Does anyone else think that credit scores helped cause the financial crisis?

[pundit]

I thought one of the major cause of this financial crises is banks did not pay attention to credit scores and gave loans to people having poor credit scores.
Subprime lending - Wikipedia, the free encyclopedia

[dazzleman]

Misuse of credit scores, rather than the scores themselves, is a big part of the problem.

Credit scores tell you how responsible a person has been with handling past debt. They tell you nothing about whether he/she can afford the loan being applied for.

I have an excellent credit score, but that doesn't mean I can afford anything I want. To issue loans simply based on a person having a good credit score, without looking at how the person can afford the loan, is idiocy. Credit scores are one component of lending, and a legitimate one, but other things have to be looked at also, like ratios of debt service costs to income.

[dazzleman]

Originally Posted by pundit

I thought one of the major cause of this financial crises is banks did not pay attention to credit scores and gave loans to people having poor credit scores.
Subprime lending - Wikipedia, the free encyclopedia

That's another problem. There's more than one issue here.

The subprime loans are an abomination, because they not only went to people with poor credit scores, but also to people who demonstrably could not afford what they were buying.

Lending to somebody with a good credit score who cannot afford what they were buying is a lesser problem, but a problem nonetheless.