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The credit reporting system in this country needs to DIAF.
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@valsharess1: Why? I agree that it's sometimes abused by using it for purposes other than its intent (such as employment screening), and that it's sometimes a pain to deal with problems on your report, but I don't see any basic problem with measuring people's risk based on past behavior and reporting it.
@johnva: Because the criteria they use to score you is completely arbitrary. I'm not saying we shouldn't have credit reports, but the way that it is approached here is absurd.
@valsharess1: I don't think they are that \"arbitrary\", though. The basic criteria they use (though not the details) are published and the same for everyone.
@johnva: It's arbitrary in the sense that there is no established reporting standard for credit lenders, so something that might adversely affect your credit from five years ago can still be sitting there making your score lower, but the credit you have been using responsibly the last two years isn't reported accurately. I also don't think it's a good idea to ding my credit report if it gets pulled a few times while I'm shopping for a mortgage. Things like that are arbitrary to me, but it looks like I'm in the minority. *shrug*
@valsharess1: \"Arbitrary\" to me means that they are either randomly treating you differently from other people or coming up with things that have nothing to do with your credit risk to base your score on. I don't think either of those things are true.
I'm not sure what you mean by \"no established reporting standards for credit lenders\"; I guess I haven't encountered that. And older reports DO have much less effect on your credit than newer reports, even though they do still have an effect (as they should). And the home mortgage thing has been changed: now they will count multiple credit pulls by mortgage lenders within a certain timeframe (I think it's like a month?) as if they are all one credit pull. Beyond that, it certainly makes sense that people who are doing a lot of \"credit seeking\" are a higher risk, as there may be a reason for that like financial distress.
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@valsharess1: There are reporting standards for reputable lenders. If you get a loan from a bank they'll make sure the reporting agencies know everything about it.
If you are shopping for a mortgage or car loan they allow you to have multiple look ups within a certain time span without taking a hit.
The reason for that is there are some people that try to accumulate cheap credit by constantly applying for credit cards and loans. If they track when you check your credit report they can flag them as a credit risk.
*shrug*
@snowburnt: That wasn't my experience when I was trying to get our mortgage refinanced last year. I'm not really interested in arguing over it, I just think it's a silly system and I'll keep on thinking that. :)
@valsharess1: I do agree that it's an overly complicated system, but I was just emphasizing that I think it's a bit naive to think that there isn't a good reason (as far as creditors are concerned) for the different metrics that they use.
The flip side is that those metrics should have no use outside of the the lending field and probably shouldn't be used as such. Further, it's pretty disturbing that these databases have become a system of identification and that they're privately held. I'm not sure I really want a government agency holding onto it either, but it's pretty disturbing.
@snowburnt: I agree that it's abusive that credit reports are being used for purposes outside of their intended use. A lot of this is because our government hasn't created a reasonably reliable universal identification system for citizens (beyond SSNs, which are horribly insecure and shouldn't be used for anything other than Social Security), and industry has defaulted to using credit reports because they're a convenient option. I'd rather the government do that and issue me an ID card with smart authentication than have these private companies doing it. Another problem is that unlike in some other places like the EU, the U.S. has very weak personal privacy laws, and businesses are free to buy and sell all kinds of data about us. Personally, I feel that we need strong privacy laws to combat further erosion of our rights caused by businesses trading in our personal information.
@johnva: The US has weak privacy laws but if anyone tries to do anything the ACLU jumps on it...
the 10th amendment is probably the biggest roadblock in getting federal IDs along with the ACLU and privacy issues.
Is it really arbitrary, though? If the criteria line up with default rates, then they're valid (with the exception of criteria that the agencies explicitly aren't allowed to use, i.e. race).
If you've got two groups of people, both with 25% overall utilization, and the group with 50% utilization on half their cards and 0% utilization on the other half has a higher default rate than the group with 25% utilization on all their lines, then utilization concentration is a valid metric.
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@johnva: How about \"it's never easy to deal with problems on your report\" and they make it unecessarily complicated?
@nakedscience: The fact that they feel the need to keep special, carefully vetted \"VIP files\" for politicians and judges -- in other words, people who could actually bring pressure on them to change their policies -- is pretty telling.
@snowburnt: Is it still a conspiracy theory if it's true?
\"Equifax says it handles disputes relating to public figures and court cases with \"additional processing procedures.\" TransUnion declined to provide details on its VIP service, but its employee manual instructs workers to use \"priority processing\" if a letter comes from a \"judge, senator, congressman, government official, attorney, paralegal, professional athlete, actor, director, member of the media or a celebrity.\"\"
[www.smartmoney.com]
If you're someone in a position to bring the hammer down on them, they pay attention to errors in your report. Otherwise, you get the runaround.
Is it still a conspiracy theory if it's true?
You provided a statement as truth, but made a conspiracy theory-esque inference based on that statement.
You can ask a judge or attorney to send a letter on your behalf or, even easier, communicate with your congressman or senator to do it also. Its things like this that they're there for.
I had a problem with my passport (shipping snafu, then a time crunch...long story), one call to my congressman's office and it was resolved overnight.
If you have issues, reach out to them...That's what I gathered from those statements.
@snowburnt: My point is they're making special exceptions for the rich and powerful (and the squeaky wheels who manage to get attention from the rich and powerful) so that they don't have to fix the horribly broken and error-ridden system that the rest of us are saddled with.
@David Brodbeck: Name one thing (business, organization, person...) who doesn't make an exception for the \"rich and powerful\".
@David Brodbeck: How are professional athletes, actors, directors, or celebrities in a position to \"bring the hammer down on them\" (as opposed to judges or politicians)? Maybe those people are just more likely to be targets of identity theft, etc because of their net worth and notoriety.
But I agree that it's kind of unfair that they wouldn't use the same procedures for everyone. That should be regulated. It doesn't mean that the idea of credit reporting should be tossed out or anything.
@johnva: Celebrities can bring a lot of political pressure in the form of unwanted public attention.
@nakedscience: The inaccuracy thing I agree with, and I would support reform on that. Otherwise, I think it's fine.
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So much for balance-transfer hopping.
@winshape: Na Balance transfer hopping is the greatest scam consumers have no the credit card companies, they charge some nominal fee and you get 0% interest in the end you could balance-transfer for your entire life and never pay for your debt..... if you wanted.