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The thing is, they need that data in order to do their business. Lenders need some way of predicting whether or not you will be able to pay back your loan
by TheSoftwareGuy 8y ago
The thing is, they need that data in order to do their business. Lenders need some way of predicting whether or not you will be able to pay back your loan
- munk-a 8y agoIf this sort of financial rating system is so crucial, we should probably nationalize the industry and make sure your score doesn't include things like adjustments due to biases (racial or whatever). Also Equifax et al. get things wrong all the time, legion are the horror stories about people's history being merged with others.
- rvern 8y agoEquifax has an incentive not to get things wrong because their customers care about having accurate information. Nationalizing credit ratings would remove this incentive. That Equifax still gets things wrong does not imply that things would not be even more wrong if it was nationalized.
- kolpa 8y agoIf their customers aren't checking accuracy and complaining to Equifax (and they aren't), then the incentive has no effect.
- chii 8y agoThe banks are their customers. And you can bet you bottom dollars the banks do care for accuracy.
- munk-a 8y agoThe banks don't actually eat the risk of inaccurately offered loans, this is why the housing market collapsed (simplified). Most of the logical incentives in financial sectors have become corrupted by perverse incentives with securities trading.
- closeparen 8y agoTurning away good borrowers and extending credit to bad ones are both terrible for business if you’re a lender. That’s the incentive.