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Right, that's what I'm saying should be legislated to be optional. I don't think citizens should be forced to make that choice. Frankly, I think it might even b
by propter_hoc 7y ago
Right, that's what I'm saying should be legislated to be optional. I don't think citizens should be forced to make that choice. Frankly, I think it might even be best to forbid a third party from collecting a borrower's personal information as a condition of a lender providing a personal financial product.
I will in advance disagree with the objection that this would make it impossible for the lending industry to operate. I have run a lending business before, and in the industry FICO score is much less valuable than a lot of other information available to lenders (demographic, income, assets). For asset-based lending (car loans, mortgages, etc), FICO is even more irrelevant compared to factors like loan-to-value.
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- harryh 7y agodemographic I don't think it's a good idea to go back to the bad old days before credit reporting where whether you could get a loan or not was based on your demographics (color of your skin) rather than on the objective criterion in a credit report.
- propter_hoc 7y agoYour home address, age and marital status are absolutely used by lenders in a data-driven analysis of whether you are a creditworthy borrower. I don't think that's a necessarily malevolent analysis, but it's also not true that we live in a society where your demographics are irrelevant to your ability to access credit.
- harryh 7y agoYour home address, age and marital status are absolutely used by lenders Oh I know. The world isn't perfect in this respect, but it's a hell of a lot better than it used to be thanks to credit reporting. It has been an incredibly powerful tool for social justice. Outlawing it as a tool would be a very large step backwards.
- propter_hoc 7y agoI honestly think it would be overall better for us. Like I said, FICO is a very weak signal that isn't given much weight in the adjudication process; and your lenders are using these other signals I listed anyway, so the negative social effects you speak of are already happening. So, the only net outcome of automatic, forced credit reporting is that third party companies exist that collect, misuse and profit off of citizens' personal data. Anyway, rather than a draconian approach of outlawing credit bureaus, I think a law making third-party credit reporting optional rather than required is the right thing to push for, and more realistic than a nonstarter suggestion like nationalizing the credit bureaus.
- asdff 7y agoHow about just looking at inflow and outflow? "Gee he's got 50k in high interest student loans and makes 30k a year, but boy he had that amex for 5 years! Let's give him a 5k limit to toy around with." Raising your credit rating is literally a game. There are even subreddits devoted to the topic filled with pages and pages of strategy that looks deranged on the outset.