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It's a shady and powerful system. The logic goes something like this: the credit reporting agencies simply provided facts (reported to them by others) to the m

It's a shady and powerful system. The logic goes something like this: the credit reporting agencies simply provided facts (reported to them by others) to the mortgage company, who made their own decision about your creditworthiness. Who is at fault in your situation? The mortgage company? No, they took your report at face value and then made their own decision. The reporting agencies? No, they just barf back data fed to them by individual creditors and run it through their arbitrary algorithm. The individual creditors? Perhaps, or maybe they sent an accurate report but somewhere along the line two numbers in an SS# got flipped (innocent mistake) and now you're carrying someone else's bad credit. Scores of companies each have these tiny slices of responsibility, making it really hard to pin one actor with all of it (ie, to name a defendant). The incentives are perverse. The worse your score the more expensive to borrow. Best case for a lender is to have a customer who should have a high credit score but doesn't because of mistakes like these -- you get the credit risk of a AAA borrower, but can charge subprime rates. Best of both worlds.

toomuchtodo 11y ago
> Who is at fault in your situation? The credit agency. If they're reporting inaccurate information, that they haven't verified, that's libel. This is something the CFPB [+] needs to clamp down on hard. [+] http://www.consumerfinance.gov/ http://www.consumerfinance.gov/
- deleted 11y ago
  [deleted]
- Domenic_S 11y ago
  I'm no lawyer, but I have a hard time imagining a successful libel suit here. I would guess the reporting agencies have some set of terms & conditions that say something to the effect of "You (the reporter) certify that this report is true and correct to the best of your knowledge". I mean, come on -- they're aggregators. They can't go investigate every single report they get; they have to depend on reporters to tell the truth. Importantly, the reporting agencies do not make claims of creditworthiness about you. They present your "credit history" (accurate or not) and the lenders themselves make their own determination. It's an awful catch-22.
  - jedberg 11y ago
    > agencies do not make claims of creditworthiness about you. Which is a load of crap. They present a number and even say "above 750 is excellent". It's in their own marketing materials. How is that not making a claim of creditworthiness?
    - Domenic_S 11y ago
      Ok, you may be technically correct. Experian, for example, says "Higher scores represent a greater likelihood that you'll pay back your debts so you are viewed as being a lower credit risk to lenders." Even so, lenders still decide what to do with that information. Some credit cards may approve you at a 500 score. Others may not. Many lenders will tier your rate based on score. Ultimately the decision of whether or not to extend credit and what rate you get is up to the lender.
      - toomuchtodo 11y ago
        > Even so, lenders still decide what to do with that information. Some credit cards may approve you at a 500 score. Others may not. Many lenders will tier your rate based on score. Ultimately the decision of whether or not to extend credit and what rate you get is up to the lender. If you're providing factually incorrect information on a person, that someone is then going to make a financial decision around, you should be held liable if your business is to provide factual information on someone regarding the credit worthiness. Unless we're just going to say that credit agencies have no requirement to verify the data they collect. In that case, let's just rule them illegal through legislation and allow them to dissolve (most of the first world does not have credit agencies for consumers).
        jedberg 11y ago
        > most of the first world does not have credit agencies for consumers Interesting, I didn't realize that. How does credit work where they don't have the agencies? Like if I want to buy a house in Germany or get a credit card in France, does the bank just do all their own research?
- pc86 11y ago
  > If they're reporting inaccurate information, that they haven't verified, that's libel. No it's not, even a little. They are under no legal obligation to independently verify every piece of data sent to them. In fact, the #1 easiest way to remove a negative mark on your credit is simply to request documentation validating the debt. Even with legitimate debts it's not a foregone conclusion that they will provide any verifying documentation within the required time frame.
  - toomuchtodo 11y ago
    > No it's not, even a little. They are under no legal obligation to independently verify every piece of data sent to them. Verify what they receive about you? Sure, don't verify all of the data. Verify the data they're publishing about you? Yes, they do.
jedberg 11y ago
> the credit reporting agencies simply provided facts (reported to them by others) to the mortgage company, who made their own decision about your creditworthiness. That's not true. They reported the information, and a number they came up with on their own. That's new information they created. It is their responsibility to verify any data they use to create that rating.
- falcolas 11y ago
  They didn't necessarily create a number - in my experience working with a company who implemented and ran automated credit checks against business criteria, few companies actually pull your FICO; they simply create their own number from the data provided by the credit unions. Your FICO score costs money to pull, which is why it's not an actual part of the credit report.
- Domenic_S 11y ago
  The number is their arbitrary summary of the "facts" contained in the report for easy digestion. If you feed in the same facts to the algorithm over and over, you'll get the same number over and over. Notably, the number has no intrinsic value -- every lender everywhere uses it to score creditworthiness, yes, but it's the lenders who do that. The agencies give them a number and say "do what you will with this information." I'm the first in line to say the system is horribly broken. I spent years cleaning up inaccuracies on my reports in order to buy a house. Credit reporting is opaque, unfair, and inaccuracies are nearly impossible to correct. It's what makes me wary of automation controlling everything -- manual underwriting used to be a thing, but now almost all of it is automated based on arbitrary numbers and reports that may or may not be true, with no good way to ensure accuracy.
  - presidentender 11y ago
    > every lender everywhere uses it to score creditworthiness SoFi doesn't.
Navarr 11y ago
I think it's pretty clear that it's the reporter who is at fault. Your only defense is that it might be a mistake on their part - but that still puts them at fault. Possibly legally too? IANAL

toomuchtodo 11y ago

> Who is at fault in your situation? The credit agency. If they're reporting inaccurate information, that they haven't verified, that's libel. This is something the CFPB [+] needs to clamp down on hard. [+] http://www.consumerfinance.gov/ http://www.consumerfinance.gov/

deleted 11y ago
[deleted]
Domenic_S 11y ago
I'm no lawyer, but I have a hard time imagining a successful libel suit here. I would guess the reporting agencies have some set of terms & conditions that say something to the effect of "You (the reporter) certify that this report is true and correct to the best of your knowledge". I mean, come on -- they're aggregators. They can't go investigate every single report they get; they have to depend on reporters to tell the truth. Importantly, the reporting agencies do not make claims of creditworthiness about you. They present your "credit history" (accurate or not) and the lenders themselves make their own determination. It's an awful catch-22.
- jedberg 11y ago
  > agencies do not make claims of creditworthiness about you. Which is a load of crap. They present a number and even say "above 750 is excellent". It's in their own marketing materials. How is that not making a claim of creditworthiness?
  - Domenic_S 11y ago
    Ok, you may be technically correct. Experian, for example, says "Higher scores represent a greater likelihood that you'll pay back your debts so you are viewed as being a lower credit risk to lenders." Even so, lenders still decide what to do with that information. Some credit cards may approve you at a 500 score. Others may not. Many lenders will tier your rate based on score. Ultimately the decision of whether or not to extend credit and what rate you get is up to the lender.
    - toomuchtodo 11y ago
      > Even so, lenders still decide what to do with that information. Some credit cards may approve you at a 500 score. Others may not. Many lenders will tier your rate based on score. Ultimately the decision of whether or not to extend credit and what rate you get is up to the lender. If you're providing factually incorrect information on a person, that someone is then going to make a financial decision around, you should be held liable if your business is to provide factual information on someone regarding the credit worthiness. Unless we're just going to say that credit agencies have no requirement to verify the data they collect. In that case, let's just rule them illegal through legislation and allow them to dissolve (most of the first world does not have credit agencies for consumers).
      - jedberg 11y ago
        > most of the first world does not have credit agencies for consumers Interesting, I didn't realize that. How does credit work where they don't have the agencies? Like if I want to buy a house in Germany or get a credit card in France, does the bank just do all their own research?
pc86 11y ago
> If they're reporting inaccurate information, that they haven't verified, that's libel. No it's not, even a little. They are under no legal obligation to independently verify every piece of data sent to them. In fact, the #1 easiest way to remove a negative mark on your credit is simply to request documentation validating the debt. Even with legitimate debts it's not a foregone conclusion that they will provide any verifying documentation within the required time frame.
- toomuchtodo 11y ago
  > No it's not, even a little. They are under no legal obligation to independently verify every piece of data sent to them. Verify what they receive about you? Sure, don't verify all of the data. Verify the data they're publishing about you? Yes, they do.

jedberg 11y ago

> the credit reporting agencies simply provided facts (reported to them by others) to the mortgage company, who made their own decision about your creditworthiness. That's not true. They reported the information, and a number they came up with on their own. That's new information they created. It is their responsibility to verify any data they use to create that rating.

falcolas 11y ago
They didn't necessarily create a number - in my experience working with a company who implemented and ran automated credit checks against business criteria, few companies actually pull your FICO; they simply create their own number from the data provided by the credit unions. Your FICO score costs money to pull, which is why it's not an actual part of the credit report.
Domenic_S 11y ago
The number is their arbitrary summary of the "facts" contained in the report for easy digestion. If you feed in the same facts to the algorithm over and over, you'll get the same number over and over. Notably, the number has no intrinsic value -- every lender everywhere uses it to score creditworthiness, yes, but it's the lenders who do that. The agencies give them a number and say "do what you will with this information." I'm the first in line to say the system is horribly broken. I spent years cleaning up inaccuracies on my reports in order to buy a house. Credit reporting is opaque, unfair, and inaccuracies are nearly impossible to correct. It's what makes me wary of automation controlling everything -- manual underwriting used to be a thing, but now almost all of it is automated based on arbitrary numbers and reports that may or may not be true, with no good way to ensure accuracy.
- presidentender 11y ago
  > every lender everywhere uses it to score creditworthiness SoFi doesn't.

Navarr 11y ago

I think it's pretty clear that it's the reporter who is at fault. Your only defense is that it might be a mistake on their part - but that still puts them at fault. Possibly legally too? IANAL