclosure of the house) and can’t go after the borrower for the difference, lots of problems solve themselves. Credit can still exist in various secured ways, business credit is barely impacted for real businesses, and people stop being able to go way below zero.

How do you apply this to loans for things that cannot be repossessed, like college degrees or medical treatment?

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

#658

Post by gottorf »

anajskkdbf wrote: post #229
bonoboTP wrote: post #148

Earlier quoted context omitted.

Societies used to understand this and put lots of limits around exploiting people, such as banning interest rates. But there is no unalloyed good. That ban also blocked rapid economic development as seen in the 19th century, where credit was absolutely critical for railroad construction and other infrastructure like electric or plumbing. It's a real dilemma with tradeoffs, where slogans and soundbites don't work. Hav…

> Societies used to understand this and put lots of limits around exploiting They still do (at least in the US). Jewish people have access to Heter Iska loans according to their religion. They do not extend this to gentiles. Humans have known for a long time usury is inherently predatory. Nobody should profit off simply having money.

> usury is inherently predatory. Nobody should profit off simply having money.

Well, the time value of money is a real thing.

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

#659

Post by sagarm »

Whoppertime wrote: post #518
sagarm wrote: post #465

Earlier quoted context omitted.

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.

I would use the long-run return on housing: the same as inflation.

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

#660

Post by bluefirebrand »

9rx wrote: post #624
bluefirebrand wrote: post #618

Earlier quoted context omitted.

> they don't close the time gap During peak hours maybe, or in very poorly designed or overcrowded cities, but ultimately if everyone is using the same roads then you will eventually sit in the same traffic if you're trying to get to the same places? Travel time might not be that much longer but it will be longer > It would be fascinating to hear from those who gave all three types of places a fair shake and still se…

> but ultimately if everyone is using the same roads then you will eventually sit in the same traffic if you're trying to get to the same places? Once you get to the arterial roads that take the traffic to the amenities that's true, but it is often slow going just to get that far. Fair to say that is less true if you are on the edge of the suburbs, but, for the sake of this discussion, are you really living in the su…

> now when you can fully shape the experience into being what you want it to be

Sort of my whole point is that there is no situation in life that we can "fully" shape into what we want, every situation comes with upsides and downsides which are often not really in our control, because we have to share space with other people

I grew into an adult and commuted to my local college from the countryside. I didn't live out there for long, but a couple of years at least. Long enough to realize it wasn't really for me

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