3 ms·

I'm curious, in what sense do you mean "Credit reporting agencies" in the USA sense aren't really a thing in EU"? I've lived in both the UK and USA and used cr

by giobox 8y ago

I'm curious, in what sense do you mean "Credit reporting agencies" in the USA sense aren't really a thing in EU"? I've lived in both the UK and USA and used credit products in each, and your access to such credit appears to me almost entirely determined by a handful of credit reporting agencies "scores" in both countries in a pretty similar way. Heck it's even often the same company - Equifax (one of the largest) operate in the UK as well.

PeterisP 8y ago
There are many differences; it's hard to generalize because each EU country is different (there's no harmonization for this, and there are major differences especially along the "ex-Warsaw-Pact" border; half of EU had their whole financial system [re]built in 1990s), but you'll often see the following differences: 1) There's no "EU score", each lending market is somewhat separate. Past history in one location may or may not influence your score in another location. 2) Instead of a general/universal "credit score" calculated by an agency, there's often a concept of "credit history" which (depending on the country) may or may not list the amounts of existing loans, of previous loans, and history of late payments. The difference being that instead of lenders getting a score calculated by some agency, the lenders get the data and make their own decision, with possibly very different opinions on which factors are important. Not everywhere, of course, some countries (e.g. UK or Nordics) are more like USA. 3) The process tends to be highly regulated. If you're providing factual data as opposed to an opaque score, each item better be correct - distributing to all lenders "Bob defaulted on a loan in 1999" is libel if it's not true; the dispute process tends to be more consumer-friendly than USA - e.g. a requirement to remove the disputed items immediately and return them only if the debtor can prove its validity), maybe a requirement to expire entries of missed payments within x years, etc. 4) In some countries, that agency is run by the gov't, i.e. purely a central official registry of loans and/or bad loans, which is somewhat sufficient to verify creditworthiness. In others, it's like Equifax. 5) There often is a principle that the credit reporting agencies can't give/sell that data to anyone - you must give explicit permission for every company before they can gain access to that data. 6) In many countries there's no concept of "building credit" - where there only information provided is about negative events (e.g. defaults or missed payments), so having never taken a loan combined with good income gets a perfect rating, as it's not distinguishable from a long credit history and having never missed a payment. So it's quite tricky - similar but different.

by giobox 8y ago

PeterisP 8y ago

There are many differences; it's hard to generalize because each EU country is different (there's no harmonization for this, and there are major differences especially along the "ex-Warsaw-Pact" border; half of EU had their whole financial system [re]built in 1990s), but you'll often see the following differences: 1) There's no "EU score", each lending market is somewhat separate. Past history in one location may or may not influence your score in another location. 2) Instead of a general/universal "credit score" calculated by an agency, there's often a concept of "credit history" which (depending on the country) may or may not list the amounts of existing loans, of previous loans, and history of late payments. The difference being that instead of lenders getting a score calculated by some agency, the lenders get the data and make their own decision, with possibly very different opinions on which factors are important. Not everywhere, of course, some countries (e.g. UK or Nordics) are more like USA. 3) The process tends to be highly regulated. If you're providing factual data as opposed to an opaque score, each item better be correct - distributing to all lenders "Bob defaulted on a loan in 1999" is libel if it's not true; the dispute process tends to be more consumer-friendly than USA - e.g. a requirement to remove the disputed items immediately and return them only if the debtor can prove its validity), maybe a requirement to expire entries of missed payments within x years, etc. 4) In some countries, that agency is run by the gov't, i.e. purely a central official registry of loans and/or bad loans, which is somewhat sufficient to verify creditworthiness. In others, it's like Equifax. 5) There often is a principle that the credit reporting agencies can't give/sell that data to anyone - you must give explicit permission for every company before they can gain access to that data. 6) In many countries there's no concept of "building credit" - where there only information provided is about negative events (e.g. defaults or missed payments), so having never taken a loan combined with good income gets a perfect rating, as it's not distinguishable from a long credit history and having never missed a payment. So it's quite tricky - similar but different.