this post was submitted on 23 Oct 2023
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[–] [email protected] 64 points 2 years ago (49 children)

I certainly have problems with the way current financial institutions operate, but prior to the credit score there wasn't a standardized, scientific way to assess lending risk. It was left to a good ol' boy process rife with racism, classism, and sexism. Sadly, we're better off with what we have now, as flawed as it is.

[–] [email protected] 53 points 2 years ago (36 children)

There still isn't a standardized and scientific way to assess credit risk. There are three major companies, several minor ones, and all of them offer multiple products.

IT'S ALL A FUCKING SCAM. We just blindly accept random institutions compiling all of our data and telling a bank whether or not we should be given a loan regardless of our ability to pay it back. It has little to do with income anymore, which should be the only allowable metric. Don't want the risk? Get the fuck out of the mortgage business.

[–] [email protected] 9 points 2 years ago* (last edited 2 years ago) (1 children)

What about those that have sufficient income, but don't pay their bills and have defaulted on previous loans?

[–] [email protected] 12 points 2 years ago* (last edited 2 years ago)

Mortgages were, prior to assholes screwing the whole thing up with mortgage-backed securities, seen as one of the lowest risk things banks could handle.

If you default on a mortgage the bank forecloses and auctions the home. This was QUITE rare before the housing crash. The problem was that the banking industry became so lax that they were giving loans to people that actually did NOT have the money to pay for them, figuring that they could just seize and sell the home as they always had. The problem THEN is that mortgage-backed securities were a thing by that point and every foreclosure caused another domino to fall over.

It became a shitshow because banks fucked themselves over being greedy pieces of shit.

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