As I understand it, credit is essentially a North American phenomenon (maybe anglosphere). The rest of the world (and formerly, America too) bases loans on income, assets, and current debts. Not some ephemeral number cooked up by how much money via interest you're likely to give to the issuer of the loan.

Let's say you're rebuilding your credit for whatever reason. You take out a recovery-level credit card with a, say, $20/mo fee. You make some purchases and pay them in full. SURPRISE! Your credit score doesn't go up. If you'd paid off only the interest, that gets your score up higher.

So you do that for a while until your score gets up to a level where you can geta new card with no monthly fee. So you pay off the principle on that first card and close it out. SURPRISE! Your score now goes down because you've closed an account.

So you keep paying that $20/mo for the rest of your life instead, and continue building your credit until you can get a car loan. You keep going until you can get a much higher paying job (since some employers check your credit score because fuck you that's why). So you pay the car loan off in full two years early. SURPRISE! Your credit score goes down because you didn't pay all that tasty interest to the lender.

So you pay more for the car over time plus $20/mo for that first credit card you don't even use anymore because you've got to keep that number that defines your worth as a human being up.

So on and so on because kowtowing to this arcane system makes your life easier than stepping back and simply saying, "Hey, doesn't this shit just not make any sense? Like, wouldn't impoverished people be less likely to pay back loans the more expensive you make it? Isn't that just a feedback loop?

"Aren't the people with the high credit scores just the people who have the most outstanding loans? Isn't that just a huge house of cards that'll collapse with one missed paycheck, ruining their precious credit and starting the whole process anew?"

But nah, just keep that ol' hamster wheel spinning. Because look at all the stuff you can't afford that you get. You'll never lose your job.

Sorry for that whole off topic tirade there. But it irks me when people defend the credit rating system as if it's some sort of universal truth with no alternative historically, or presently elsewhere in the world. As I see frequently on reddit, even some places in this comment thread.

Credit rating isn't so much if you can afford something given time to pay it back. That'd be assets, income, and current debts.

Credit is if lenders can make a lot of money off of you. If they can lend you enough money that you can't pay off the principle in your working life, that's ideal as long as you keep making the interest payment. And the more likely that is, the higher your credit score.