[HN Gopher] Apple acquires UK open banking startup Credit Kudos
___________________________________________________________________
Apple acquires UK open banking startup Credit Kudos
Author : rmesters
Score : 158 points
Date : 2022-03-23 13:29 UTC (9 hours ago)
(HTM) web link (ffnews.com)
(TXT) w3m dump (ffnews.com)
| spratzt wrote:
| If I were a UK retail bank, I'd be deeply nervous.!!!
| ricardo81 wrote:
| Perhaps Apple could buy the lot for cash at their current
| market cap.
| spratzt wrote:
| I'm sure they could, but why bother?
|
| They don't need the very obsolete technology, obsolete
| business processes and obsolete management mentality of most
| existing banks. Much better to start with a greenfield site
| and acquire customers from there.
|
| Many people would drop their existing bank in a heartbeat if
| there were a viable modern alternative. Apple is in a perfect
| position to capitalize on this widespread dissatisfaction.
| ricardo81 wrote:
| Indeed. Just thought that they could potentially do that as
| telling.
| fumblebee wrote:
| Depends if you're talking about neo-banks (Revolut, Monzo,
| Starling, etc.) or the high-street banks (Barclays, HSBC,
| Lloyds, etc.).
|
| Some of the neo-banks (less so, Revolut) would be a
| rounding error in Apple's market cap valuation. Relatively
| "cheap" for Apple, more feature rich than American
| alternatives, and for good measure wouldn't bring with them
| the legacy issues you mentioned that are associated with
| the dinosaur institutions.
| tobylane wrote:
| When HSBC bought the Midland Bank, the UK government required
| HSBC to legally relocate here. The current cabinet are craven,
| but I expect they'd still require this, a deal breaker for
| Apple.
|
| https://en.wikipedia.org/wiki/Midland_Bank
| deadfish wrote:
| If I were them I would be more concerned by Revolut, Monzo,
| Starling and Atom than Apple.
| Angostura wrote:
| I wonder if this means we will finally get Apple Cash up and
| running in the UK
| davb wrote:
| Unfortunately it seems that the biggest application of open
| banking (beyond "see all of your accounts in one app") are these
| type of credit risk analysis products with opaque (to the
| individual) algorithms responsible for informing decisions that
| have a potentially massive impact on a person's life. To apply
| for credit (such as a mortgage) you're required to connect your
| bank account to these services via Open Banking, allow them to
| extract all of your transaction data and trust that they make
| reasonable, unbiased and fair recommendations based on that data.
|
| While I understand that high value lenders (e.g. mortgage
| providers) made similar assessments based on submitted paper bank
| statements, the massive proliferation of these services using
| Open Banking (or worse, screen scraping after requesting your
| account credentials) is concerning. Especially in cases where
| they use difficult to reason about AI/ML algorithms. The volume
| of data that can be gathered far exceeds the n-months bank
| statements typically requested by a mortgage lender, and it seems
| that most lenders use third parties like Credit Kudos rather than
| doing the same risk analysis in-house. Generally speaking, I
| don't trust them and their networks of partners and contractors
| to keep my data secure.
|
| And it looks like it's becoming increasingly difficult to avoid
| these services when applying for a mortgage.
| Nextgrid wrote:
| Agreed.
|
| I already dislike the requirement of submitting to a credit
| check for services that aren't _lending_ (and thus don 't have
| to comply with finance-related regulations), have a fixed cost
| and can be trivially cut-off in case of non-payment such as
| internet or telephone service. Sadly, this battle has already
| been lost and the practice has been normalized; most people
| don't bat an eye and in monopolized industries they don't have
| a choice anyway.
|
| Open Banking making this even easier is not a good thing as it
| just means more and more companies will now be doing this, with
| the inevitable overreaching data collection that follows.
|
| At least with a credit check, all the information they get is
| identity verification and a very high-level overview of any
| credit accounts you have open and whether they're in good
| standing.
|
| With Open Banking, they get a full account history, including
| detailed timestamps and locations for card purchases (if the
| bank supports it - modern banks do, and it's just a matter of
| time before legacy banks catch up). That's a lot of personal
| data which can be misused for discrimination, price
| segmentation, etc with very little oversight.
| derefr wrote:
| > services that aren't lending ... such as ... telephone
| service
|
| I'm in Canada, not the UK, but the last time I had a post-
| paid plan with a cellular ISP (~2015), they actually
| structured it in the contract as some type of revolving
| credit instrument, where your "credit limit" is the maximum
| outstanding invoice amount you can have before they cut your
| service off. Like any credit card, this actually involves the
| cellular company -- as underwriter of the loan -- locking up
| some of their own assets for each customer account,
| commensurate to said credit limit. That small amount of extra
| revolving credit showed up on my credit report!
|
| My understanding is that they do this because, much like a
| credit card, cellular accounts can actually generate non-
| predictable-to-the-underwriter charges. Long-distance (esp.
| 900) peerage fees, instantaneous charges from SMS short-
| codes, and purchases through SIM Toolkit "apps", can all bill
| a cellular account directly; with the latter two classes of
| fees not being settled after the fact, but rather settled
| immediately (so the relevant merchant can receive their cut),
| with the cellular ISP temporarily footing the bill for them
| until you pay.
| mijoharas wrote:
| Wait... It's been a long time since I got a new phone or
| internet contract, do they require a credit check now? In the
| UK too?
|
| How long has this been a thing?
| Tsiklon wrote:
| In the UK I think for at least a decade. I think I can
| remember submitting to a credit check for a mobile phone
| contract in 2012, and certainly again when I changed
| provider in 2015
| midasuni wrote:
| Is it an actual credit check, or used as a proxy for an
| identification check?
| Tsiklon wrote:
| Last year I took out a new line with a EE and from
| looking at Experian it was a hard pull by them and a soft
| pull by Lexis Nexis for identification.
|
| I don't have my records from 2015 to recall if it was
| hard or soft.
| mijoharas wrote:
| Hmmm... I probably changed provider within that timeframe
| so maybe I just don't remember.
|
| Thanks for the info!
| 8ytecoder wrote:
| This was one of the biggest shocks for me. Other places you
| can pay a deposit (approx one month bill) in advance and
| they'll cut you off if you go over it. No credit check
| required.
| _jal wrote:
| Last time I moved between states, I asked and was able to
| pay a deposit to avoid the credit check. I randomly got it
| refunded several years later after I'd forgotten about it.
|
| Of course that was over a decade ago. And if this data
| becomes another revenue stream, of course that won't be an
| option.
| missedthecue wrote:
| What makes you trust your current bank or credit union to keep
| your data secure that doesn't make you trust these open banks
| from keeping your data secure?
| martimarkov wrote:
| At the very least it's one provider who has my data. When
| there are 5 different providers - it increases the attack
| service of my data.
| davb wrote:
| I don't particularly trust my bank, but I do try to minimise
| (as much as possible) the number of organisations with which
| I share my transaction data.
|
| It's probably worth clarifying that there are no institutions
| that would be categorised as "open banks"; Open Banking [0]
| is an umbrella term for a set of technologies (primarily
| APIs), regulatory frameworks and standards which allow easier
| integration between businesses in the financial services
| industry. The bar for getting access to those APIs is high
| enough that it would generally exclude customers who'd like
| to query their own accounts from their own software, but not
| so high to stop the proliferation of startups keen to
| monetise and analyse customer transation data. For the most
| part, in the UK you can't just ask your bank for an API key
| and use it to pull transaction data from your own account but
| your mortgage lender can require you to share that data with
| a third party as a condition of extending a line of credit.
|
| I believe this is how Experian Boost works in the UK; you can
| "boost" your Experian credit score by linking your bank
| account via open banking and allowing them to analyse your
| transaction history. However you would need to read (and
| fully understand the breadth of) their privacy policies and
| terms and conditions to understand how your transaction data
| is used (and how it may be used in the future).
|
| One of my primary concerns is around data being shared on,
| and on, and on. Regulation helps a little, but I'm afraid
| that we'll end up in a similar situation as we have with
| other types of data online (analytics, advertisement
| targeting and telemetry) where you may opt out of certain
| types of data collection but find that next tab on the opt-
| out dialog lists hundreds of partner organisations with a
| "legitimate interest" in your data. And with financial
| services, it's even more sensitive - it would be disastrous
| if people were excluded from applying for a mortgage because
| they refused to share incredibly detailed transaction history
| with a third party credit risk firm. And worse still if, upon
| sharing that data, they were denied a mortgage because
| placing an occasional bet online, subscribing to an OnlyFans
| creator, spending thousands at the Apple store and trading
| some disposable income on eToro fit a pattern that a black
| box algorithm deemed high risk.
|
| It would be better to have credit decisions not rely on such
| invasive analysis of personal data.
|
| [0] https://www.openbanking.org.uk/
| madeofpalk wrote:
| > are these type of credit risk analysis products with opaque
| (to the individual) algorithms responsible for informing
| decisions that have a potentially massive impact on a person's
| life.
|
| I once used this for a personal home rental application, and it
| automatically slurped in all my _business_ incoming invoice
| payments and based on that was like "Yeah you can afford lots
| of rent!"
| reaperducer wrote:
| _And it looks like it 's becoming increasingly difficult to
| avoid these services when applying for a mortgage._
|
| Chase is guilty of this.
|
| I went to a Chase branch a few years ago to ask about a
| mortgage. The banker put my SSN into the computer, and told me
| the computer said no. No questions about my income, no request
| for financial statements or account balances, or anything. Just
| that the computer said not to bother continuing the process.
|
| I asked my accountant about this, and she said it was because
| of the way my income was structured, and that the computer
| "pre-approval" process has no way of understanding most of my
| six-figure income because my life isn't so simple that I can
| use a plain old 1040-EZ.
|
| I'm sure that some banking middle manager sees these "AI"
| systems as wonderful things that reduce risk, or cut expenses
| because human beings are no longer needed to make decisions.
| But they hurt real people and contribute to the ongoing housing
| crisis. But, hey, as long as some MBA can use his budget-
| trimming bonus to buy a second boat, that's all that matters.
| throwra620 wrote:
| throwntoday wrote:
| Apple have offered the best credit card experience I have had
| the pleasure of. I cannot recommend them enough. Being able to
| text support alone is enough of a draw for me. I've closed most
| my other accounts at this point besides my travel card.
| kwhitefoot wrote:
| > screen scraping after requesting your account credentials
|
| Sounds very odd. Handing your log in credentials to anyone is
| against the rules not to mention common sense. Even the bank
| itself will never ask for that. My bank's website has warnings
| about this right on the front page.
| rmesters wrote:
| Unfortunately, this is still common in Europe:
| https://sifted.eu/articles/open-banking-finance-battle/
|
| In U.S. most "open banking" is still done via asking people
| to share their banking passwords.
| vishnugupta wrote:
| While it is indeed odd companies are making fortune out of
| this. Plaid is a recent example which was in news for failed
| acquisition by Visa (shot down by DoJ no less[1]). Yodlee is
| another old timer company. Why do regulators not go after
| such companies is beyond me.
|
| [1] https://www.justice.gov/opa/pr/justice-department-sues-
| block...
| creeble wrote:
| Good previous discussion a year ago on HN:
|
| https://news.ycombinator.com/item?id=28389576
| [deleted]
| hbrav wrote:
| At least in the US, the Fair Lending Act imposes an
| explainability requirement on credit-granting decisions. If the
| UK has a similar act (I'd be surprised if it doesnty) I'd
| expect there to be some interesting challenges over this in the
| near future.
| amaccuish wrote:
| I understand, but Open Banking has been wonderful. My main
| German bank has a crap app, but I can use the excellent one
| from the Sparkasse to access my DKB account, which has made
| life far easier. Plus all my accounts are in the same app.
|
| I guess it's a two-edged sword.
| rmesters wrote:
| Open banking (the actual regulated type in UK and EU) replaces
| (1) the need to rely solely on credit bureau data to understand
| someone's creditworthiness, which is often faulty or incomplete
| (2) the need to share paper/PDF bank statements (3) the need to
| share banking credentials with tech companies that do "open
| banking powered by screen scraping".
|
| Because open banking is regulated, consumers now have a layer
| of protection that they didn't have before. And more people can
| prove their actual creditworthiness (as opposed to whatever
| credit bureaus think their creditworthiness is).
|
| Full disclosure: I'm a cofounder of Nordigen, a freemium open
| banking platform. Views biased.
| nerdawson wrote:
| I'd be open to sharing banking data this way if there were
| strict controls at the user level. E.g. share the previous 3
| months, 6 months, and so on. Also a way to ensure that it's
| one time only and not a continuous monitoring type situation.
|
| If that were the case, it'd be a more convenient alternative
| to sharing statements as opposed to a massive violation of
| privacy.
| mijoharas wrote:
| > Also a way to ensure that it's one time only and not a
| continuous monitoring type situation.
|
| Not quite what you're asking for but access does need to be
| regranted every 3 months.
| Nextgrid wrote:
| Open Banking regulation has very little impact on how the
| collected data will then be used.
|
| A separate regulation - the GDPR - would cover that but
| raising a complaint is very difficult and a complaint would
| involve the subject being aware of their data being misused;
| you can't complain about something you don't see.
|
| My worry about Open Banking is that it makes it much easier
| for companies to collect a lot more data and would normalize
| the practice even more.
|
| Currently there's already no reason for a credit check to be
| required for a lot of services such as internet or phone
| service (those aren't lending any money and can cut off the
| service in case of non-payment), but at least a credit check
| gives them very little personal data compared to Open Banking
| - I'd rather not have to give them _even more_ data.
| emteycz wrote:
| The best (and the only working) way of data protection is
| to never send the data. GDPR is a crude hack compared to
| that.
| reedjosh wrote:
| > Because open banking is regulated, consumers now have a
| layer of protection
|
| I'm sick of regulated solutions and generally moving toward
| more governmental reliance.
|
| I wouldn't need a student loan or a mortgage if the
| government wouldn't cause inflation and back loans for every
| milestone of adulthood.
|
| College and homes used to just be affordable. Everytime we
| bring in governmental assistance and regulation, we all just
| lose--well, not the players in the regulated and
| Frankensteined market, but normal people all just lose.
| toiletfuneral wrote:
| mattmanser wrote:
| There's a certain irony (and ignorance) to this comment
| when you consider that house prices in the UK only started
| spiralling when councils were forbidden from building new
| social housing by Thatcher.
|
| Previously 'governmental assistance' of council house
| building was the major house builder in the UK.
| reedjosh wrote:
| I won't deny my ignorance regarding the UK housing
| market. Here in the US, housing prices are clearly
| inflated by Fanny/Freddy and artificially low mortgage
| interest rates.
|
| https://www.fhfa.gov/about-fannie-mae-freddie-mac
|
| > Fannie Mae and Freddie Mac were created by Congress.
| They perform an important role in the nation's housing
| finance system - to provide liquidity, stability and
| affordability to the mortgage market. They provide
| liquidity (ready access to funds on reasonable terms) to
| the thousands of banks, savings and loans, and mortgage
| companies that make loans to finance housing.
| solaxun wrote:
| I understand your concerns, but the alternative (at least in
| the U.S.) of credit agencies are absolutely abysmal. Despite
| the privacy concerns it's difficult for me to imagine more data
| not improving the current state.
|
| For 10 years I had to fight one of the 3 major U.S. credit
| bureaus to get them to remove a bankruptcy that was showing on
| my report because a relative with the same name happened to
| have a bankruptcy in their past. Think about how incredibly
| stupid that is - I was 18 at the time, so according to this
| report I started a business at 12 and filed Chapter 11 at 16. I
| had a different social security number, address, and DOB that
| should have made things painfully obvious, yet still the burden
| of proof was on me to show why this report was false. Oh, and
| you can only challenge it by snail-mail (at least back then).
| If you don't get a response, there is no number to call, no
| address to visit, and practically speaking no way to challenge
| the agency short of hiring a lawyer.
|
| Not to mention the obvious problem of credit bureas relying on
| length of history as a primary determinant of credit-
| worthiness. I don't like debt so I didn't get a credit card
| until 28, and did so then only because I knew I needed to build
| history if I ever wanted a house. If you are a responsible
| steward of your finances and choose to avoid debt in lieu of
| paying with savings, then that lack of history may preclude you
| from getting a loan in the future. You could have a $2mm net
| worth but that credit history will still be a problem with
| traditional lenders.
|
| It's worse for immigrants - the U.S. credit agencies often
| don't interface with their home country's agencies. Imagine a
| responsible 60 year old adult with a pristine record in their
| homeland, viewed as a risky borrower by the bureas here due to
| lack of history. Another problem is not having a large enough
| number of credit accounts. I don't need more than one card, so
| I just use one card, but that's a negative on my report because
| the agencies wan't to see multiple "revolving accounts" (credit
| cards) holding a balance. You have to... wait for it... have
| more debt to show that you're good at managaging debt.
|
| I could go on at length about how shitty the 3 main bureas are,
| and if this comes off as ranty it's because, if it's not
| obvious, I absolutely despise them and would love nothing more
| than to see them relegated to the graveyeard in short order.
| pell wrote:
| > You have to... wait for it... have more debt to show that
| you're good at managaging debt.
|
| It is quite a strange system to me from a non-American
| perspective. A US acquaintance of mine told me their parents
| signed them up for a credit card as a teen so they could
| "build credit" early on.
| emteycz wrote:
| Yeah it is so strange to all the young Europeans - until it
| slaps them in the face once they need a loan and must
| scramble to learn about it and have to suffer the
| consequences of having none of it because they thought it's
| some weird American thing.
|
| The US way is extreme, but credit absolutely does exist
| here and works the same way - you'll get much better deals
| for insurance and loans if you have it, and it takes years
| of payments without issues to build it.
| jltsiren wrote:
| It depends on the country. Some countries subscribe to
| the idea that all credit is bad credit.
|
| I grew up in a system where only negative credit history
| was shared between banks. If you had no credit history,
| you had perfect credit history. Your creditworthiness
| depended on having regular income and paying bills in
| time. Based on that information, banks determined an
| overall limit for all your loans and other forms of debt.
| If you had a credit card, you would get a smaller
| mortgage. Large credit limits relative to your income and
| spending signified risk rather than creditworthiness.
| emteycz wrote:
| Does it really work like that in practice, or are there
| """bonuses""" you can get if you prove your credit?
|
| Here in Czechia, it's like you say, no history = _perfect
| credit_ - but as I said, you 'll get _much_ better deals
| (after counting in bonuses) if you have _proven your
| credibility_ - and the normal deal you get with only
| "perfect" credit is nearly a financial suicide. Building
| your _credibility_ by having a credit card (and paying on
| time) is as good idea here as it is in the US because you
| don 't pay interest until the next month so it's free.
|
| The only difference is, in the US it's institutionalized
| (and thus transparent) whereas here I have to do under-
| the-table dealings with the bank's independent sales
| representative. Sucks, IMHO.
| jltsiren wrote:
| Creditworthiness is (was?) based on stable income and
| spending habits in Finland. Credit cards used to be niche
| products for foreign travel and later online purchases.
| emteycz wrote:
| Used to be niche here as well, but nowadays it's a useful
| tool, especially with the modern banking apps. It also
| has really cool and free year-long worldwide travel
| insurance, something that would cost me a lot of money
| otherwise. And I get discounts for using it to pay for
| hotels and car rentals and accumulate airline miles with
| every purchase.
|
| Really, we in EU get all the good features with none of
| the bad things that the US people suffer from. I
| recommend to ask your bank about their available deals.
|
| In the banking app, I was watching my _credibility_
| directly affect the loan offers available to me in real
| time. I got my interest rate down to half of the usual
| deal (which is based on my income and expenses) after a
| year of paying back on time. It really pays off.
| NikolaNovak wrote:
| Hmm, I'm 100% with you, but the end of it:
|
| "You have to... wait for it... have more debt to show that
| you're good at managaging debt."
|
| Suddenly made sense, despite being intended as sarcasm /
| surrealism. Everything else in life, I get better at by
| practicing. Debt may be similar; getting that first credit
| card, regardless of age, CAN be alluring temptation to max
| out. Some history of on-ramped, well managed debt, makes
| sense would be a prime proof that "one can manage debt" :-/
| axg11 wrote:
| This is great news for expansion of Apple's financing/credit/card
| services to the UK. On the downside, does this mean it's
| incredible hard for Apple to scale these services to all the
| countries they operate in? I can't imagine they can acquire a
| similar company for every market.
| maxfurman wrote:
| They have essentially unlimited cash. They certainly could
| acquire a small bank(ing startup) in every major market if they
| wanted to.
| sschueller wrote:
| Don't all these new online banks (Wise, Revolut, etc) get UK
| bank license and then operate in the entire EU (although UK is
| no longer in the EU)?
| fumblebee wrote:
| As another commenter mentioned, for the EU many fintechs will
| opt to get a banking license in Lithuania.
|
| For example, Revolut is a bank in the EU via a Lithuanian
| banking license, but only an "e-money institution" in the UK
| (though the application to become a British bank -- and for
| that matter, an American bank, and other jurisdictions -- is
| in progress).
|
| Monzo is a UK bank, but opted to cancel their US banking
| application, and I don't believe is an EU bank either
| (someone please fact check me here!)
| alibarber wrote:
| I don't know of any that will extend credit across the whole
| EU.
|
| The closest service I have gotten to this was (also not
| exactly an EU company) American Express - but that was still
| two different legal entities.
| rgallagher27 wrote:
| A lot of Fintechs get their banking license in Lithuania now
| for the EU
| physicsguy wrote:
| Each market is different; even when UK was in the EU it wasn't
| like you could for e.g. apply for a credit card from Bulgaria -
| the supervision responsibilities for UK customers fell onto the
| UK based Financial Conduct Authority. If you try and purchase
| an Apple item on credit in the UK, the loans are provided by
| Barclays even.
| talideon wrote:
| Because it's not obvious from the headline posted here, the
| startup in question is Credit Kudos.
| [deleted]
| nailer wrote:
| Fred and Matt formed Credit Kudos in my cohort in
| https://joinef.com back in 2015.
| [deleted]
| explaingarlic wrote:
| Open Banking is some serious business. Wondering if they're gonna
| face any fines in the coming years due to non compliance... These
| won't be the regular EU slap-on-the-wrist fines either.
| rmesters wrote:
| It's happening already:
| https://www.finextra.com/newsarticle/39905/cma-writes-to-bar...
| erinnh wrote:
| Why?
|
| There already is a standard for open banking in the EU with
| PSD2.
| explaingarlic wrote:
| I have genuinely no clue what that is. I don't think it's the
| same thing as Open Banking, though. The FCA did just fine
| NatWest a quarter of a billion for their blatant money
| laundering.
| dbbk wrote:
| Open Banking is PSD2. They are the same thing.
| objclxt wrote:
| No, it's not. PSD2 does not define any APIs. Open Banking
| implements the requirements of PSD2, but they're not the
| same thing.
| proctrap wrote:
| Except it's not a standard. It's "everyone has a different
| API that is broken in another way". But you can threaten
| legal action if they don't fix it or help you, which gets
| stuff done.
| sydthrowaway wrote:
| I need a loan from Apple Bank!
| jxub wrote:
| Kudos (?) to the team. My guess is that they will want to roll
| out their own credit score system when paying by installments,
| rather than rely on Barclays as the credit broker as they
| currently do.
| [deleted]
| tksb wrote:
| As far as I know the Barclays partnership ended at least a few
| years ago. Apple Card was launched with Goldman Sachs.
| traceroute66 wrote:
| > As far as I know the Barclays partnership ended at least a
| few years ago. Apple Card was launched with Goldman Sachs
|
| As far as the UK is concerned, neither. There is no Apple
| Card in the UK (or indeed Europe for that matter, AFAIK).
| tksb wrote:
| You're totally right, thanks! I read right past the UK in
| the headline.
| RossM wrote:
| At least in the UK, all financing arrangements for phones,
| laptops are with Barclays and PayPal Credit
| https://www.apple.com/uk/shop/browse/financing
| mcintyre1994 wrote:
| I bought a new iPhone with Apple's 0% interest financing in
| the UK in December, and the financing is provided by
| Barclays. Goldman Sachs doesn't have much of a presence in
| the UK yet, only Marcus AFAIK and no credit products.
| vineyardmike wrote:
| Goldman doesn't have much of a consumer presence anywhere.
| Only Marcus is their consumer facing side (besides Apple
| Card).
|
| In America apple doesn't use Goldman for their financing of
| products unless it's financed via Apple Card.
| crate_barre wrote:
| _own credit score system when paying by installments_
|
| These are good ideas. Many people have debt from all kind of
| life issues and it kind of seems insane to lock them out of
| financing for ... a phone or the like.
|
| The credit score system is the OG social credit system that
| China ain't got nothing on.
| toomuchtodo wrote:
| There is _a lot_ of opportunity in issuing credit to folks
| with thin or no credit files where you can rely on other
| signals to determine creditworthiness, and it's win win. The
| lender makes a profit, and the borrower is able to obtain
| credit they otherwise wouldn't be able to, or credit at a
| lower cost.
| crate_barre wrote:
| So I've heard but for the thing that really matters,
| renting and certainly buying a home, you are more or less
| fucked (at least for the 7 years they put you in financial
| jail).
| toomuchtodo wrote:
| The mortgage banking origination pipeline, mortgage
| backed securities, and the housing/wage macro situation
| is a topic onto itself.
| [deleted]
| basisword wrote:
| >> These are good ideas. Many people have debt from all kind
| of life issues and it kind of seems insane to lock them out
| of financing for ... a phone or the like.
|
| Why is that insane? Why would a company essentially loan
| money to people they think are unlikely to pay them back? A
| PS1200 iPhone is certainly not essential when there are
| serviceable equivalents for < PS100 without the need for a
| contract.
| crate_barre wrote:
| The same reason they loan out the money in the first place.
| Do they ever actually check if a young person will have the
| earning potential to pay back a 50k loan? Not really right,
| but they hand out that loan. I've gotten credit cards with
| 20k credit line 1 year out of college, no questions asked.
| That's insane to hand that out and then blackball the
| receiving party. Liability is on both sides here but only
| one party suffers in an unbalanced way. For a large
| company, writing off 50k is nothing even at scale, but for
| the individual the scarlet letter is haunting.
|
| Overall, I cannot fathom how we tied the credit system to
| something necessary like housing. It's absurd to think you
| are fucked out of housing options for 7 years.
| basisword wrote:
| 1. Those credit card numbers are crazy and not something
| I've experienced in the UK.
|
| 2. Taking a huge loan out when you have little prospect
| of being able to pay it back is a persons own
| responsibility. I've been in debt, I know lots of people
| in debt, and in almost all cases it's due to my/their own
| poor decisions. This conversation changes if you live in
| the US and experience medical debt (not something we deal
| with in the UK).
|
| 3. Again, depends on your jurisdiction, but housing is
| typically available in some form (just not ownership)
| even to people with poor credit ratings.
| judge2020 wrote:
| > Not really right, but they hand out that loan.
|
| Student loans, if that's what you're referring to, are
| basically 0-risk because they'll either get wiped out by
| the government at some point, or the person will
| eventually pay it off within their lifetime; this is
| helped by how you can't discharge student loan debt in
| bankruptcy.
| 2Gkashmiri wrote:
| i do not own a credit card. in our immediate family,
| taking loans is seen as a terrible thing. the result? i
| do not "own" a car because i can't afford it. same for
| going on expensive holidays or owing iphones. if i can't
| afford it with the cash i have, i am not getting it.
|
| growing up, this has been my idea and i cannot imagine
| tying myself "in future" to an item of convenience or
| luxury if i can't already pay it in cash.
|
| a large part of it comes from the reason that i am not a
| government employee who traditionally have enjoyed a "get
| employed and you will get your salary till you die",
| those people can certainly portion off their salary,
| future even because there is essentially 0 risk of being
| let off. OTOH, being a professional with no "assured"
| income, this is not possible.
|
| i know people, like many who sport a credit card, own a
| vehicle for the lulz and the "experience" of making heads
| turn but i can't care less about neighbours idea of me
| owing or not owing an iphone or a top line car. meh
| mschuster91 wrote:
| > if i can't afford it with the cash i have, i am not
| getting it.
|
| With that attitude, about 99% of people couldn't _ever_
| afford a house because there is no way on saving the cash
| needed _and_ paying rent at the same time.
| basisword wrote:
| But then the price of housing would drop until it became
| affordable to buy in that way.
| mschuster91 wrote:
| It would _not_ simply because there are always greedy
| investors, airbnb profiteers and money launderers who
| will pay any price asked.
| ratsforhorses wrote:
| I totally agree, here in Romania, prices have skyrocketed
| since the banks became involved... one might argue they
| fund new construction but the downside is it's destroying
| a lot of the authentic inner cities with "ugly" high
| rises...
|
| Also somewhere there is a succinct explanation of how
| when you want a loan from a bank for a new property, they
| go to the central bank and get one to finance you,
| thereby creating money out of thin air, and adding to
| monetary inflation... but please correct me if I'm wrong
| Liquid_Fire wrote:
| Unfortunately your approach is not very efficient when it
| comes to buying a house/apartment. If you are renting
| until you can afford to buy, you are essentially wasting
| your money. (Maybe you are lucky and have a place to live
| already, e.g. from your family, but that doesn't apply to
| everyone)
| Turing_Machine wrote:
| > If you are renting until you can afford to buy, you are
| essentially wasting your money.
|
| Well, maybe.
|
| Underwater mortgages are a thing.
| 2Gkashmiri wrote:
| agreed. the idea behind that is i live in my family home
| that was built by my father and there is no reason for me
| to "move out". not me nor hopefully the next generation
| would need to build a new house so we wouldn't need to
| worry about that.
|
| you are right about housing though. i agree. in my town,
| the property prices double in 4-5 years. In the 25 years
| we have built our home, land prices have gone up 68x and
| they are growing fast.
|
| my argument was on credit cards and disposable income
| spending.
| Bilal_io wrote:
| Simply because the credit system is _in my opinion_
| imperfect and punishes people harshly. It encourages
| borrowing. i.e. if a person is responsible and chooses not
| to open a credit line, then their credit is considered bad,
| and banks would consider them risky. That's just one
| example.
| vorpalhex wrote:
| Not taking out credit doesn't make your credit bad, it
| makes it unknown. You wouldn't loan $150,000 to a friend
| you just met right?
| lotsofpulp wrote:
| Why are people entitled to credit? Everyone ascribes more
| credit to people they have good or neutral experience
| with than people they have had no experience with.
| Bilal_io wrote:
| > Why are people entitled to credit?
|
| I am with you there. But unfortunately, many entities
| check credit to decide whether they want to rent you an
| apartment, whether they want to install pre-paid home
| internet to your house or hire you for a job in many
| instances.
|
| So my argument is simple, if you want to check my credit
| to rent me an apartment, then the credit system should
| use my rent payment to increase my credit score, and this
| should apply to every bill I pay, be it prepaid or post
| paid.
| lotsofpulp wrote:
| As far as I understand, the reason the credit system
| already does not do this is due to friction with
| integrating data. All the small landlords probably do not
| have access to credit reporting bureaus, and there is
| probably a lot of hassle to report and verify
| information.
|
| Of course, that friction has greatly been reduced due to
| computers and internet, so it is possible to get a more
| granular look at people's ins and outs to more precisely
| establish credit.
|
| I think checking accounts or an equivalent should
| basically be a government utility at this point,
| available to all.
| JumpCrisscross wrote:
| > _if a person is responsible and chooses not to open a
| credit line, then their credit is considered bad, and
| banks would consider them risky_
|
| If you have zero credit history, yes, you _are_ risky
| because what 's unknown (including to you) is how your
| personality interacts with debt and what's known is that
| you have zero experience managing debt.
| Bilal_io wrote:
| Please read my response to the other comment.
| hectormalot wrote:
| > Simply because the credit system is _in my opinion_
| imperfect and punishes people harshly. It encourages
| borrowing. i.e. if a person is responsible and chooses
| not to open a credit line, then their credit is
| considered bad, and banks would consider them risky.
| That's just one example.
|
| That's a US (and maybe some other countries as well)
| perspective, but not the same for all countries. e.g. in
| The Netherlands, your credit report is mostly concerned
| about how much debt you have (vs capacity to pay) and if
| you have debts in arrears. I understood historic debt
| payments don't really factor into it here.
|
| Note that different debts do have different weights. e.g.
| a car loan for 20k can reduce the limit of your max
| mortgage by 50k because its a bigger impact on your
| capacity to pay.
| judge2020 wrote:
| In general that's how it works here too, people just like
| to watch their VantageScore rise and fall when most non-
| credit card credit decisions only worry about debt. The
| only thing that really matters is any history of late
| payments, but I imagine lenders in the Netherlands also
| wouldn't like it if you had multiple late payments to
| lenders every year.
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