this post was submitted on 02 Apr 2024
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Why would a system for tracking someone's historical reliability in lending, and then paying back, money be an anomaly? I mean I get the general sense of distaste in being boiled down to a number by financial institutions, but what I don't get is why anyone seems confused about how or why credit scores exists (other than that it makes for a nice hot take on Twitter)
In what world would something like a credit score NOT exist, given that a) you have a customer base larger than a couple hundred individuals, and b) you have a technology that allows you to calculate a risk/reward index on those individuals?
Countless hours have been poured into algorithms to rate things like movies on an easy to digest point system, when the stakes are as low as 2 hours of your time and 15 bucks. OF COURSE there is going to exist a system for communicating the risk of extending a lease or car loan or mortgage to individuals.
The problem is, it doesn't really measure the risk of lending, it measures the profitability of lending. And it results in people who probably shouldn't be loaned money being taken advantage of by corporations.