story
That's a US (and maybe some other countries as well) perspective, but not the same for all countries. e.g. in The Netherlands, your credit report is mostly concerned about how much debt you have (vs capacity to pay) and if you have debts in arrears. I understood historic debt payments don't really factor into it here.
Note that different debts do have different weights. e.g. a car loan for 20k can reduce the limit of your max mortgage by 50k because its a bigger impact on your capacity to pay.
If you have zero credit history, yes, you are risky because what's unknown (including to you) is how your personality interacts with debt and what's known is that you have zero experience managing debt.
I am with you there. But unfortunately, many entities check credit to decide whether they want to rent you an apartment, whether they want to install pre-paid home internet to your house or hire you for a job in many instances.
So my argument is simple, if you want to check my credit to rent me an apartment, then the credit system should use my rent payment to increase my credit score, and this should apply to every bill I pay, be it prepaid or post paid.
Of course, that friction has greatly been reduced due to computers and internet, so it is possible to get a more granular look at people’s ins and outs to more precisely establish credit.
I think checking accounts or an equivalent should basically be a government utility at this point, available to all.
The current system incentivizes card swipes for credit cards, not borrowing.
