There are some benefits, but it does complicate the transaction significantly. It's no longer between two parties (a consumer and a merchant), there are now at least two more: a lender and a credit bureau.
And that's why we're in this mess to begin with. Credit card transactions are reported to credit bureaus (from a quick web search, it looks like debit card transactions aren't) and this normalizes the idea that your financial data should be shared freely amongst finance companies.
There's really no such thing as a free lunch, or a free loan. When someone offers you one, it's good to understand how you're going to be paying for it.
> It's no longer between two parties (a consumer and a merchant)
A cash transaction is between 2 parties. A debit card transaction is between 5: consumer, consumer's bank, merchant, merchant's bank, payment network/card provider.
Credit reporting makes getting loans easier because lenders are more willing to give loans when they can look up your credit rating instead playing it safe and declining you because they have nothing to judge the risk with.
You also get fraud protection.
It’s not free, but you’re not necessarily paying for it. The main concern is that some people are definitely paying for it disproportionally more than others.
I would disagree, as things stand, getting a loan is easier if you have a good credit rating, but it is a deformation of the space.
If there was no credit reporting, the lender would still need to loan just as much. They would base their decisions on other factors (down payment, wages, employ stability, assets, ...) rather than the extremely invasive credit rating.
And that's why we're in this mess to begin with. Credit card transactions are reported to credit bureaus (from a quick web search, it looks like debit card transactions aren't) and this normalizes the idea that your financial data should be shared freely amongst finance companies.
There's really no such thing as a free lunch, or a free loan. When someone offers you one, it's good to understand how you're going to be paying for it.