[Dries007]

> but as far as I'm aware, somebody with no credit history is basically indistinguishable from somebody with "good" history.

As it should be. Why would you want to allow someone to be judged for _not_ having been in debt in the past?

You can always ask for references if they rented before, that might help somewhat.

[grfhtsdfvv]

That’s like saying “why not hire someone that’s never worked as a software engineer to be your principal?” Why should they be judged for _not_ having a job in the past??

[lazide]

Because businesses need to make money to exist. Credit history == has successfully made other people money in the past, and if past behavior is indicative of future behavior, they likely will to someone else too.

[jrockway]

I don't think this really has any relationship. You can open an account and never use it, and your credit score is just as good as someone who borrowed $10,000 at 30% APR and makes the minimum payment every month. Probably better, because lower "credit utilization".

[lazide]

Not true, based on everything I’ve ever seen for credit reporting.

Holding zero balances on accounts means you aren’t costing them money, which is better than defaulting on loans, not making payments, etc. but doesn’t mean you actually made them much money. People who never get into debt are generally not valuable customers for companies who make their money off interest.

People who require they keep book keeping/overhead for (aka keep active accounts), while not paying them money are actually costing them money.

If you show a past history of being able to cost them money, and then not actually doing so, or even making them money, that is certainly better than actually costing them money.

Aka, you held some debt for awhile, but made your payments and paid it off. Those are high credit score/low risk folks.

Having large outstanding credit balances (especially escalating ones) and only making minimum payments means you’re currently making them money, but are a relatively high risk of costing them money shortly in the future when you inevitably default. Which is a low credit score/high credit risk.

If you have high open credit, but rarely use it, they can’t tell if you’re high risk (you’re waiting to blow all your credit and leave the country) or low risk (would work yourself to the bone to pay every dollar back and would never overcommit) - but one thing is for sure, you aren’t actually making them money right now, and there is some risk you’ll max out your credit and disappear.

If you are paying ongoing interest and never default though, you’re the gravy customer for a CC company, as you’re be paying them waaaaay more interest than anyone else. So medium credit score, medium credit risk.

It’s a balancing act.

Someone with zero credit history is a complete unknown, which for various reasons is likely the highest risk of all, and why it’s also only slightly easier to get credit in that situation than if you were a serial bankruptcy machine.

[Tijdreiziger]

If I pay a landlord rent every month, I make them money. I don’t need to take on any debt for that.

[jrockway]

You will be happy to know that the big property management companies are willing to charge you an extra per-month fee to report your rent payment history to credit reporting agencies.

To some extent, renting an apartment does take on some debt. You're basically being loaned the property in exchange for making interest payments.

[FireBeyond]

> You will be happy to know that the big property management companies are willing to charge you an extra per-month fee to report your rent payment history to credit reporting agencies.

Which, to me, they should not be allowed to do. I'm yet to find a rental property that lets you pay rent in arrears, so there's absolutely no use of credit occurring.

[lazide]

Since it takes quite awhile to evict in most places if you stop paying (months to years), they've always got some degree of 'arrears' risk going on.

Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you, since you have the run of the place. At best they can try to lock you up afterwards, but if you do it right it would be nearly impossible to prove.

Having a tenant in possession is always a 'credit' risk.

[FireBeyond]

None of which is 'credit' in the sense of a score. And the fact that you have PM companies doing it as a "value added service", for a fee of course, rather than in the normal course of business also shows how shady this is.

If it's credit, report it. Don't charge people a fee to do so. I'm actually fairly surprised the bureaus haven't forbidden this. And if I was a renter and this was being done to me as a condition of rental I'd be disputing the tradeline.

> they've always got some degree of 'arrears' risk going on.

That's not a default of an extended line of credit.

> Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you

That's your investment risk as a landlord and why you carry insurance, still has nothing to do with my creditworthiness. Like you say, "even by accident".

[lazide]

You are promising to keep paying them x amount of USD per month over time, in exchange for control of the asset and hence them taking on the risk of you trashing the place or that they could find someone willing to pay more during that time.

A loan has a risk to the principal that you’ll not repay it in full. A lease has a risk to the principal that you’ll drive down the value of the property or even destroy it. Same difference, approximately.

Both have the actual cost they’ll be worth less at the end of the term than they were beforehand, due to inflation and wear/tear.

The biggest difference between a loan and a lease is that instead of them giving you x amount of $ directly (aka exclusive control of that money), they’re giving you exclusive or semi-exclusive control of an asset they value at x amount of $.

And that the asset has an address attached to it, and you can live there.

[jowea]

No comment on the fairness, but isn't the system beneficial for good borrowers?