this post was submitted on 18 Aug 2023
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You dont need a credit score to borrow money. I own crypto that i can borrow against as collateral for a loan. Plus i can keep it out forever as long as i pay at least the interest payment. I obviously dont do that, but i could. You do have to be careful with borrowing from crypto or stocks since they fluctuate and you could get liquidated, but i am allowed to borrow up to 70% of the face value and i have a personal cap of 35% so i never run into that.
You essentially just said "I have money to borrow money against".
If you had an account with $100k and can borrow up to $70k against it, that isn't really taking out a loan as it is just borrowing your own money.
Your argument essentially boils down to "just don't be poor". The people who need credit and to borrow money are those who don't have the collateral to spend it otherwise.
You're just essentially advocating for what rich people like Elon musk do. Take out loans against their stocks so they don't actually have to liquidate their stocks to get usable cash.
What do the people who don't have money do?
Dont borrow money. About the worst thing you can do is go into debt
The car I need to go to work? Was I suppose to be born with 3-15K for that car? The House I want to buy. guess I just need to dig though the laundry for that 500K I left in my pants pocket?
I am all about not going into debt but often times it is a necessary evil.
Ah, we are thinking different debts. A car is like 7% and a house is like 5%. I am talking credit cards at 20-25% as being the real problem. If you have assets like stocks or crypto and need to replace the water heater you can get $500 at 6% instead of the 20% you would pay on a credit card. $1000 is enough to borrow $500 and be at 50% utilization, though $1600 would be better since that would only be 30% utilization. Plus you get to keep the interest bearing asset while younpay the loan off which you could use to lower your paid out of pocket interest even farther.
Doesn't your credit score affect the type if interest you will get even on an assets lone? My understanding at least in the US credit scores affect basically all credit lines. That is why they recommend getting a credit card to help built you score. As long as you pay it off every month it is basically free use of someone else's money. That builds up your credit score.
Yeah, if you are borrowing from stocks your credit score is a factor. However, the APR will still be way lower than any CC. With a crypto loan like i use no credit score is needed at all, just the assets to borrow from.