Agree, I think there's also an overblown perception that you need to obtain credit and loans in order to build a decent credit rating. Which whilst true, doesn't really disadvantage you if you don't.
Just because you've always had easy access to credit in the past doesn't mean you always will in the future. Depending on easy access to credit for financial security is very foolish.
People lose jobs during a recession. People without income don't usually have easy access to credit and lending standards tighten (or even temporarily halt) during a recession.
If the housing crash causes you to become underwater or close to it on your mortgage you aren't going to get approved for a home equity line of credit. Any lines of credit you did have will be cancelled.
furthermore, it seems that it should be easier to obtain credit if you have no debt than if you have more debt than collateral, and obviously no ability to pay it.
You missed the point that many people with good finances are denied credit. They cant get a $75,000 loan. Thats the only point I was making. The person provided no insight whatsoever and was unable to see that their experience is different.
"Others think that credit is just a scam ... which is absurd"
I understand that companies probably can't leave without it but I as an individual never took any loans in my entire life and not planning to get one. I don't like the idea and I see as it can get peoples life miserable, you constantly see people whining about paying the mortgage and credits even here because they basically chose, thanks to loans, the lifestyle they can't afford and because of how the whole thing works they can't easily get out of it.
Correct, if you have no credit history then financial institutions are not as confident in your ability to pay back loans. This is not remotely comparable to reducing people's social credit for associating with political undesirables.
There is no law requiring the extending of credit to people whose income streams don't support it nor incentive for folks to take such loans on while credit scores can be used to deny folks housing, loans for cars that are increasingly unaffordable to buy outright even used, and jobs or charge them much more for homes/cars over the life of the loan.
I'm going to go out on a limb and suggest the downside is trivially avoidable by either side and the upsides could be substantial for many folks.
When you come to America as a student, the first thing the other international students tell you is that you turn those off when you get a bank account.
Easy access to cheap credit is one of America’s best things but this is expensive credit. You don’t want it.
Honestly credit is completely overrated. You can rent apartments for example even if you've never owned a credit card or taken out loans provided you have a job and can prove it. People just want to know you have the ability to pay them and behavior is a really stupid way to judge that.
Which is totally fair, I get that. It’s kind of my point: anything financially out of the ordinary, plus the massive (to them) red flag of no credit history, would be a very difficult obstacle to overcome in getting a loan.
What would be the negative effects of that drawback? Higher wealth inequality? Increasing age for first time home buyers?
The ability to build credit isn’t actually an advantage in and of itself. In most other lines of business, if the business tried to point to “we’ve given you more opportunities to prove yourself a worthy customer” as a perk we’d laugh at them.
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