It’s not a social credit system because it doesn’t weight your social involvement in the society (political party, school credentials, race) but rather payment history, amount of debt, types of credit
Not at all. It is simply a score based on your ability to manage credit, it is scored differently based on the company making the assessment.
In reality that means "have you paid off what you owe in the manner that was agreed" and does the person have any red flags e.g. County Court Judgements against their name or residence.
There are people I know that manage it properly and those that don't. It has nothing to do with wealth or class.
It doesn’t inherently have to do with wealth and class, however, all of these things are so tightly correlated that it loses barely any fidelity and just saves you a little bit of time to assume that someone with an 815 credit score is law-abiding, upper-middle or high social class, and has a medium to high net worth, and that somebody with a 550 credit score is at least one of the following: poor, criminal history, and a low social class.
None of this should be that surprising: it’s hard to make all of your debt payment payments on time if you’re either broke or in jail.
No having a high credit score has nothing do with your wealth or social class. I have worked in this industry briefly. It looks at your ability to manage credit, and whether you have any flags.
e.g. I had a 995 credit score on Experian back in the late 2000s. The highest was 999. I earned £18,000 at the time, and was in my mid-20s and didn't really own anything at the time. I did have a credit card at the time where I made the payments, and I lived at a household which had no debt, and I was on the electoral roll.
That is why when you are making larger purchases they do a "means test" e.g. see if you earn enough to pay a mortgage.
Your case is a great example of why credit scores are not reliable indicators. You were living on the ropes then. One job loss and you probably have very little saved and will be forced to incur debt and and start defaulting on payments potentially. You were very much the risky bet. And yet, you were able to game the system to look like a reliable bet.
Gaming the system like you were able to do in order to improve your credit score is very much correlated to financial literacy which is correlated to socioeconomic class which is correlated to race. This is how we arrive at credit scores being race and class indicators, but not bound by laws that prohibit using race and class as indicators.
Your comment is a great example of "If you assume, it makes an ass out of u and me".
Everything about this reply is completely incorrect.
> Your case is a great example of why credit scores are not reliable indicators. You were living on the ropes then. One job loss and you probably have very little saved and will be forced to incur debt and and start defaulting on payments potentially. You were very much the risky bet. And yet, you were able to game the system to look like a reliable bet.
So you made a bunch of assumptions about my personal circumstances. Let me correct you:
- I didn't "Game the system". I had absolutely no idea at the time such a thing as a credit score existed. I cannot game a system when I have no idea that it exists. The only reason I checked is that other people at work were checking theirs and I did so sheerly out of curiosity. Many years later I happened to work a contract where they wrote software that did the credit checks.
- I was not "living on the ropes". I lived within my means.
- I had 2-3 months of savings. My strategy for saving this money was to save it on payday. So I forgot I had the money and couldn't spend it. I do exactly the same thing now.
- The debt I had on my credit card was paid off in full monthly. I only used it for online purchases (many online sites didn't take debit cards still).
> Gaming the system like you were able to do in order to improve your credit score is very much correlated to financial literacy which is correlated to socioeconomic class which is correlated to race.
Again I did not game the system. I was completely financially illiterate at the time. My only financial literacy, I had at time was that I shouldn't spend all my money after payday and I shouldn't spend more money than I had. I found that out in the first month of living on my own. My family actually earn a lot less than I do now.
None of this has anything to do with race. From reading your comments replying to me and your posting history, I am pretty sure you are from the US. You are applying your US centric view of the world onto the UK. The UK is not the US.
> This is how we arrive at credit scores being race and class indicators, but not bound by laws that prohibit using race and class as indicators.
What you are trying to do is to erroneously shoehorn in your brand of US politics into a discussion about the UK. As a result of this you have got everything about my personal circumstances (at the time) and the circumstances of family and wider community completely incorrect, in an attempt to score some political points (it obvious btw from the language you are using).
I suggest in future you shouldn't make assumptions.
Because there is already a barrier to prevent that. Defaulting on the home loan or not paying rent and facing eviction. Having a barrier based on past behavior is stupid. "Past performance is no guarantee of future results." Funny how that works for investment banks to cover their ass but they can't see how it might also apply to individuals.
I realize that you responded to a specific statement, not necessarily the entire context of the thread. However:
Saying that a person’s credit score is entirely due to their own financial decisions is incorrect because it’s overly simplistic, that’s true, although the main factor is that person’s behavior (whether that behavior is their fault or not is a different story). It can also depend on circumstances specific to the person but not directly related to their own actions (e.g. their credit provider revises credit limits across the board due to external factors, so their credit utilization changes too, without them having used any more or less of it).
In addition, and what you’re alluding to, is that these models are continuously revised. A set of behaviors and circumstances that lead to a higher score in one economic environment may not do the same in another.
Credit scores as implemented in for instance the US are not a direct reflection of a person’s moral character or intended as a reward for good behavior. They’re uncaring algorithms optimized solely for determining how risky it is to lend you money, so that financial institutions can more accurately spread that risk across their customers and maximize their profits. This also enables credit providers to give out more credit overall, based on less biased criteria (not unbiased, because models are never perfect and financial circumstances can be proxies for other attributes).
One can feel however one wants about whether this system is good or not. But it’s definitely different in kind to ”social credit” systems like the one China has implemented, which directly takes into account far more non-financial factors and determines far more non-financial outcomes, effectively exerting much more control over many facets of people’s lives.
> although the main factor is that person’s behavior (whether that behavior is their fault or not is a different story).
This is the whole crux of the situation so buying it in a disclaimer misses the point.
Every lender and background investigator I’ve ever interacted with have treated credit score as a social credit marker, but sure, your mileage might vary.
> They’re uncaring algorithms optimized solely for determining how risky it is to lend you money, so that financial institutions can more accurately spread that risk across their customers and maximize their profits.
This is a fallacy; algorithms are “uncaring” in an anthropomorphic sense, yes, they lack a psychological capacity to care, but their designers are very much not, as you admit in the very next sentence.
> But it’s definitely different in kind to ”social credit” systems like the one China has implemented, which directly takes into account far more non-financial factors and determines far more non-financial outcomes, effectively exerting much more control over many facets of people’s lives.
We entirely disagree on this point. Probably because we have different definitions of “non-financial factors” and “non-financial outcomes.”
> This is the whole crux of the situation so buying it in a disclaimer misses the point.
It maybe doesn’t adress the point you’re interested in, but it doesn’t miss the point I was making, that the goals and mechanisms revolves around how well a person manages credit. For the credit provider everything else is secondary or irrelevant, including whether it’s because you’ve made poor decisions or external factors have screwed you over.
> Every lender and background investigator I’ve ever interacted with have treated credit score as a social credit marker, but sure, your mileage might vary.
This is probably the crux of why we’re not on the same page, because I don’t understand what this means. I’m genuinely asking, what do you mean when you say that they treated it as a social credit score marker? What business did you have with them (or they with you) that didn’t involve whether or not to extend credit? What does the term “social credit score marker” mean to you?
> This is a fallacy; algorithms are “uncaring” in an anthropomorphic sense, yes, they lack a psychological capacity to care, but their designers are very much not, as you admit in the very next sentence.
I don’t see how you explain that it’s a fallacy, and I don’t think it is, but I concede that it’s a confusing word choice - I should probably have just omitted the word “uncaring”. My point was once again that their sole goal is determining the risk of extending a person credit - whether that would be a nice or moral thing to do or not doesn’t factor into it.
> We entirely disagree on this point. Probably because we have different definitions of “non-financial factors” and “non-financial outcomes.”
I assume here that you mean that people’s financial status, including their access to credit, determines a lot of aspects of their lives, too (correct me if I’m wrong). I don’t think any reasonable person disagrees with that. I do however think that you underestimate how constraining it can be when additional variables are factored in to more directly control what you are and aren’t allowed to do, and how.
