this post was submitted on 17 Jul 2025
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It's reasonably common in the developed world. And it's a good idea that lenders be able to easily know how responsible borrowers are with repayment. That the US' implementation of credit scores is problematic in some areas shouldn't be used as a blanket dismissal of a credit scoring system.
The US credit score system is from the 60's. Things worked just as well before it existed...
This is technically true but extremely deceptive if you don't know the history. From "Creditworthy: A History of Consumer Surveillance and Financial Identity in America" (Lauer, 2017; Columbia University Press):
Chapter 3: "By the late 1890s systems for evaluating the credit risk of individual consumers existed in metropolitan centers throughout the United States."
Chapter 4: "During the early twentieth century millions of Americans came under the watchful gaze of newly formed credit bureaus. But these bureaus were only one arm of the emergent consumer credit apparatus. Their counterpart was the credit department of individual stores, where credit managers interviewed, documented, and tracked customers for their own benefit and that of the local bureau."
Credit reporting has existed for a very long time in the US. So while a computerized score wasn't there until the late 1950s (basically as soon as such a computerized score could exist, underscoring how eager banks were to implement it), your comment being technically true has no real impact on the argument of the merits of credit scoring.
From Wikipedia about the history of Equifax:
People latch onto the fact that credit scores were invented and ignore decades of credit reporting prior.
before, bankers used other ways to discriminate, such as (and if you know anything about US history this should not be a surprise) being Black.
not to defend credit scores. they suck. but what existed before sucked too and we shouldn’t go back to them.
Redlining still happens today. They just discriminate in more ways now.
I didn't think it started in the US until the late 80's.
The modern version we know is from the late 80s.
i think that article describes many different systems and grouping them under a concept that's not necessarily related. the us system is definitely an odd man out.
How so? They all seem to be used for estimating risk when pricing a loan and are based on financial history.
the big difference i can see is that most systems described seem binary. if you don't pay your debs, you get a strike. the american system, as i had it explained to me, is based on cash flow, so you need to have debts to pay in order to get a good score.
Not unique to the US, we have the same thing here in Canada
the uk also has something similar. which makes sense.
They want an established history showing you pay things you've agreed to pay. I've never made a lot of income, but I've always paid my bills on time, so even with a smaller cash flow I still have great records of always making sure I have enough to pay what I'm expected to pay, so I'm seen as reliable to any possible debtors.
Most of them mention a range of scores. China and India use scores which by themselves give about 3 billion people with credit scores based on statistical modeling.
A lack of cash flow is a lack of financial history which makes one less predictable and therefore riskier which lowers your score.