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The current oligopoly of the big three credit bureaus is a travesty and needs substantial reform. That being said, abolishing the concept of a consumer credit

The current oligopoly of the big three credit bureaus is a travesty and needs substantial reform. That being said, abolishing the concept of a consumer credit report entirely is a terrible idea. It is a fact that different people simply present different risks to a lender in their likelihood of default. Having actual data about a person's previous repayment history is extremely predictive of their future default probability (with proper ML applied). If you remove the ability to use data about that actual person's previous behavior then instead lenders will simply not provide credit or financial services to large proportions of the population whom might be credit worthy as they would be unable to determine if they are creditworthy. Again, I'm not arguing for the status quo. A lot of reform is needed. But to ignore the reality of how credit underwriting works is foolish. One of the reasons that many developing countries don't have financial services for their populations to access debt is because they don't have sufficient data to do credit underwriting. And debt is a critical tool to enable investment in the present. Used wisely, debt enables a person to borrow from the future to invest in the present, e.g. buying a car so they can commute to a nearby city and earn a higher salary.

Networkmancer 5y ago
>That being said, abolishing the concept of a consumer credit report entirely is a terrible idea. It is a fact that different people simply present different risks to a lender in their likelihood of default. And any bank will ascertain this from their forms when applying for a loan well before they do any kind of credit check on you. Also, YOU should control your credit history. You can give it to a lender if you wish to prove your credit worthiness. They shouldn't be allowed to give it to anyone else. Organizations should not be allowed to track it unsolicited.
tomnipotent 5y ago
The U.S. financial system worked just fine before credit scores became a thing in 1989.
- lupire 5y ago
  This comment outs you as someone who thinks in Twitter/Reddit memes.
- InTheArena 5y ago
- bigbizisverywyz 5y ago
  Yes, but probably by being much more conservative and relying on the branch managers to have a close working relationship, or long standing banking relationship with the people seeking credit. When that gets more automated - i.e. giving credit to somebody you've never met, then a centralized automated system for verifying trustworthiness is also needed to compensate. It may even have the net effect of allowing some people to get credit that never could before, so swings and roundabouts I guess.
  - jaystraw 5y ago
    Nothing is stopping anyone from lending, afaik, on other basises. Basees? Ba...sis.
    - deleted 5y ago
      [deleted]
    - tough 5y ago
      Biases I'd say
- sokoloff 5y ago
  Credit scores were invented in the 1950s. I’d estimate that the US financial system has improved substantially since then, in both absolute and relative terms. “In 1956, engineer Bill Fair teamed up with mathematician Earl Isaac to create Fair, Isaac and Company, with the goal of creating a standardized, impartial credit scoring system. Within two years, they had begun selling their first credit scoring system.” You might recognize the names Fair and Isaac as the F and I in FICO. https://www.opploans.com/oppu/articles/a-brief-history-of-credit-scores/ https://www.opploans.com/oppu/articles/a-brief-history-of-cr...
matheusmoreira 5y ago
> Used wisely When does that ever happen? Lending and borrowing are always at the root of every economic crisis. National debt of countries are already astronomically large and will only keep growing. Just abolish credit as well. If it means the economy will grow slower, so be it.
- Aunche 5y ago
  >If it means the economy will grow slower, so be it. This is easy for someone to say who already lives a comfortable life. Credit is simply a more efficient use of wealth. Without credit, money stored is money that is unused, and thus money denied to everyone else. Everyone is poorer as a result because you have millions of people willing to exchange their goods and services but are blocked because they lack a medium of exchange that is being hoarded by the wealthy.
  - matheusmoreira 5y ago
    And with credit, money lent out is money that doesn't actually exist until made real by repayment which must come from extracting value from this planet at ever increasing unsustainable rates, and there's always the risk it won't ever be realized at all in case of defaults. Credit creates money out of nowhere, effectively imposing a tax on everyone and making them poorer so that banks can extract profits. The massive amounts of debt people go into effectively enslaves them forever. Nowhere is this clearer than the student loans scam which not only lures unsuspecting victims into signing up for hundreds of thousands of dollars in debt they might not ever be able to pay off but also drives up the price of tuition and lowers academic integrity precisely because it's trillions of easy government money being injected into the economy. Efficient use of capital? That's exactly what the banks and investment firms said about stuff like highly leveraged derivatives and the CDOs and all the stuff that caused the 2008 crisis. Bad loans was literally the source of it all. We all know who paid the price for all that and who got to keep their fortunes.
    - FredPret 5y ago
      Spoken like someone who has already benefited from past growth. “Stop the economy! We have enough money already!” There are people living in inprovised huts in the third world who would literally give a limb for more growth.

Networkmancer 5y ago

>That being said, abolishing the concept of a consumer credit report entirely is a terrible idea. It is a fact that different people simply present different risks to a lender in their likelihood of default. And any bank will ascertain this from their forms when applying for a loan well before they do any kind of credit check on you. Also, YOU should control your credit history. You can give it to a lender if you wish to prove your credit worthiness. They shouldn't be allowed to give it to anyone else. Organizations should not be allowed to track it unsolicited.

tomnipotent 5y ago

The U.S. financial system worked just fine before credit scores became a thing in 1989.

lupire 5y ago
This comment outs you as someone who thinks in Twitter/Reddit memes.
InTheArena 5y ago
bigbizisverywyz 5y ago
Yes, but probably by being much more conservative and relying on the branch managers to have a close working relationship, or long standing banking relationship with the people seeking credit. When that gets more automated - i.e. giving credit to somebody you've never met, then a centralized automated system for verifying trustworthiness is also needed to compensate. It may even have the net effect of allowing some people to get credit that never could before, so swings and roundabouts I guess.
- jaystraw 5y ago
  Nothing is stopping anyone from lending, afaik, on other basises. Basees? Ba...sis.
  - deleted 5y ago
    [deleted]
  - tough 5y ago
    Biases I'd say
sokoloff 5y ago
Credit scores were invented in the 1950s. I’d estimate that the US financial system has improved substantially since then, in both absolute and relative terms. “In 1956, engineer Bill Fair teamed up with mathematician Earl Isaac to create Fair, Isaac and Company, with the goal of creating a standardized, impartial credit scoring system. Within two years, they had begun selling their first credit scoring system.” You might recognize the names Fair and Isaac as the F and I in FICO. https://www.opploans.com/oppu/articles/a-brief-history-of-credit-scores/ https://www.opploans.com/oppu/articles/a-brief-history-of-cr...

matheusmoreira 5y ago

> Used wisely When does that ever happen? Lending and borrowing are always at the root of every economic crisis. National debt of countries are already astronomically large and will only keep growing. Just abolish credit as well. If it means the economy will grow slower, so be it.

Aunche 5y ago
>If it means the economy will grow slower, so be it. This is easy for someone to say who already lives a comfortable life. Credit is simply a more efficient use of wealth. Without credit, money stored is money that is unused, and thus money denied to everyone else. Everyone is poorer as a result because you have millions of people willing to exchange their goods and services but are blocked because they lack a medium of exchange that is being hoarded by the wealthy.
- matheusmoreira 5y ago
  And with credit, money lent out is money that doesn't actually exist until made real by repayment which must come from extracting value from this planet at ever increasing unsustainable rates, and there's always the risk it won't ever be realized at all in case of defaults. Credit creates money out of nowhere, effectively imposing a tax on everyone and making them poorer so that banks can extract profits. The massive amounts of debt people go into effectively enslaves them forever. Nowhere is this clearer than the student loans scam which not only lures unsuspecting victims into signing up for hundreds of thousands of dollars in debt they might not ever be able to pay off but also drives up the price of tuition and lowers academic integrity precisely because it's trillions of easy government money being injected into the economy. Efficient use of capital? That's exactly what the banks and investment firms said about stuff like highly leveraged derivatives and the CDOs and all the stuff that caused the 2008 crisis. Bad loans was literally the source of it all. We all know who paid the price for all that and who got to keep their fortunes.
  - FredPret 5y ago
    Spoken like someone who has already benefited from past growth. “Stop the economy! We have enough money already!” There are people living in inprovised huts in the third world who would literally give a limb for more growth.