i think that article describes many different systems and grouping them under a concept that’s not necessarily related. the us system is definitely an odd man out.
the big difference i can see is that most systems described seem binary. if you don’t pay your debs, you get a strike. the american system, as i had it explained to me, is based on cash flow, so you need to have debts to pay in order to get a good score.
Most of them mention a range of scores. China and India use scores which by themselves give about 3 billion people with credit scores based on statistical modeling.
A lack of cash flow is a lack of financial history which makes one less predictable and therefore riskier which lowers your score.
They want an established history showing you pay things you’ve agreed to pay. I’ve never made a lot of income, but I’ve always paid my bills on time, so even with a smaller cash flow I still have great records of always making sure I have enough to pay what I’m expected to pay, so I’m seen as reliable to any possible debtors.
i think that article describes many different systems and grouping them under a concept that’s not necessarily related. the us system is definitely an odd man out.
How so? They all seem to be used for estimating risk when pricing a loan and are based on financial history.
the big difference i can see is that most systems described seem binary. if you don’t pay your debs, you get a strike. the american system, as i had it explained to me, is based on cash flow, so you need to have debts to pay in order to get a good score.
Most of them mention a range of scores. China and India use scores which by themselves give about 3 billion people with credit scores based on statistical modeling.
A lack of cash flow is a lack of financial history which makes one less predictable and therefore riskier which lowers your score.
Not unique to the US, we have the same thing here in Canada
the uk also has something similar. which makes sense.
They want an established history showing you pay things you’ve agreed to pay. I’ve never made a lot of income, but I’ve always paid my bills on time, so even with a smaller cash flow I still have great records of always making sure I have enough to pay what I’m expected to pay, so I’m seen as reliable to any possible debtors.