5 ms·

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

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?
      - toomuchtodo 11y ago
        I don't want to generalize too much, but yes, the lender does the majority of the legwork in other countries.
        germanier 11y ago
        I don't know about most other countries but both France and Germany do have credit scoring agencies. The difference is that it mostly deals with negative entries, i.e. you don't build credit by repaying loans but rather by never falling behind on your payment schedule (the German system uses a few additional factors). Banks usually don't care if you ever successfully repaid a loan nor do they ask that question. I don't know what US banks do apart from getting a credit score if somebody applies for a loan but I don't assume it's much less than banks do here: Assessing your income stability and looking at your large fixed expenses. I also don't think there are any, say, OECD countries without such credit scoring agencies.
    - Domenic_S 11y ago
      Their business is to aggregate what others have told them. It's consensus + automation at its purest. If you have a lot of different companies saying you've been a good boy for a long time, you get a high score. If a couple companies say you're garbage (true or not) you get a bad score. The agencies simply aggregate this information. I guess a lender could cut out the middleman and call each of your previous lenders themselves, but who's to say the result wouldn't be the same (+ the added cost of having to do that). Conceptually I have no disagreement with you, and I'm certainly no reporting agency apologist. I spent a lot of time on my own report correcting an unfortunate combination of youthful indiscretion and erroneous reporting and I guess I realized that the rage is wasted. There's just no one place to pin the blame, the whole thing is a complex system (intentionally) with perverse incentives (intentionally) and you can either play the game or resign yourself to a life of credit denials. I hate it too, but I can't see a better way that serves the same scope and scale at the same price. The only place to fight, I think, is 1) for better corrections process, and 2) penalties for companies that incorrectly report.
- rlucas 11y ago
  You are lumping together a number of players under "they." The number itself typically comes from Fair Issac -- who traditionally sold a black box algorithm to project a multidimensional vector onto a single scalar. The data itself comes from a Credit Reporting Agency, who lumps together payment histories and public records. That data in turn came from creditors and public sources. I'll happily agree, though: the entire keiretsu benefits from the general public thinking it all sort of just happens and is authoritative and predictive in that single scalar.
TheOtherHobbes 11y ago
There have been cases in the UK where individuals have successfully sued a lender and/or collection agency because inaccurate or questionable credit records generated costs and/or inconvenience for them. I'm not aware of any cases where the agencies themselves have been sued.

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?
    - toomuchtodo 11y ago
      I don't want to generalize too much, but yes, the lender does the majority of the legwork in other countries.
      - germanier 11y ago
        I don't know about most other countries but both France and Germany do have credit scoring agencies. The difference is that it mostly deals with negative entries, i.e. you don't build credit by repaying loans but rather by never falling behind on your payment schedule (the German system uses a few additional factors). Banks usually don't care if you ever successfully repaid a loan nor do they ask that question. I don't know what US banks do apart from getting a credit score if somebody applies for a loan but I don't assume it's much less than banks do here: Assessing your income stability and looking at your large fixed expenses. I also don't think there are any, say, OECD countries without such credit scoring agencies.
  - Domenic_S 11y ago
    Their business is to aggregate what others have told them. It's consensus + automation at its purest. If you have a lot of different companies saying you've been a good boy for a long time, you get a high score. If a couple companies say you're garbage (true or not) you get a bad score. The agencies simply aggregate this information. I guess a lender could cut out the middleman and call each of your previous lenders themselves, but who's to say the result wouldn't be the same (+ the added cost of having to do that). Conceptually I have no disagreement with you, and I'm certainly no reporting agency apologist. I spent a lot of time on my own report correcting an unfortunate combination of youthful indiscretion and erroneous reporting and I guess I realized that the rage is wasted. There's just no one place to pin the blame, the whole thing is a complex system (intentionally) with perverse incentives (intentionally) and you can either play the game or resign yourself to a life of credit denials. I hate it too, but I can't see a better way that serves the same scope and scale at the same price. The only place to fight, I think, is 1) for better corrections process, and 2) penalties for companies that incorrectly report.
rlucas 11y ago
You are lumping together a number of players under "they." The number itself typically comes from Fair Issac -- who traditionally sold a black box algorithm to project a multidimensional vector onto a single scalar. The data itself comes from a Credit Reporting Agency, who lumps together payment histories and public records. That data in turn came from creditors and public sources. I'll happily agree, though: the entire keiretsu benefits from the general public thinking it all sort of just happens and is authoritative and predictive in that single scalar.

TheOtherHobbes 11y ago

There have been cases in the UK where individuals have successfully sued a lender and/or collection agency because inaccurate or questionable credit records generated costs and/or inconvenience for them. I'm not aware of any cases where the agencies themselves have been sued.