this post was submitted on 21 Feb 2024
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Today I Learned

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I always assumed credit scores were an integral and historic part of the American financial system.

They were not, they are very recent,most of your parents didn't have credit scores growing up, and as you can probably tell or at least intuit, it's mostly just a b******* scheme for those with capital to accrue more capital by invading your privacy.

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[–] [email protected] 136 points 8 months ago (3 children)

It sucks but things were worse before, especially if you were black.

[–] [email protected] 123 points 8 months ago (1 children)

Or an immigrant. Or a woman (especially if you're pregnant). Or if you lived near black people or immigrants. Or if you had long hair. Or maybe the local bank manager just didn't like you. These were all acceptable reasons to deny your loan application prior to credit scores.

They literally made decisions based on things you can't control. Banks are now legally prohibited from even asking these things. If you notice, people working at a bank will never ask "where are you from?"

[–] [email protected] 36 points 8 months ago (1 children)

Fuck I sound like a bootlicker but the net result was that it took away some control of the rich to influence social mobility.

But rich people are living organisms and their think tanks are the smartest. They’ve already found ways around it.

[–] [email protected] 31 points 8 months ago (1 children)

As time moves on, a lot of things containing racial bias have gotten more abstract. For example, we don't segregate schools by law anymore, but African-Americans do tend to live in neighborhoods together, those neighborhoods tend to have lower property values, and schools are funded by the taxes on property values. Segregation is still there, but you have to go a few layers deep to find it.

However, as its been forced to get more abstract, it's also become less effective. Without absolute prohibitions against African-Americans attending the same schools as white people, there has been more upwards mobility of African-Americans to live in better neighborhoods with better schools and end cycles of poverty. Still, it would be better if we got rid of this dumb property tax system for schools altogether.

Credit scores are the same. It abstracted away the racism. It's still there, causing unnecessary hardship, but not to the degree previous systems did. There is more room for upwards mobility, but that doesn't mean we should leave it as it is.

[–] [email protected] 6 points 8 months ago* (last edited 8 months ago)

However, as its been forced to get more abstract, it’s also become less effective. Without absolute prohibitions against African-Americans attending the same schools as white people, there has been more upwards mobility of African-Americans to live in better neighborhoods with better schools and end cycles of poverty.

That's highly debatable. There are definitely some groups of African Americans who have cracked the glass ceiling. But on average, black household wealth has significantly lagged white wealth accumulation year-over-year. Case in point, the '08 crash decimated black households to the tune of 40% of their total accumulated savings. The COVID crisis saw higher rates of mortality in black communities, as well as higher rates of unemployment, of declines in school completion rates (from high school up through graduate programs), and of divorce. All negatively correlated with wealth accumulation.

Maybe since '89 things have improved. But the last two decades have sucked and African Americans have eaten disproportionate amounts of shit during it.

[–] [email protected] 33 points 8 months ago* (last edited 8 months ago) (2 children)

Came here to say this. Credit scores are meant to remove some of the racial and social bias from the decision making. That was the idea anyway.

[–] [email protected] 21 points 8 months ago (1 children)

Doesn't mean this is how it has to be. It can be improved further.

[–] [email protected] 15 points 8 months ago (1 children)

While true, don't let perfect be the enemy of the good.

[–] [email protected] 8 points 8 months ago* (last edited 8 months ago) (1 children)

Yes, and I'm only making the opposite counter-point: Don't stop doing a good thing, like fixing broken systems.

I love it how everyone enjoys pointing out the negative interpretation when it's in response to something that makes it utterly clear I mean the positive interpretation.

You may as well be saying, "if it ain't broke, don't fix it", which I'm sure is not what you mean, but that's exactly what responding with a counter-view implies at this point.

[–] [email protected] 1 points 8 months ago (1 children)

How can it be improved further. If you're going to say stuff, give us a "such as," otherwise it comes off as a negative, it's not good enough. Gotta be constructive with the criticism. I'm reading a lot of negative reactions and I want some actual rationale for it, because I guess I'm uneducated on the topic and I fail to see what the issue is. Credit is people giving you money. There's a system that keeps track of your credit history. Don't want it? Don't get credit, that's it. Have 0 credit and then reap the rewards of that if you want.

[–] [email protected] 1 points 8 months ago (1 children)

Such as if you've been paying rent for years you should be allowed to pay an equal amount for a home you may actually own one day. That's my main one.

[–] [email protected] 2 points 8 months ago

I don't understand what you mean or how that relates at all. And I'm not trying to be obtuse, I just don't see a rational nexus between what you're paying in rent now versus what you may pay as a mortgage on some completely different piece of property. Owning a piece of property and renting one are two different things.

Now, should paying rent be reflected on your credit score? I believe so, for better and for worse. If you are a good tenant, always pay rent on time, to me that reflects well on your fiscal health. I think the only reason it's not is because who is there to report it? Only way it would be is if you could put it on your credit card, and I'm not sure any landlords take credit cards.

[–] [email protected] -2 points 8 months ago

Credit scores are meant to ~~remove~~ obfuscate some of the racial and social bias

[–] [email protected] 5 points 8 months ago

Mass incarceration in the modern era makes that a hard comparison to square up.

Are you better off today as a middle class black suburbanite throwing a third of your paycheck at a subprime loan for a house you couldn't even legally own 40 years ago? Yeah, sure, I guess.

Are you better off today as a teenager in a Texas supermax prison without working A/C, working 12 hour shifts for less than a dollar an hour, while the state government frets that there aren't enough people like you to meet some arbitrary imprisonment quota? Doubtful.

Post-Reagan, society has been a decided mixed black for African Americans.