Why The American Credit System Is So Terrible

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In America, more than in any other country in the world, three numbers can change just about everything. From your job, to your home, to your insurance, three digits can command where you can live, what you can buy, and what it’ll cost you. To most Americans today, this is just “the way it is,” but that idea, and the idea behind credit scores in general, is deeply complicated, discriminatory, and rooted in a long history of our financial system driving an ever bigger wedge between the rich and the poor.

In this episode, we’re looking at credit scores. We’re going over everything wrong with our modern credit reporting system, how you might hear people defending this broken metric, and the why and the how that landed us here.

Why The American Credit System Is So Terrible – Second Thought

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Citations And Further Reading:
Credit Scores, Neoliberalism, and Class Systems

Credit Racism

Redlining and Market Logic

A Third of Americans Have Errors on Their Credit Report

52% Credit Medical Debt Stat

Paying Off Loans Early Hurts Your Credit Score

August 2001 Excerpt from “The Banker”

Short Description of Credit Unions

China Social Credit System

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34 Responses

  1. PepStep says:

    I love your videos but you cannot be talking about the evils of capitalism and then accept and advertise audible to us, which is a subsidiary of amazon..

  2. Jose Ochoa says:

    maybe its the u.s, thats poor.

  3. Jose Ochoa says:

    so your saying poor people cant get credit without being charged is unfair? I see now.credit is being used for profit not freedom.

  4. Kevin Gorissen says:

    $28.35 for the Communist Manifesto audiobook? Ché T-shirt vibes

  5. Random Avenger says:

    And they said tha Social Credit system doesn't exist in America…

  6. Moon Woman Studios says:

    It's also ableist

  7. Laura Smith says:

    Despite the fact that I was raised in multi generational poverty, had parents who denied me medical treatment for severe mental health issues and autism and did many things that actively made my mental health issues worse, was kicked out of my parents’ home at 19 after not being allowed to attend college because my parents refused to submit their financial information to the government so I could get any kind of funding to be able to attend, republicans will still look me in the eye and say everything bad that has happened to me was my fault. I’ve had it happen. Which one of those issues did I create myself?! I had to seek my own mental health care once I legally could because I couldn’t even do school work while at school my mental health was so severe. I applied for colleges, got accepted to some, just to have it all crumble in front of my face as I couldn’t fill out the FASFA because they require your parents’ financial information until the age of 24. What was I supposed to do? Without filling out the FASFA, I had no access to student loans or any other college funding. I had no savings because my parents took any money I ever had. Like holy cow, I can only do so much before everything is out of my control. I didn’t chose where or who I was born to. I didn’t have a choice on being autistic or severely mentally ill.

    It’s honesty just a complete lack of empathy to think everyone has an equal chance in this country.

  8. kurisu3000 says:

    As a black man, I constantly ask myself "Why do I STILL choose to live here?"

  9. its ya boi says:

    I'm curious how Second Thought feels about Chinas social credit system. I'd like a video on that.

  10. john clark says:

    One thing I see a lot is people saying their credit score dropped after paying off their car loan and it’s actually because credit variety is a component of the score. If you paid off the only installment credit you had, you then may only have revolving accounts so in that moment your score may drop. Installment credit is a fixed payment that creditors can use to determine consistency and financial health vs the variable nature of credit cards where you can be nearly maxed out but paying the minimum pmt usually just 1-3% of the outstanding balance.

    It’s definitely not a good system because it’s been perverted to prey on those with the least means, but with a stronger social safety net (M4A / UBI types) combined with general education on how it works I think it could be good overall. The challenge is, can this exist within a Capitalist structure or will there just be another device dreamed up to undermine any progress inevitably?

  11. Mic Supreme says:

    Getting penalized for paying of ur mortgage early..so dumb

  12. Voiced Thoughts says:

    Credit scores are a very terrible system, paying your phone bill, electric, gas, water or whatever won't help you but miss a payment and it's tanking your score. Get into an accident and can't afford the ridiculous medical bill, credit score is tanked which takes all of one mistake and it will take you years upon years to fix it keeping you in poverty because can't get anything decent with a bad credit score. Apartments, houses, phone plans and even utilities (sometimes) use your credit score and that means higher security deposits or intrest rates or just flat out being denied.

  13. Greg C says:

    I wanted to watch a video on credit scores and I get a video by a bleeding heart liberal talking about race, lol.

  14. N Honda says:

    The Banker article is exactly the credit card companies giving well off (“responsible”) members who pay off their balance every month (ironically “the deadbeats”) juicy benefits for affordable or zero annual fees at the expense of (1) high margin transaction fees from the vendors and probably the worser (2) high interest/penalties on the poorer folks.

  15. Jon Wroblewski says:

    I got a credit score company advertisement on this video….

  16. tjuyftutjyfudt says:

    Yes credit is terrible

  17. Corey Seet says:

    I never once supported this stupid system but here we are. People have been telling me for 20 years now that I HAVE to have a credit score and/or a credit card to buy any major expense when that's not the case, but nobody ever believes me. Even my own parents still don't believe me when I've bought all my cars in cash and I have my own place. THE VERY TWO THINGS THEY SAY YOU NEED CREDIT FOR

  18. JC Gonzalez says:

    I am 36 was born in Mexico live in the USA. I don’t have a fancy job but I am very responsible with my money. My credit score is 833.

  19. Полковнік КОНС-а и Сєрбскога Народа says:

    Social credit system: US edition.

  20. ferarzo says:

    Immoral system…

  21. ferarzo says:

    This channel is amazing

  22. sistakia33 says:

    Got a family member that files bankruptcy every seven years! My question: How does she keep getting credit?

    Meanwhile JCPENNEY accused me of filing bankruptcy in 1951 before my mother was born) and refused to give me a card!

  23. Thomas Luedke says:

    I think it's kind of bad faith to criticize a credit score system when you probably don't even believe that credit itself is ethical. It would be like a vegan making a video about why sous vide is a bad way to cook steak.

  24. gustavo hermandio says:

    so im gonna answer your question : 7:35 : staying healthy is a personal responsibility. not getting hurt is a personal responsibility. if you break your leg while mountain biking or smoke all your life, its on you. not taking care of yourself and risking to die suddenly is certainly a red sign. its not 100% out of your control like you try to convince people of.
    from 8:47 to 9:10, you really show that you understand why your whole premise is wrong.

  25. Lawrence Cisek says:

    Chinas system is where we are headed. And it is dystopian.

  26. Lawrence Cisek says:

    I would never argue the point that the Credit Scoring shackling of Americans. But understand that easy credit is the root of the problem. We are headed to a cashless society.

  27. Lon Brooklyn says:

    Truly poor shouldn't have credit cards!

  28. Robert Peterson says:

    What I don't understand is how my credit scores varies significantly through all these sites giving out free credit scores (e.g., banks). One would say my score is 824 and then another would say it is 750. How can you find your true actual credit score?

  29. That random Guy on the internet says:

    So a system similar by the same system that led to the collapse of Yugoslavia

  30. Robert Peterson says:

    @13:05 – and that is true because I paid off my mortgage a few years ago and my score stayed the same for a while. No change in use of credit cards, etc that would make a significant difference. But I noticed that over the last two years, my score has gone down and I have done nothing to lower that score. Meaning my habits and ability to pay my bills on time and keep my end of the score solid. I checked my score and they say my score is impacted because I do not have a loan like a house and/or car.

  31. MangoGo says:

    Well in my country the size of loan depends on how much you earn and how high is your rent relative to what you earn. You also can get a good deal when your employer has a deal with a bank lowering interest rate up to 2%
    Edit: credit score system is ok when you use it for giving loans, not when it's about employment/rent, wow

  32. belle says:

    also nobody ever mentions this but the credit system is also ableist!!! Disabled people have more medical issues more regularly to worry about, they spend more money on medical care, and if someone is neurodivergent and has executive functioning issues then the ENTIRE process of paperwork and making several payments on a deadline is literally harder or nearly impossible! Abled people don’t need to worry about this as much

    also the chinese social credit jokes you’ll often see in comment sections are incredibly racist. it undermines the agency of and infantilizes asians, and is a dismissal of everything we say.

  33. Em D says:

    Love how this channel is pro socialism but he's monetized with ads and sponsors. Cut it off at its source, bro, don't feed the monster!

  34. Gustavo Aragon says:

    And this is why i don't play this credit none sense. I love the fact i have no credit cards,car loans and mortgage to worry about. I save and buy my stuffs.

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