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My point is that certain borrowers will lose out if the lender can't be specific in their assessment - see the paragraph following that quote about how some bor

My point is that certain borrowers will lose out if the lender can't be specific in their assessment - see the paragraph following that quote about how some borrowers will win and some will lose. > I'm not convinced of the objectivity or desirability of perfect economic efficiency in credit allocation. There's plenty of evidence to suggest the information asymmetry will be abused by unscrupulous corporate actors. Interesting. There are certainly plenty of flaws with credit. A big one for me is that consumers often don't act in their own long term interests and get into too much debt. Another one is that credit is inflexible (compared to equity) when things go bad, and has a tendency to cause crashes. Both of these are a challenges to economic efficiency. On the other hand, I'm not sure about the benefit of reducing the information that lenders have. I'd be interested to hear your point of view.

wfo 9y ago
>see the paragraph following that quote about how some borrowers will win and some will lose. So, no change? https://www.nytimes.com/2016/07/19/business/dealbook/race-strongly-influences-mortgage-lending-in-st-louis-study-finds.html https://www.nytimes.com/2016/07/19/business/dealbook/race-st... Centralized credit scores can be gamed, easily, helping those who are inclined to game them -- these are currently the "winners". Taking out a debt for no reason and then paying it back on time is a stupid economic decision, but it's great for your credit score. The minimal increase in efficiency that comes from lenders having all this often incorrect, unaccountable private information about borrowers must be balanced against the damage the big 3 do as well as the damage lenders can do by exploiting the aforementioned information asymmetry it gives them. It comes up pretty short in my view.

wfo 9y ago

>see the paragraph following that quote about how some borrowers will win and some will lose. So, no change? https://www.nytimes.com/2016/07/19/business/dealbook/race-strongly-influences-mortgage-lending-in-st-louis-study-finds.html https://www.nytimes.com/2016/07/19/business/dealbook/race-st... Centralized credit scores can be gamed, easily, helping those who are inclined to game them -- these are currently the "winners". Taking out a debt for no reason and then paying it back on time is a stupid economic decision, but it's great for your credit score. The minimal increase in efficiency that comes from lenders having all this often incorrect, unaccountable private information about borrowers must be balanced against the damage the big 3 do as well as the damage lenders can do by exploiting the aforementioned information asymmetry it gives them. It comes up pretty short in my view.