this post was submitted on 27 Dec 2025
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[–] halvar@lemy.lol 4 points 11 hours ago (1 children)

well from a capitalist viewpoint credit scores measure how good an investment you are. you are a good investment if you are reliable to pay back your loans at maximum interest. the more likely you are to pay back your loan at exactly the right time (measured by how often you've already done that) the more the banks trust you with their money.

[–] damnedfurry@lemmy.world 2 points 4 hours ago (1 children)

you are a good investment if you are reliable to pay back your loans at maximum interest.

That sentence is correct only if you omit the last three words. The credit reporting agencies don't even know what the interest rate is on a given loan. Also, your credit score goes up from paying a credit card off (i.e. down to a $0 balance) every month, which means you're paying literal zero interest.

[–] halvar@lemy.lol 1 points 1 hour ago

There is some merit to that, probably a better way to say it would be paying back your loans as close to the original terms of the landing as possible. Creditors want certainty.