Credit score doesn’t determine how much you can borrow, the lender’s interpretation of the score does. They can literally just do this, with no changes to any laws.
Now, if that’s true…
Then excluding medical debt doesn’t do anything because credit score doesn’t matter…
Credit scores are just a metric used by lenders.
A metric to…
Determine how much to loan someone
They decide what it means to them, and the whole point is to avoid offering loans to people who are likely to default on them.
No, the goal is to make money. As much money as possible. You do that by loaning as much as possible. If they default, the lender gets the house and what you paid, an even bigger profit because they can sell the house again.
No don’t just think of it as a single home, approving people for higher mortgages raises the entire housing market, we all pay more, and that makes lenders hundreds of millions of dollars more in interest…
Like, c’mon man, can you really not get this?
I legitimately can’t spell it out any better, I’m sorry, but that was my last hailmary
I legitimately can’t spell it out any better, I’m sorry, but that was my last hailmary
Then you really should take some more classes 🤪
A lender only has so much money, and they can lend that money to anyone. If someone defaults on a loan, the lender experiences a relatively large opportunity cost, as additional funds, effort, and time are required for any repo or garnishing - and in the end, it’s quite rare to actually recoup it all. If they had lent that money to someone else, they could have gotten all the money without any additional cost.
It gets more complicated in the middle - someone who pays extra and on time won’t make nearly as much as someone paying minimums.
Now, if that’s true…
Then excluding medical debt doesn’t do anything because credit score doesn’t matter…
A metric to…
Determine how much to loan someone
No, the goal is to make money. As much money as possible. You do that by loaning as much as possible. If they default, the lender gets the house and what you paid, an even bigger profit because they can sell the house again.
No don’t just think of it as a single home, approving people for higher mortgages raises the entire housing market, we all pay more, and that makes lenders hundreds of millions of dollars more in interest…
Like, c’mon man, can you really not get this?
I legitimately can’t spell it out any better, I’m sorry, but that was my last hailmary
Then you really should take some more classes 🤪
A lender only has so much money, and they can lend that money to anyone. If someone defaults on a loan, the lender experiences a relatively large opportunity cost, as additional funds, effort, and time are required for any repo or garnishing - and in the end, it’s quite rare to actually recoup it all. If they had lent that money to someone else, they could have gotten all the money without any additional cost.
It gets more complicated in the middle - someone who pays extra and on time won’t make nearly as much as someone paying minimums.