Why is that insane? Why would a company essentially loan money to people they think are unlikely to pay them back? A £1200 iPhone is certainly not essential when there are serviceable equivalents for < £100 without the need for a contract.
That's a US (and maybe some other countries as well) perspective, but not the same for all countries. e.g. in The Netherlands, your credit report is mostly concerned about how much debt you have (vs capacity to pay) and if you have debts in arrears. I understood historic debt payments don't really factor into it here.
Note that different debts do have different weights. e.g. a car loan for 20k can reduce the limit of your max mortgage by 50k because its a bigger impact on your capacity to pay.
If you have zero credit history, yes, you are risky because what's unknown (including to you) is how your personality interacts with debt and what's known is that you have zero experience managing debt.
I am with you there. But unfortunately, many entities check credit to decide whether they want to rent you an apartment, whether they want to install pre-paid home internet to your house or hire you for a job in many instances.
So my argument is simple, if you want to check my credit to rent me an apartment, then the credit system should use my rent payment to increase my credit score, and this should apply to every bill I pay, be it prepaid or post paid.
The current system incentivizes card swipes for credit cards, not borrowing.
Overall, I cannot fathom how we tied the credit system to something necessary like housing. It’s absurd to think you are fucked out of housing options for 7 years.
2. Taking a huge loan out when you have little prospect of being able to pay it back is a persons own responsibility. I've been in debt, I know lots of people in debt, and in almost all cases it's due to my/their own poor decisions. This conversation changes if you live in the US and experience medical debt (not something we deal with in the UK).
3. Again, depends on your jurisdiction, but housing is typically available in some form (just not ownership) even to people with poor credit ratings.
growing up, this has been my idea and i cannot imagine tying myself "in future" to an item of convenience or luxury if i can't already pay it in cash.
a large part of it comes from the reason that i am not a government employee who traditionally have enjoyed a "get employed and you will get your salary till you die", those people can certainly portion off their salary, future even because there is essentially 0 risk of being let off. OTOH, being a professional with no "assured" income, this is not possible.
i know people, like many who sport a credit card, own a vehicle for the lulz and the "experience" of making heads turn but i can't care less about neighbours idea of me owing or not owing an iphone or a top line car. meh
With that attitude, about 99% of people couldn't ever afford a house because there is no way on saving the cash needed and paying rent at the same time.
Student loans, if that's what you're referring to, are basically 0-risk because they'll either get wiped out by the government at some point, or the person will eventually pay it off within their lifetime; this is helped by how you can't discharge student loan debt in bankruptcy.
