this post was submitted on 21 Jun 2025
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Isn't that what credit score already is?
Just expand that, maybe with generative AI since the accuracy doesn't matter.
/s
Not really, a credit score is based on your ability to repay loans.
As well as your willingness to take on debt.
No credit score (AKA living so frugally that you don't need credit) is a bad score too.
Is it though?
I work on an adjacent industry.
Lenders lend money, that's how they make money.
If you've got savings and a steady job and can offer something a house as security they're gonna lend you the money to buy thay house, even if you don't have a score.
The score as a number, and the concept of building your credit score, is really just something bankers tell you when they're trying to get you to take a credit card.
So if you have taken more loans in the past & repaid a lot of credit card debt you get a cheaper loan/can afford a bigger loan.
It's what we call predatory tactics & are usually banned.
You don't have to actually "take on debt" to establish a good credit score, though. If you use a credit card whenever you'd otherwise use cash you have on hand, and instead use that cash to pay off the card's statement balance every month (essentially just paying your month's expenses all at once instead of on demand for each expense), you're never truly in debt (read: you're charged no interest), but a credit score is established and continuously improved, via both the consistent payments, and the aging of the line of credit.
So your credit worthiness is equal to the amount of money (3% fee of each purchase?) you make for the bank that would otherwise go to the seller (or stay in your bank account if it's charged to the customer & not the store, but that is afaik rare, maybe not existent anymore).
So free monies you make for the bank = some potential loan possibility in the future.
Scammy af. But this exists all over the world (packaged as cashbacks that you regularly receive, eg 0.5% of everything you spend, not affecting your loans).
How do you know that? The algo is proprietary, anything can go into it
The minutia of the algorithm is private, to prevent gaming it, but the major factors are very well known, and make perfect sense.
Also if you repay your loan early is somehow bad for your credit score.
If you change your bank to go to a cheaper one alters your score (creating sticky monopolies).
To scam citizens out of yields while minimising the chance of nonperforming loans?
The rest of the world puts citizens first.
The banks are the professionals with all the data & capital. They get to multiplicate money (give loans without backing) and get to charge relatively big interests on those loans (interes rates (spreads over risk-free) tnot indicative of/to cover the expenses of defaults, which are very rare overall, or their own operating costs).
The money multiplication thing comes from the state (central bank), and it exists to allow people to live & to perpetually stimulate the economy (eg getting a house earlier than saving up the lump sum to buy it whole). The banks job is to balance things out & offer competitive loans in terms of profits vs probability of defaults. Without that it's just free money for the banks. Like insurance business only selling policies to people/entities that won't ever need them.
And it determines where you can live, what jobs tou can hold, and wheree your kids can go to school. The system that was developed immediately aftyer the federal government said you can't discriminate on race is definitely fair.
Didnβt say it was fair or good.
How? Wealth determines that, not your loan repayment history. You can be barely making ends meet (and therefore very limited in the above stuff) with a perfect credit score, and a millionaire (and therefore practically unlimited in the above stuff) with a shitty one, or none at all if you inherited enough wealth that you never had to take any loans.
You are not gonna believe where the majority of the wealth of the majority of USA residents comes from.
Also can't look at credit score system without loan system (they are linked by default) - and loan-worthiness cames from not only paychecks, but also where (which street/neighborhood) you currently live, you job history, criminal convictions, etc.
It does what the West says the Chinese social credit system is doing tho the later isn't that consequential & focuses on convictions.
And rich people (millionaires aren't rich anymore, just the last thrashes of a middle class) don't need a credit score at all, they all take out business loans, not personal loans.
The credit score system wasn't invented to oppress the rich.