What your credit score actually means
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5 ай бұрынIt’s not just you. Credit scores are confusing as hell.
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When credit scores were invented just a few decades ago, they were hailed as a way to democratize lending. Today, they’ve become so essential that not having one can essentially lock you out of daily life. Having a low score can make life challenging, too.
These scores have a long history - and a lot of problems. In this video, we’ll show you where they came from, how they’ve changed over the years, and actually explain what that three-digit number means for you.
Sources and further reading:
Check out Frederick Wherry’s book, Credit Where It’s Due: Rethinking Financial Citizenship, which he co-authored with Kristin S. Seefeldt
Anthony S. Alvarez: www.russellsage.org/publicati...
Here’s Josh Lauer’s book on consumer credit bureaus: cup.columbia.edu/book/creditw...
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@chad9971 5 ай бұрын
I think the most ironic thing about credit scores is when you pay off a long credit account (like student or auto loan) it tanks your score because you “closed” an old account which lowers your average length of credit…it’s like they reward you more for being in debt forever lol
@Gormadt 5 ай бұрын
Usually that's in the short term, like the month or so after paying it off. Afterwards it goes back up often times higher than it was before you still had the debt. I've done it a couple times at this point and usually it's like a 5% drop following by going a few percentage points higher than it was while holding the debt.
@chad9971 5 ай бұрын
@@Gormadt well I'm still waiting for mine to rebound lol I closed 2 student loans and an auto loan back in October and my credit score dropped like 20 pts and still hasn't recovered lol
@Gormadt 5 ай бұрын
@@chad9971 I've never closed more than one in less than a month, maybe that's what's up. I've always had a few credit lines open and the last few times I've paid off some loans it was about 6 months apart from each other.
@moneeb343 5 ай бұрын
I closed an 8yr old account because the bank requested I change to a new credit card for better rewards and no annual fee. My credit score tanked by 60 points. It has not recovered. It has been over 7 months. @@Gormadt
@EmmanuelC0403 5 ай бұрын
@@chad9971Unless you’re looking to buy a house (which you shouldn’t be because of the housing market and because you just paid off some loans), you have nothing to worry about. 1-2 months more and it’ll have bounced back if you are keeping low utilization and paying debts on time
@tHebUm18 5 ай бұрын
My family was neither poor nor wealthy, but my mom worked in a bank so I was forced to get a credit card at 18 to start building credit and she'd taught me being responsible with money before that--definitely was nice to have an 800+ score by the time I was financially on my own. Now if only homes weren't totally unaffordable no matter your credit score.
@PainfulEditz 5 ай бұрын
Same here, already at 3 really good starter credit cards with a score of 700 at the age of 19 💪😊
@johnnynephrite6147 5 ай бұрын
You were 18 and you were "forced"??? Perhaps what your mom should have focused on was teaching you to be a grownup and say no to bullies.
@RichardHarlos 5 ай бұрын
@@johnnynephrite6147 wrote, _"You were 18 and you were 'forced'???"_ Oh, look... another person who has nothing to say, but they 'create' opportunities to disagree with others by taking **literally** language that was almost certainly intended to be understood *colloquially.* You're free to play whatever psychological and rhetorical 'games' you may prefer to play, if that's the best you can come up with concerning ways you might feel relevant. Should you ever desire to 'graduate' from **feeling** relevant, to actually *being* relevant, that's always an option available to you.
@PainfulEditz 5 ай бұрын
@@johnnynephrite6147 You do realize a large portion of people become adults while they are still in high school and under the general care of their parents? 💀
@contenteater 5 ай бұрын
@@johnnynephrite6147Worse still they were forced to eat vegetables, brush their teeth and to study.. 😱
@adrianr.2603 5 ай бұрын
Basically people in debt determine if you’re worthy of debt based on your current debt and others debt
@johnsamuel1999 5 ай бұрын
Exactly
@ricardoxavier827 5 ай бұрын
Thats the same of the chinese social score. Same end to the citizen. A dictatorship...-.-,..-,,-.,-,
@RodrigoroRex 5 ай бұрын
@@ricardoxavier827Bro "china's social score" is just a meme. Sure, if you go against the CCP you might get some restrictions, mainly you can't get out of the country but chinese people are not really scored
@alekshar9690 5 ай бұрын
Which is more than dubious, "if you don't know how to manage your money and live with it for small things, then you are trustworthy of more debts for bigger things" No wonder how this country caused a general debt crisis in 2008
@EconomicWarfare 3 ай бұрын
It's actually a system aka machine aka algorithm.
@AwokenEntertainment 5 ай бұрын
it's scary how necessary having credit has become in modern times..
@RealmyTheMan 5 ай бұрын
*in the US
@alexrogers777 5 ай бұрын
it's become the "social credit" scores that conservatives were so worried about in China
@Eimrine 5 ай бұрын
And a smartphone, too.
@electrodynamicorb6548 5 ай бұрын
Why?
@irfanm5892 4 ай бұрын
Its a manipulation
@benbovard9579 5 ай бұрын
Considering I was raised to never owe a debt to anyone, especially after growing up during the Recession when my parents were forced to go thousands into debt, the interest of which they are still paying off to this day...being forced to build a credit score by intentionally going into debt just so I can have access to things like a house and a car seems highly unethical, and almost criminal.
@vailpcs4040 5 ай бұрын
It is almost as if the economy can't make money off you via interest and fees, it doesn't let you participate... It seems the US focus on profitability above all else is something we could collectively vote to change if we were aware and motivated to do so.
@jonathanstafford3383 5 ай бұрын
Right there with you... Something is off if you need debt to be trusted… though you can just buy the house out right of you have money…. You can also do non bank lending ie direct lending person to person
@dancan2513 5 ай бұрын
It make NO sense. And is counterproductive to financial literacy!
@siobahnhurley85 4 ай бұрын
It’s legalized loan sharking.
@mateofenn 3 ай бұрын
To be fair in like a year you can have a decent credit score with a credit card. Use it like a debit card and if you didn't have bad prior history you'll be in the 700s.
@andrewlalis 5 ай бұрын
When I lived in the netherlands, instead of credit scores, the bank would just run an inquiry into your finances directly. Imo that's a bit less confusing and dystopian than tracking people's every action in some secret databases.
@mohammedgharbiyah6566 5 ай бұрын
What does "run an inquiry into your finances directly" mean? Do they just look at income and how much money you have saved?
@potapotapotapotapotapota 5 ай бұрын
they do that anyway - checking your bank statements for income and savings
@irinab7524 5 ай бұрын
It’s illegal in theUSA - the credit cards can only run your credit report but not your financials like bank statements, tax returns or income verification. The only time it’s possible when you are buying a home and applying for a mortgage…but even then you give written permission to access your personal financial info.
@Hadar1991 5 ай бұрын
@@irinab7524 When you want to get credit in Europe (I am not sure about all European countries, but I am unaware if there is a country that works in other way), you may take loans with extreme interest, no question asked (sometimes even ballooning up to 80% yearly) or you may provide bank with information like employment contract, how much you earned in last year, how much you pay on bills etc and then depending how much you want to loan, do you have anything as collateral in case you fail to pay on etc. Bank cannot collect those data on it's own, you have to provide the data. The only think bank can check is if you have any unpaid debts. So your credit history is not as important, it is mostly based on your current ability to pay.
@alastairhewitt380 5 ай бұрын
@@irinab7524 Common sense, sadly, is regularly made illegal in this backwards country
@dqge_6068 5 ай бұрын
Most people believe that social credit is extreme. But this system has been put into place decades ago yet nobody bats an eye.
@dave_riots 5 ай бұрын
this system pretty much inspired the social credit version
@MrChad69420 5 ай бұрын
guess what, social credit doesnt exist, its a myth.
@user-sq5sl4uz3c 5 ай бұрын
@@MrChad69420But this system is designed to keep the poor poor and to make the rich even richer.
@yeet1337 5 ай бұрын
Exactly what I thought too
@zhye5588 5 ай бұрын
@@user-sq5sl4uz3clike any system designed by the rich
@DeltaDemon1 5 ай бұрын
My father did not have a credit card until he was 50 and the bank he dealt with all his life (with a mortgage and everything) was not widely recognised. So, when he wanted to take a house mortgage with another bank, they refused him. It was rough even getting the credit card. That's why I got a credit card straight in first year University to build up my credit score.
@Mar_Ten 5 ай бұрын
distopian
@maemilev 5 ай бұрын
😂. Another vicious cycle continues
@ricardoxavier827 5 ай бұрын
Thats the same of the chinese social score. Same end to the citizen. A dictatorship...-..,-,.
@DominikPlaylists 5 ай бұрын
and the credit card company just took 3% of your lifetime spendings
@johnnynephrite6147 5 ай бұрын
Pretty sure theres some things you didnt know about your dad.
@mattl165 5 ай бұрын
I have never understood why a contractual obligation (rent, cell phone) isn’t included in your credit score. When you sign a lease or phone contract you are in debt the same as someone who buys a car and finances through the dealership.
@davidi3127 5 ай бұрын
If your rental company reports to the credit agencies it is included in your score. Most/All big rental companies do this - it's the mom and pop small guys renting out single units that aren't included in your score.
@BTrain-is8ch 5 ай бұрын
Neither of your examples involve a party giving another money to spend today in exchange for future dollars at a cost. That's what a debt is. In any case the real answer is that if lenders found those things to provide useful insights on creditworthiness they'd probably be included. Since they aren't they're probably not good indicators of your likely behavior as a borrower.
@Stars-Mine 5 ай бұрын
It is now and has been for a couple of years. FICO 9 implemented that.
@bensparshott3542 5 ай бұрын
In the UK mobile phone contracts DO appear on your credit report. Not rent though
@kingjsolomon 5 ай бұрын
Well I’m not sure about y’all, but I wasn’t able to pay my phone bill during covid and now have a 2,000 dollar bill in my collections, also progressive insurance, and a boof contract I signed from a fraudulent modeling company. My score is mid 500s. So some contracts definitely get put into your credit report. At least mine did.
@ItsRuve 5 ай бұрын
One of the most infuriating parts of this is that someone running a credit check lowers your score 🙃 And don't even get me started on it also taking a hit when you literally finish paying off a loan and close it... The whole system has been cobbled together so stupidly and does so much to damage to so many people. I hope future generations completely abolish this garbage and replace it with something that actually makes sense
@nunyadambusiness3530 5 ай бұрын
We can do without credit scores. Our Grandparents used to give an Income Statement, a Signature, and a Handshake. We can go back to those days, without systemic oppression of course.
@johnsamuel1999 5 ай бұрын
Actually checking your crdit score ( a soft inquiry) has very minimal or no impact on your credit score. However a hard enquiry (when you looking to apply for a loan ) will have a small but significant, temporary impact. It will vo back to normal within 2 months, assuming your profile is the same
@johnsamuel1999 5 ай бұрын
@nunyadambusiness3530 how is it oppression? The same people suffering from credit score will still suffer from the old system
@oksowhat 5 ай бұрын
even worse, people who would be eligible but looks different, they would be denied the credit @@johnsamuel1999
@ConnorRianHickey 5 ай бұрын
It hardly does, and just for a short period of time. It is not a big percentage of what affects the credit score, utilization, on time payments, and credit age is most important
@jkae91 5 ай бұрын
What frustrates me about the scoring system, is that if I’ve missed a small repayment of $30.. it has the same impact of lowering my score as someone who’s missed a payment of $3k. Small amounts are treated the same as larger amounts, which doesn’t seem fair.
@DominikPlaylists 5 ай бұрын
yes, a missed $100 bill I genuinely did not get decreased my credit by 10's of thousands for 7 years.
@Nov1706 5 ай бұрын
Because the credit score is a reflection of your ability to pay back you credit obligations. In some ways, being unable to pay back $30 is the same as being unable to pay back $3k because it shows a serious liquidity problem in your financial situation regardless of how large your access to credit it. It isn't about the amount you borrow. It's about your ability to pay back whatever you do borrow.
@loganfignewton 5 ай бұрын
not paying a $30 debt is more concerning that not paying a $3k one
@yegfreethinker 5 ай бұрын
@@loganfignewtonwhat kind of backwards logic did you use for it
@loganfignewton 5 ай бұрын
@@yegfreethinker If you can't afford to pay someone $3000 that is understandable, but if you can't afford to pay a $30 debt you're in serious financial trouble.
@Deletistjerk 5 ай бұрын
Just another problem Congress has not fixed in the last 50 years.
@AshokKumarBemal 5 ай бұрын
😂
@ullebor 5 ай бұрын
US credit score system began in 1989.... 34yrs ago.
@alekshar9690 5 ай бұрын
@@ullebor so "yet another problem congress has not fixed in the last 34 years" then, what's the difference, it is still a problem the oligarchs don't bother to solve
@calyodelphi124 5 ай бұрын
Something that I think should be done is a federal law that requires ANY entity that relies on credit scores to make any sort of decisions about individuals to also have to report information back to the credit bureaus. If an apartment complex wants to require a good enough credit score for an application to be approved, then that apartment complex should be required to report the tenant's on-time rent payments back to the credit bureau so that the requirement for the tenant to have credit history just to get a place to live goes back into building the tenant's credit history.
@kostiemuirhead8187 5 ай бұрын
Fixing the credit system might be good... Figuring out why nobody is able to live sustainably without credit and what changes need to happen to make people able to afford to live again might be better.
@salokin3087 5 ай бұрын
It's funny how people talked alot about "China's social credit system" which is sus, but that basically already exists in regards to credit. Bad credit cuts you off from a LOT of opportunities and it can take a lifetime to fix.
@CapybaraHunter187 5 ай бұрын
those two systems are entierly different
@ComanderSazabi2000 5 ай бұрын
@@CapybaraHunter187 Yeap. While credit score exists, I think social credit doesn't. I think some provinces on China did attempt to implement social credit but unpopularity of it within China made them scrap the idea.
@itinn1 5 ай бұрын
sorry to say but there is no social credit system in china. its a made up thing by media
@5464654135756 5 ай бұрын
Exactly!!!! I thought this video was about China's social credit system...
@arcticwulf5796 5 ай бұрын
@@CapybaraHunter187I asked chat gpt and this is what it said: Absolutely, on the surface, the US credit score and China's social credit system do seem very different. The US credit score focuses mainly on financial behavior, assessing how likely someone is to repay a loan. On the other hand, China's social credit system covers a broader range, including social behavior, adherence to laws, and even influences on various aspects of life. However, despite these differences in scope and purpose, they both essentially aim to evaluate and judge individuals' behaviors. While one concentrates on financial trustworthiness and the other on a broader spectrum of conduct, they share the underlying concept of assessing and categorizing people based on their actions. Both systems ultimately influence opportunities and treatment within their respective societies, making them somewhat similar in their fundamental goal of evaluating and influencing behavior.
@lukemccrory 5 ай бұрын
It's amazing how people's criticize China's social credit score for being authoritarian, but we have the exact same system, just centered around money.
@JKCWvids 5 ай бұрын
also the social credit score thing in China doesnt actually exist lol.
@Da_Rauch 5 ай бұрын
You have no idea about China's system if you think they are in any way comparable. The US system is problematic. The chinese system is catastrophically dictatorial
@JKCWvids 5 ай бұрын
@@Da_Rauch you know the chinese system doesnt actually exist right? like it was proposed, then rejected.
@Reefiemon 5 ай бұрын
A lot of Western finger-pointing is projection at the end of the day.
@Da_Rauch 5 ай бұрын
@@JKCWvids that is wrong. It has not been implemented (yet?) in its full planned form but the existing systems based on redlisting, blacklisting and city trial policies amounts to a quite restrictive system.
@bukharijabarazman2700 5 ай бұрын
When we wanted to move away from human segregation, we created computer segregation…
@Kurtizss 5 ай бұрын
“Social Credit Score is bad!” The Credit System: *Gentlemen.*
@derradfahrer5029 5 ай бұрын
(high level summary) The ECJ (European Court of Justice) just released a ruling a week ago, that basically said, that a credit score can not be the only or main factor for a bank to decide whether or not someone can get a loan. Same would apply for companies like mobile carriers, etc.
@alekshar9690 5 ай бұрын
Let's mention also credit scores don't even exists in some country, I had no clue such a slavery system existed before today. In France the thing is simple, you are blacklisted if you don't pay your rents, otherwise the only limit is 1/3 of your income spent in loans and it is the same for everyone. Banks often take a look at what your can already pay (they trust you more if you convert your house rent into a house loan) but that is far from a social score like China or USA uses
@persimmon93 5 ай бұрын
Chinese Social Score System Americans: OMG! DYSTOPIAN!! HORRIBLE!! BAD!! US Credit Score System Americans: OMG HARDER DADDY! UH YEAH!!!
@sigmamind711 5 ай бұрын
Im glad you mentioned Black soldiers being excluded from Veteran home loans. Many people don't know how bad that set-back a group of people that already endured centuries of slavery. That's one way the gov't can try to pay reparation's to the decedents of those brave soldiers. And greatly level the playing-field.
@CaribouEno 2 ай бұрын
That is the reason so many African American soldiers remained in Germany after WW2. They knew that they would still be discriminated against when they return. Some stayed in the army on posts in Germany, or they left and began a work career in Germany. Most married German women.
@oboecoe 5 ай бұрын
"Like a lot of systems in the US..." it starts with Reagan.
@amethystdream8251 5 ай бұрын
That and slavery with the founding fathers
@life_of_wescott 5 ай бұрын
The worst part about these credit scores is the fact that you need to have credit to obtain a credit score. But, you can't obtain credit without a good credit score. And if you're lucky enough to get approved for credit, the interest rates are so high that it is just unaffordable. It doesn't make sense at all... most people who apply for credit do so because they can't afford to pay for something. Now they have to pay 20% in interest back making it even less affordable. So now basically a good credit score is only obtainable if you have a lot of money which completely defeats the purpose of applying for credit. But that's capitalism for you... 🙄
@eudofia 5 ай бұрын
Exactly. Very well said. The system exploits poor people. No doubt about it.
@kingderald 5 ай бұрын
The annoying thing is. We all know these issues but yet NO ONE is standing up to make the changes. These are the issues that are more important.
@kiwi8476 5 ай бұрын
We just need to stop glamorizing the score. People need out of debt and to stay out. @DaveRamsey
@DhooomKetu 5 ай бұрын
Just another way to control people
@Mr_Battlefield 5 ай бұрын
Agreed, it's big brother trying to surprise the innocent.
@stevezelaznik5872 Ай бұрын
A credit score is a lot better than what came before it. Before credit scores, banks and landlords went on “vibes” which is way more discriminatory.
@deaxd1 5 ай бұрын
Paying with money that you don't have so can spend more money that you don't have. Great system. Here, in my country, the bank just looks at your salary (and other debts) and if you will be able to return it monthly, and maybe where you spend your money (like gambling). They care about the credit card only if you are using it and how you use it, but it is better not to use it.
@dansihvonen8218 5 ай бұрын
Exactly. It's a little Orwellian. You have to take out loans and spend them to prove that you are financially reliable. Let's see, who benefits from that system?🤔
@BattleshipAgincourt 5 ай бұрын
This is content that should be taught in high school. These and many life lessons are more valuable than understanding chemistry or geometry.
@little.zayzay 5 ай бұрын
Exactly
@HShango 5 ай бұрын
Unfortunately, not that many life lessons are taught in school. Only academics and theory is taught in schools.
@jaraujousc 5 ай бұрын
Unless you got a degree in chemistry like I did 😅
@gmdille 5 ай бұрын
How about, personal finance, geometry, and chemistry should ALL be taught in schools? Christ. The irony of saying "we need to teach about finance, but not that useless math stuff!
@BTrain-is8ch 5 ай бұрын
Quick piece of advice. The sort of people that say "no one trained me on X" in the workforce tend to be the people that don't get the raises, don't get the promotions, etc. School is for helping you develop the tools to train yourself.
@sierralvx 5 ай бұрын
Its still remarkable to me that credit is propped up on money that just doesn't exist. It shows how expensive things have been and that at no point could people just pay straight from their cheqing accounts.
@Lincolnator721 5 ай бұрын
Kind of like with govt spending, eh? Except the spending *almost* always exceeds the profits There's a few small towns I know of that are doing so well financially that they've given their taxpayers tax breaks
@Sinaeb 5 ай бұрын
@@Lincolnator721 when you're attempting to run the government as a business but also privatizing everything so the rich profits from teh government that's what happens
@ricardoxavier827 5 ай бұрын
Thats the same of the chinese social score. Same end to the citizen. A dictatorship...-.,-,-.,,-
@alekshar9690 5 ай бұрын
include the interests so that you pay things more than they actually worth
@mabus4910 5 ай бұрын
Among economists book money is seen as "real" money in the same way that cash is. "Money creation" is a very interesting part of modern economies. But imagin this case: Your employer goes into debt to pay you. Now you earned money that was "created" by a commercial bank. And you can enjoy the fruits of your labour without taking a credit. Is the money you spend "real" or not?
@tammysanchez5559 2 күн бұрын
If you can follow this advice you will raise your score from whatever it is to 750 ish
@fenardomike4228 2 күн бұрын
My 75/yo mother has pulled off a miracle. After my father and stepfather passed away, she faced foreclosure and bankruptcy in her late 50s. Now that I am an adult, I was able to help her come all the way back to a credit score of 798 (Equifax), I am happy to have helped her rebuild her life and credit in her senior years.
@fenardomike4228 2 күн бұрын
She currently has a bank issued credit card through M&T Bank, the Chase Instacart card, and a Wells Fargo Autograph card. She gets great cash back for her grocery delivery of 5% (I hate shopping and she loves using Instacart) and any take out she gets she uses the Wells Fargo for 3% back.
@johnbowers4477 2 күн бұрын
@@fenardomike4228I need a help please 😮
@johnbowers4477 2 күн бұрын
@@fenardomike4228wow really and how can I trust this cause I’ve been trying to fix my credit score but I think they don’t see any solution to it PLEASE I NEED HELP .
@JuliaTica-rr7ur 2 күн бұрын
I'm looking for a card (and happy to map out the next few) knowing I have some planned spend that will go on a credit card, so I'd like to get decent SUB if possible. Most of the spend will not be in USD, so ideally the card won't have FTFs. I'm imagining this card will be used for the bonus only and either closed or parked, and not used for ongoing spend. I don't run a balance ever, I only use cards for rewards.
@MrMash-mh9dy 5 ай бұрын
Indentured servitude quantified. The credit score is a gauge of how obedient you are to your masters.
@Tubeytime 5 ай бұрын
wut
@Pandoradow 5 ай бұрын
So true
@ricardoxavier827 5 ай бұрын
Thats the same of the chinese social score. Same end to the citizen. A dictatorship...-,-,-.,--,-
@jm2307 5 ай бұрын
I get followed around in stores a lot by people assuming I’ll steal. Then I go open a line of credit with the sneering cashier, they run my credit and suddenly their expression changes to shock and elatement. Now all of a sudden I’m worthy of basic human decency. It’s WILD!
@justinhenryhaynes 5 ай бұрын
@vox If it isn’t too redundant to do another piece on credit, can you please consider a story on “cashless” businesses in the USA? My partner and I have been discussing this trend. While convenient for the business it excludes a portion of the population who are cash only. There is also the question of legality of refusing cash which is supposed to be legal tender for all debts public and private. It seems there is a lot of material to cover which could benefit from Vox’ unique and human balance of investigation, analysis and presentation. Thank you for your work.
@RodrigoroRex 5 ай бұрын
I'm commenting cause that's a great idea, especially when you talk about the legality of it. I'm going to be honest, I'm all for a cashless society, I love not having to carry a single cent on my wallet, and managing all my money through an app, but on the other hand, I do understand that may be discriminatory to some people, mainly to those who don't want certain transactions to be tracked to them Please Vox, do it! ☝️
@frafraplanner9277 5 ай бұрын
@@RodrigoroRex Exactly my thoughts on the cashless society
@Alex06CoSonic 5 ай бұрын
Cashless society will clamp down on people who rely on cash to bypass overtaxing due to being poorer. That often means african-americans and other minorities, which is a real shame. It's essentially the same problem as with credit, which is what was talked about in the video. Cashless is a terrible idea that will punish the poor and limit what they can get, how much of it and when they can get it.
@b33viemm 5 ай бұрын
Awesome idea. I have a lot of problems paying without cash, so the idea of cashless stores becoming commonplace terrifies me.
@justinhenryhaynes 5 ай бұрын
@@b33viemm I'm curious about your experiences and what's possible. Are pre-pay cards like Netspend still available at Walmart, Target and other places? Is it possible to load those with cash and use it like a credit card everywhere? If there is no such solution, and restaurants can deny a form of payment for their own convenience, then this really is a big problem for a large number of people. I am in a position to spend using almost any method, but I was not always in that position. So no I'm out of touch with what's available.
@vinny61389 5 ай бұрын
Since change can take decades, one way to set yourself or kids up for success right now is to get credit history started as soon as possible. Get a lower limit credit card that has no annual fees. Only pay 1 or 2 recurring bills with it and nothing else to start. If you financial situation allows, add more. You’re essentially adding a step to the bill paying process but do this for only a couple years and you’ll easily crest a score of 700+. It’s also very low risk and costs nothing.
@randeknight 5 ай бұрын
My parents recommended I get a credit card as soon as I hit 18 with an automatic payment from my bank account. I have bounced a payment twice when unexpected bills came in, but I still have near perfect score.
@minimansson2023 5 ай бұрын
As an European I am so thankful for all the things I just don't have to worry about. It must be so extremely stressful to live in the US
@falling_homer 5 ай бұрын
Same bro
@mxKrysie 5 ай бұрын
Can confirm. It's pretty stressful here. I forgot a payment once and my credit went from 680 to 560...no grace for people living paycheck to paycheck.
@davidi3127 5 ай бұрын
Germany, Spain, and the UK have credit scores.
@Laruxo 5 ай бұрын
Most of Europe does not depend on a credit card for basic functions. I only need it when renting car and that is it, otherwise debit cards = only spend what you have. And my credit score is only checked by banks when applying for a mortgage or a loan.
@houseplant1016 5 ай бұрын
@@LaruxoFor real, I don't even have a credit card, nor do I know anyone who has it.
@arodvaz1528 Ай бұрын
My grandparents didn't have credit whatsoever. They paid cash only until they were well into their fifties. My mother made her credit the old fashioned way: pay what you owe on time, don't spend extravagantly. That didn't always guarantee money at the end of the month. I learned from her to be frugal and always think about the future. That's why it kinda angers me sometimes when i see people spending and spending on things that they will throw away, like there will always be more money tomorrow. It is so hard to earn and goes away so fast.
@HShango 5 ай бұрын
Humanity doesnt need credit scores, in my honest opinion. This the rich judging people who were already at a disadvantage and making their lives extremely harder already by adding more financial barriers. In the uk we have credit scores too.
@skyboy49707 5 ай бұрын
Credit scores just seem made up to me. I didn't come from wealth, I come from a single mom and she didn't even have a credit score until I was 29. I've always had a high credit score for some reason. I didn't get a credit card until I was 22 and yet somehow the moment I did I had 750+ score. I think I made $19k at the time and had no rental history or anything. Sometimes seemingly randomly my score will jump or drop by 30+ points when nothing major has changed. Like I'll buy something off Amazon for $500 (on a card with a $25k limit) and it'll drop 33 points but buying a car less than a year after the last car (didn't like it) with like 6% down it'll go up by like 5. Makes no sense.
@TobyKim-tp1dw 4 ай бұрын
Yea this happened to me and I found out my mom actually threw me on a credit card as a "authorized user." Because she paid it on time and in full it, that history was now part of my history. I had a credit history starting from 14 years old even though I didn't get my first credit card until I was 18.
@user-df8iz3iq9o 5 ай бұрын
She said that cell phone companies do not end up on your credit report, which is not true. Companies like ATT, TMobile and Verizon all share data to all 3 credit bureaus.
@eudofia 5 ай бұрын
Only when you default on that iPhone payment. But for paying your phone bills on time? Nah!
@CaribouEno 2 ай бұрын
Only for the installment credit account when you buy your phone on their credit. Look closely on the monthly prices advertised, it is always split between the installment credit and the actual monthly cost.
@user-jn3od3hk9n 5 ай бұрын
In my country no loan history - is great!!! It means that until now you had enough money and you're reliable.
@MiniMotoAlliance 5 ай бұрын
It's almost like it should be taught in grade school alongside other useful skills to prepare kids for the real world.
@soymilkman 5 ай бұрын
bro.... out of every possible conclusion you could've had and you STILL made it into an individual's problem-- fixing absolutely nothing
@llanfairpwlgwyngyll7331 5 ай бұрын
@@soymilkman ironic
@ricardoxavier827 5 ай бұрын
Thats the same of the chinese social score. Same end to the citizen. A dictatorship...,-,.,-.,--,
@thetruth65756 5 ай бұрын
many high schools require consumer's ed
@msvmac9361 5 ай бұрын
Since the score factors into hiring decisions for some employers (esp. those in the financial sector), it impacts how much a person could pay for auto insurance, whether you can rent an apartment/house, etc., what’s really being scored and subsequently judged? Credit isn’t being extended for any of these things.
@RebelCowboysRVs 5 ай бұрын
Credit is being extended to you when you rent. Its not in cash, but in the value of the home. One they themselves usually still owe the bank for. Its not unusual to rent someone a house an they stop paying rent right away. Months later, when you finally get them evicted, you find the house destroyed an all the appliances have been removed an sold. Now you need to sink $20K in to it to get it back to what it was. So the owners want to see your income to know that you can pay, your credit score to know you will pay, an a previous rental reference to know they will get an intact house back. Seems pretty reasonable to me for entrusting you with something worth hundreds of thousands of dollars.
@TherconJair 5 ай бұрын
Here in Switzerland international credit corporations are moving into the Swiss market and are in the process of establishing a credit score. Would not be surprised if it is going to supersede the official debt collection office entries at one point.
@houseplant1016 5 ай бұрын
Didn't the Swiss bank recently get a bail out?💀 With such an impopular decision they'll hurt themselves more... The audacity of getting saved by the taxpayers but then making their lives harder...We should impose a credit score on banks in the future to decide who will get a bail out or not in the future...
@owen1607 5 ай бұрын
it’s so funny Vox is doing native ads like every random streamer after cutting their effects budget this much lol
@nunyadambusiness3530 5 ай бұрын
We can do without credit scores. Our Grandparents used to give an Income Statement, a Signature, and a Handshake. We can go back to those days.
@nothere2994 5 ай бұрын
Fraud was also rampant back in Grandpa’s day, and they didn’t lend to anyone who wasn’t a white man. Don’t think such a system is desirable.
@DominikPlaylists 5 ай бұрын
Yes, income statement and proof of savings is much more useful and works well in many countries.
@seagull8415 5 ай бұрын
It very much in the eye of the lender, and how risk averse their strategy happens to be at the time.
@johnsamuel1999 5 ай бұрын
A lot of countries like canda, india , china , australia , austria , denmark , norway , brazil , south africa , ireland , germany etc use credit scores or crdit blacklists as well. The exact calculations and factors may differ , but they still exist
@EduardoEscarez 5 ай бұрын
The difference is that they put more restrictions than in the US in how to use it. Here in Chile is illegal (except in some specific cases, mostly in finance) to use scores to evaluate job applicants, almost all banks allow you to open an account with them so you can provide a history of your income/expenses, and you can request a free credit report to all the bureaus for free and without any score hit. Even more, now I'm suscribed to a service provided by the financial services authority that will send me periodical emails about my debts and how I look to the rest of the financial sector, free of charge. I don't think that credit scores are evil but a necessity in a modern and complex economy, but the US has a system that is abused and need to be reformed.
@johnsamuel1999 5 ай бұрын
@EduardoEscarez you can request a free credit report once a year . But there are third party services that allow you to get a free monthly report .but you are right, not sure why its used in job applications
@kingace6186 5 ай бұрын
And? Either fix them or abolish them all! Although, I'd bet some of the countries that still have them, have improved it to make it more just, like Norway. Many countries also still have the death penalty. That shouldn't stop the US from abolishing it.
@googelygoo1 5 ай бұрын
As of last year Washington State also bans the use of credit score when determining rates on car insurace
@OriginalBrett610 5 ай бұрын
So frustrating. Paying extra to enable your rent payments to be considered on your credit score is not okay. Agreed, think bigger.. Systemic change, not a pay for credit scheme like suggested.
@johnsamuel1999 5 ай бұрын
The credit score isnt a personal finance score , its a score of credit worthyness. The true users of the crdit scores are lender. Thats why sadly rent isn't considered in your credit score
@msvmac9361 5 ай бұрын
But it’s factored into a leasing manager’s decision...it’s one of the major considerations determining whether a rental applicant will be approved or not.
@johnsamuel1999 5 ай бұрын
@msvmac9361 oh yes
@irinab7524 5 ай бұрын
@@johnsamuel1999you can report your rent - my tenants applied and some agency text me every month to ask if rent was on time. It’s a long and not efficient way, it’s easier to build your credit starting with a secured credit card and pay it on time. Think about it as a game - you learn the rules and follow them. Pretty soon everything will improve and in 2-3 years your late payments if any will fade out Don’t blame the game if you’re too lazy to learn the rules - you’ll s;wats lose
@yatzeegamingop 5 ай бұрын
Americans when they realize they themselves are the pioneers of social credit concept. Truly poetic.
@idiot9359 5 ай бұрын
FREEDOOOM
@rusher2937 5 ай бұрын
The difference is that in the US you will still be able to take out a loan after criticising your government...
@GibbousTT 5 ай бұрын
@@rusher2937 Not when they throw you in prison.
@rusher2937 5 ай бұрын
@@GibbousTT for what?
@GibbousTT 5 ай бұрын
@@rusher2937 Anything they want, if you're considered a 'subversive element'. The right to protest is constantly undermined by unjust incarcerations, police violence, and misinformation. Every nation south of the border knows the US best for espionage and repression.
@geeksdo1tbetter 2 ай бұрын
That was a surprisingly useful ad. Well done, Secret!
@Ze_Austin 5 ай бұрын
That's one of of the best advertiser inserts I've seen in a video
@prdamico 5 ай бұрын
"It's a private club & we are not invited"......
@kiru6517 5 ай бұрын
Americans : Make fun of Social Credit Score Also americans :
@metrofilmer8894 5 ай бұрын
Tbf, although problematic, having a low or nonexistent FICO score doesn’t deny people from society, unlike the preposed social credit system and FICO scores are not allowed to be based on political or civil data, like voting roles, criminal history or association with other people or organizations
@kridreklaw 8 күн бұрын
Use your credit and your score goes down. Don't use credit and your score goes up. Have no credit and you basically don't exist.
@Birthday1313 5 ай бұрын
I didn't have a credit score... and was constantly denied a loan to start building a credit score.
@chronischtelaat 5 ай бұрын
Always love these episodes of 'another reason why I'm glad I'm not an American"
@billyfink1234 5 ай бұрын
Only wealthy countries would trust a system that alllows people to borrow money in this way
@ricardoxavier827 5 ай бұрын
Thats the same of the chinese social score. Same end to the citizen. A dictatorship...-.,-,.-.,-,-.,-,.
@DominikPlaylists 5 ай бұрын
except this is real unlike the Chinese score@@ricardoxavier827
@aspirationavenue 5 ай бұрын
for me, it's another episode of "another reason why I'm trying to get out of America ASAP"
@alekshar9690 5 ай бұрын
When you discover China and USA are basically working the same way : social score or credit score the matter is the same, if you totally submit yourself to the dominant class you'll be rewarded... providing you are never forced to disobey.... Happy to live in Europe where we are a little more protected from those autocratic structures. At least in France, not taking loans is seen a a good behavior, it means you know how to live with what you earn and manage your money.
@ailrky4765 3 ай бұрын
The only difference is that social credit doesn’t exist
@jasonmotley 5 ай бұрын
Excellent reporting!!
@charmingowloflavenderism 5 ай бұрын
Banks do not exist to help you in any way, so from this POV why would you ever want to rely on them or care about a credit score?
@Swampdragon102 5 ай бұрын
America is weird. They really built an entire culture around being in debt. So if you aren't in debt, it's a bad thing?
@irinab7524 5 ай бұрын
You don’t even understand the system. You don’t have to be in debt to have great credit. Use credit cards and pay them off every month just like of you using cash - only they’ll build your credit. It’s free and you don’t spend more than you make. Bingo!
@Swampdragon102 5 ай бұрын
@@irinab7524 Nope I don't get it. Why? Why can't I just live off of a debit card? Why is it good to spend money? Also, do I get credit for investing my money instead of spending it?
@irinab7524 5 ай бұрын
@@Swampdragon102 it’s inconvenient at least. It’s like driving a car by your own rules disregarding common accepted rules. It’s just a game you play and if it’s not you created it - it’s better to play by rules. Or be discriminated on the basis of incompetence. It’s not that complicated - I’m playing this game for last 20 years and I always worked at low income jobs. However, my house is paid off, so is my truck and I don’t have to work because my investments put food on my table. When you’re mature enough to understand that’s easier to go with the flow than against - you’ll be blessed with wealth and wisdom. Age is not equal to wisdom. Don’t fight with a system - use it
@VidWatcher01 5 ай бұрын
End credit scores
@devilpupbear09 5 ай бұрын
Credit scores have dictated where i live, what i drive and how hard I work. I hate numbers
@DRENS2131 4 ай бұрын
Imagine having a 800+ credit score and still pay 15k on medical bills cause insurance wont cover the expenses... what a joke
@mathisnotforthefaintofheart 2 ай бұрын
I had a near perfect credit score for years along with my car loan. I paid off my loan last month and I lost 40 points right there. LOL
@williamlee3572 5 ай бұрын
Credit Scores just make me think of Black Mirror. It's too controlling if you will be denied an apartment or job with it. It's also incredibly "Classist" as well.
@amethystdream8251 5 ай бұрын
It also doesn't make sense. How do you complete the tasks required to maintain and grow a credit score without housing or a job? If we think about it logically and practically, it doesn't add up. I've pointed this out to customer service at the bureaus and people in general, and the dismissals have been baffling to say the least. Then it really is just about class divides being maintained.
@nerd26373 5 ай бұрын
If you have low credit score, something has to change-as soon as possible. Be wary of your own spending habits. Money in your pocket would only last for a limited period of time. It's one way to avoid bankruptcy.
@DominikPlaylists 5 ай бұрын
The life has gotten really hard for all the frequent visitors because of this too. If you need to stay in the US just a few months at a time, you need to jump through so many hoops to rent a place, rent a car, get sensible medical insurance.
@quinnhaynie7767 5 ай бұрын
Leveling the playing field is important, but how does it generate money? If you can figure that out then you can come up with a plan.
@IvesBanner 5 ай бұрын
This information also applies for my country. I wish there was an explainer video like this in my language.
@Eric-yj5xg 5 ай бұрын
Now do one on american social score
@meldavis1877 4 ай бұрын
Here in the UK same thing with credit score,personally I think it’s humiliating we are all equal until we are not I guess.Your content is brilliant and engaging,food for thought.Thanks for another interesting educational video.😊🙏
@hervva 5 ай бұрын
Do I understand it right: do you in USA just have to have credit to do stuff like renting apartment? Is it possible for you to go though your life just earning enough to not have to borrowing money (for me it is vital not to have loans, i always say i cannot afford to have loan, i'd rather have cheaper life) and NOT HAVING LOANS will be negative about you?
@cesmith48 5 ай бұрын
This system is really ridiculous.
@louistech112 5 ай бұрын
No credit should be considered as good credit . This country is a sham cuz you gotta out yourself in debt to be considered responsible with money but if you have no loans / debt that should mean your a smart spender . It’s a system like social credit system but with cash only the rich will benefit
@thegraffitiplayground1325 5 ай бұрын
Debt is money tho you have to u sweat and the game to play
@nothere2994 5 ай бұрын
Having some credit is good, it’s time-value of money. Rather than paying the whole value of a house up front, you can instead invest a portion of the money and just pay the amount your loan requires you to, thus giving you an asset that (generally) increases in value AND allowing your cash to increase in value as well. It’s pretty simple. For smaller stuff, like credit card payments, you are totally right, makes no sense.
@louistech112 5 ай бұрын
@@nothere2994 I agree with the larger payment cuz none of us got 30k for stuff
@nathandennis03 5 ай бұрын
What websites give loans based on rental history. 11:26 she says there are a few start ups that do this and I am interested in which ones please help.
@BeowolfNindoJournal 5 ай бұрын
What's messed up is how buy now pay later services and pospaid phone plans don't report how you pay on time, but only report you when you miss a payment or fall behind.
@civichx24 5 ай бұрын
Vox offered no solution to the problem, only that we need to "think bigger." Whatever that means. 🙄
@JoshPitts530 5 ай бұрын
You know what helps student loan repayment? Paying a livable wage. A person can barely support themselves nowadays let alone a family on one income.
@BTrain-is8ch 5 ай бұрын
That's backwards. You don't buy a Ferrari then complain that you don't make enough money to afford it. You just don't buy the Ferrari in the first place.
@nitjigupta 5 ай бұрын
I am facing the same problem. Recently moved from other country. Faced all kind of issues to get the home lease/credit card/ car loan
@thecunninlynguist 5 ай бұрын
wish there was like one universal score...there's like 4-5 that I'm aware of via some of my banking apps, and they're all different scores.
@Locke99GS 5 ай бұрын
What your credit score actually means: Your trustworthiness to pay back your debts based on indications of you actually paying off your prior debts, and whether others trust you to pay their debts based on the same.
@bmay282 5 ай бұрын
Well.. if the credit scores were correct, maybe... But in reality it's mostly become a way for the Banks to make more money off of poor people. In practice it stops low income people from participating in the economy.
@Locke99GS 5 ай бұрын
@@bmay282 How do you figure? If you don't pay back your debts, you get a lower score. If you do pay back your debts, you get a higher score. If other companies don't trust you enough to loan you money, you get a lower score. If other companies do trust you enough to loan you money, then you get a higher score. If you don't have a long record of paying things back on time, you get a lower score. If you do have a long record of paying things back on time, you get a higher score.
@ingislakur 5 ай бұрын
Credit score just means how risky it is to lend you money. If banks gonna eliminate it the interests rate will rise on all of us.
@JayeOFarrell 5 ай бұрын
The host takes vocal frying to a never before seen level. Truly impressive amount of fry.
@AmaanSattar-it6mt 5 ай бұрын
I think score should depend on amount of credit. It shouldn't be all or nothing!
@HShango 5 ай бұрын
Credit score (low or not having one) locks you out of jobs in the USA?
@Juicyayyo 5 ай бұрын
It can. Some jobs do check your credit scores
@nothere2994 5 ай бұрын
A small percentage, the idea is that jobs where you might handle large amounts of cash (bank tellers being the most notable) don’t want people who aren’t credit-worthy (and thus, might have a larger-than-average incentive to steal).
@metrofilmer8894 5 ай бұрын
In some, however in most cases this is because these jobs involve finances or are very monetary based. In most cases though, credit score isn’t a main barrier to job access
@bermei5187 5 ай бұрын
Should've touched on the fact that paying off loans will lower your credit score and why that happens. Most people would assume the opposite happens.
@TheMule1 Ай бұрын
My family got here about 25 years ago. They have great credit scores and not because they know a lot about credit scores but they are just responsible with money.
@Mr_Battlefield 5 ай бұрын
Let's end the credit scoring system all together. It's just big brother (government, rich people, and rich businesses trying to surprise the innocent.) In a way it's a pyramid scheme. The only one at the top is the companies and rich people behind the scheme to begin with.
@JohnDoe-hm4in 5 ай бұрын
Credit scores are should be able to be voided depending on your situation until you actually have one built up a bit
@K0sm 5 ай бұрын
I'm glad the EU completely forbids the use of personal information for banks loans
@world_still_spins 5 ай бұрын
For me it is difficult to understand how repeatedly going into debt(s) and then sometimes paying back the debts owed, will somehow improve social status and ranking (for a silly banking thing only brought about as of the 80's). This "credit score" thing seems to only to help keep poor people poor and allow rich to waste money more because they can afford to be in constant debt to maintain a high credit score. Too many necessary life items are allowed to be tied to a credit score, (finding/obtaining shelter or a place to rent, mortgages, car payments, scholarships/grants, gaining employment (WHAT? why?), buying health coverage, auto insurance, and other items).
@Commando303X 5 ай бұрын
I feel that quite a number of Vox's stories veer into, "Here's why the world is unfair to black Americans," rather than into any more interesting or thoughtful contemplation.
@JoshWalker1 5 ай бұрын
Yeah. Title: "Here's what your credit score actually means". That's hardly the best title to describe the actual content found within the video itself
@royaldiadem_ 5 ай бұрын
Why is everything focused on Black People. Like stop stalking black people. It would be nice to hear how the credit reports and scores affect Mexicans, Latinos, Arabs, Asians, & Pacific Islanders. We are relevant too.
@intherapture 5 ай бұрын
The mention of Black people does not invalidate the experience of other marginalized groups, it informs it. We live in a white supremacist society in which "Blackness" was designed as the bottom rung by which the nation's economy and social foundation is structured. Studying, understanding, and dismantling that would free everyone, which is exactly why racism is so successful. The video was obviously a primer on the subject, not an exhaustive history. Learn and grow
@account5223 5 ай бұрын
@@intherapture i wonder if the black youths in Detroit, Chicago, etc. would use words like "'invalidate," "structure," and "exhaustive"
@acelvmzz3553 5 ай бұрын
Thank you
@neverletmego6414 5 ай бұрын
Dear those commenting what about China's 'social credit score': it was proposed but was not implemented in any meaningful capacity. Some cities experimented with it but unpopularity amongst the citizens made it being scrapped and rejected.
@QuarterCoyote 5 ай бұрын
My credit score is almost 800, but I was recently denied for a credit card. It's all a joke.
@19MAD95 5 ай бұрын
Having a better credit score because you’ve been signed up as a co-account holder as your parents is one of the issues too. Some people get to start out with an 800 score at 16 through this.
@drdopesec 5 ай бұрын
How is this a problem?
@Biga101011 5 ай бұрын
@@drdopesec I mean being able to start your kids off on the right foot seems like one of the few perks of the system.
@dantehampton2570 5 ай бұрын
That's not an issue
@doujinflip 5 ай бұрын
That explains how my credit history is somehow longer than my own lifetime. Luckily I chose financially responsible parents 😉
@harley297 4 ай бұрын
So glad i pay for ad free youtube and still have to sit through ads baked into videos i want to watch
@ZackGisme 5 ай бұрын
It’s weird you’re claiming someone living in a home worth less money shouldn’t have a lessened ability to borrow. It’s literally less collateral in the event the debt can’t be repaid.
@Simalacrum 5 ай бұрын
While I love how well made and articulated this video is, it's frustrating to me that information about topics such as credit scores are very much focused on the US (understandably) - I wish this same level of free, independent investigative journalism on the internet was available for every country, so we can see for our own nations the nuiances of our particular systems and their flaws, and potential solutions we can participate in. I know that's very much outside the remit of Vox as a US-based organisation, but I wish there was for example a Vox EU/UK/Asia etc.
@Grentanksmog 5 ай бұрын
Vox and "independent investigative journalism" have nothing in common, what are you talking about?
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