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FICO to incorporate buy-now-pay-later loans into credit scores

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277 points cebert | 5 comments | 24 Jun 25 00:03 UTC | HN request time: 0.898s | source
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PostOnce ◴[24 Jun 25 00:47 UTC] No.44361768[source]▶
Theoretically, credit should be used for one thing: to make more money. (not less)

However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later.

At some point, you run out of hours available and the house of cards collapses.

i.e., credit can buy time in the nearly literal sense, you can do an hour's work in half an hour because the money facilitates it, meaning you can now make more money. If instead of investing in work you're spending on play, then you end up with a time deficit.

or, e.g. you can buy 3 franchises in 3 months instead of 3 years (i.e. income from the 1 franchise), trading credit for time to make more money, instead of burning it. It'd have been nice had they taught me this in school.

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1. msgodel ◴[24 Jun 25 01:49 UTC] No.44362133[source]▶
I tried using one of these offering a 0% intro APR to finance an upgrade to the boat I eventually moved into (saving me 10s of thousands in rent.) They wouldn't let me do it despite having an upper 700s credit score.

It's not clear to me how they pick people to lend to.

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2. tonyhb ◴[24 Jun 25 02:04 UTC] No.44362226[source]▶
It’s not just the credit score - the APR offered is also chosen by the retailer.

0% financing costs the retailer 8%(ish) of the total amount, which is how the lender makes their money.

So in your case, the retailer didn’t want to lose that much of their margin.

3. avianlyric ◴[24 Jun 25 09:52 UTC] No.44364434[source]▶
Yeah a high credit score isn’t what that lender is looking for. They don’t make money of people who actually repay the loans, indeed they tend to loose rather a lot (cost of capital + cost of account admin).

If someone is offering you a 0% APR loan, it’s either because they’re hoping you’ll move your loans to them, and become unable to leave once the 0% period has ended. Or they’re trying to sell something else (either more of something, or the same thing at a higher price), and want use consumer debt to artificially increase market demand.

You upgrading a boat, so you can save money in the long term, is literally the opposite outcome they’re looking for here.

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4. jack_riminton ◴[24 Jun 25 10:08 UTC] No.44364529[source]▶
Exactly. The thing I always have to remind myself: issued loans aren't liabilities for companies, they're assets. Assets need a return!
5. astura ◴[24 Jun 25 11:24 UTC] No.44364957[source]▶
0% intro APR offers are somewhat predatory in that they rely on a large portion of people keeping a balance after the intro period in order to be offered, or at least building a relationship with other financial products. It wouldn't surprise me that they would reject someone in the high 700s, they might have been looking more for people in the low to mid 600s.

There's also a lot of reasons one might be rejected for a credit line that have nothing to do with credit score. Some lenders have specific policies in addition to credit score, like Chase's 5/24 rule. Some are also just looking for "relationships" and won't offer you their best products unless you have a bank account with them, etc.