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> Whether that is possible practically is another question. Well it's sort of the key question though right? The incentives of the credit reporting agencies a

> Whether that is possible practically is another question. Well it's sort of the key question though right? The incentives of the credit reporting agencies are fundamentally unbalanced because the average consumer has no meaningful input into their behavior. If could practically avoid having my information sent to bad actors they would be incentivized to treat my data with care. This is an example of where good government regulation can be introduced (giving consumers the option to opt out) rather than what I would consider bad government regulation (trying to specify how the companies should behave directly). I believe in the free market but I also understand that there are cases where incentives are incorrectly balanced and we need a neutral party to make sure all incentives are properly accounted for.

judge2020 4y ago
> The incentives of the credit reporting agencies are fundamentally unbalanced because the average consumer has no meaningful input into their behavior. Howso? The lenders are obligated to submit truthful data, and under FCRA you can dispute fraud and incorrect data. And the FICO/Vantage scoring system can be computed from the data, they don't just spit out a hidden number generated by some ML model.
- eternalban 4y ago
  > [In "God" we trust] Here you go: https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...
  - gruez 4y ago
    "Credit rating agencies" =/= "Credit bureau". If you read your own link, you'd discover that the former refers to companies like "Moody's Investors Service, Standard & Poor's, and Fitch Ratings". Needless to say, those are separate entities from credit bureaus, which are companies like equifax, transunion, and experian.
    - eternalban 4y ago
      Your reply is a good example of missing the forest for the trees.
      - gruez 4y ago
        The average HN reader isn't a telepath. If you posted a link about a different subject without any accompanying explanation about why it's related, and other readers get confused, that's on you. Your follow up reply makes the same mistake, but it's worse because it's obvious that at least one person isn't seeing the connection, yet you don't make an effort to provide such an explanation.
- gruez 4y ago
  >And the FICO/Vantage scoring system can be computed from the data, they don't just spit out a hidden number generated by some ML model. AFAIK those models aren't public. If you search around you'd find some vague factors and aproximate weights, but nowhere near enough data to reproduce the scores yourself. For the typical consumer and company, they're a black box just like a ML model.
  - judge2020 4y ago
    Checked the Experian website (their "freecreditreport" product, aka the thing that tricks people into foregoing annualcreditreport) and they provide weights for how much each contributes: Payment History: 35% of score. in no particular order: - Late payments 30+ Days ("About 98% of FICO High Achievers have no missed payments at all") / Late Payments 60+ Days / Accounts Always Paid as Agreed / No Delinquent Accounts - Collections ("FICO® Score 8 only considers collections with an amount of $100 or greater. Virtually no FICO High Achievers have a collection listed on their credit report") / Late Payments 60+ Days / Derogatory Public Records Amount of Debt: 30% of score. in no particular order: - % revolving credit: ("For FICO High Achievers, the average ratio is less than 7%.") - Number of Accounts with Balances ("FICO High Achievers have an average of 3 accounts carrying a balance.") - Total balance on revolving and open-ended accounts ("Most FICO High Achievers owe less than $2,500 on revolving and/or open-ended accounts such as credit cards, charge cards and department store cards.") Length of credit history: 15% of score - Average age of accounts ("Most FICO High Achievers have an average age of accounts of 9 years or more.") - Age of Oldest Account ("FICO High Achievers opened their oldest account 25 years ago, on average.") Amount of new credit: 10% of score ("FICO High Achievers opened their most recent account 2 years, 7 months ago, on average.") Credit Mix: 10% of score ("FICO High Achievers have an average of 11 revolving accounts, 5 installment accounts, 6 credit cards) Also, a trend I see is that almost every option says "Authorized user accounts aren't considered in the calculation of this attribute", which might be a big contributor as to why Credit Karma / Vantage Score numbers are almost always higher than FICO, which leads to people thinking they have a higher number when they walk into a car dealership / apply for a loan. But you're right in that I don't see any actual weights or FICO simulators.
gruez 4y ago
>If could practically avoid having my information sent to bad actors they would be incentivized to treat my data with care. who are the "bad actors" in this case? Equifax? Whoever equifax sold the information to? Whoever equifax got the information from? >This is an example of where good government regulation can be introduced (giving consumers the option to opt out) rather than what I would consider bad government regulation (trying to specify how the companies should behave directly). As the parent poster has mentioned, you can already "opt out" by not getting a loan. I agree that it'd be nice if some government regulation allowed to you to have your cake (ie. get loans) and eat it too (not have it reported), but there are two obvious problems: 1. One man's "private information" is another man's free speech. Why should a company be prevented from making true statements about its business dealings with you? You can leave nasty yelp reviews for businesses that have behaved inappropriately. Why shouldn't businesses be able to leave nasty credit reviews for individuals that failed to make payments? 2. On more practical level, opting out might put you in a high risk pool. Part of the enforcement mechanism for repaying loans is that if you don't, your credit gets wrecked and your life becomes harder. If you opted out of credit reporting, that's one enforcement mechanism that a lender wouldn't have, and therefore will adjust accordingly. Going back to the yelp analogy, imagine if yelp allowed businesses to opt out of reviews. Would you want to go to such a business, all else being equal?
- falcolas 4y ago
  > you can already "opt out" by not getting a loan Just wanted to comment on this to say: This is impossible. The reason why it's impossible is subtle because it comes from a source you'd not expect: Utility payments (power, gas, water, sewer, cable, internet, satellite, etc.). Utilities are always charged and paid for after they're delivered, and are thus loans and reported to the credit bureaus. Also, credit bureaus don't just report on loans/debts. They also report on public proceedings that may or may not have financial consequences. And your employment record is also reported by many company's HR departments to these same bureaus. So, short of going Ted Kaczynski (and even he had enough of a public presence to probably also have a credit report), you will exist in all of Credit Bureaus' databases.
  - 4y ago

judge2020 4y ago

> The incentives of the credit reporting agencies are fundamentally unbalanced because the average consumer has no meaningful input into their behavior. Howso? The lenders are obligated to submit truthful data, and under FCRA you can dispute fraud and incorrect data. And the FICO/Vantage scoring system can be computed from the data, they don't just spit out a hidden number generated by some ML model.

eternalban 4y ago
> [In "God" we trust] Here you go: https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...
- gruez 4y ago
  "Credit rating agencies" =/= "Credit bureau". If you read your own link, you'd discover that the former refers to companies like "Moody's Investors Service, Standard & Poor's, and Fitch Ratings". Needless to say, those are separate entities from credit bureaus, which are companies like equifax, transunion, and experian.
  - eternalban 4y ago
    Your reply is a good example of missing the forest for the trees.
    - gruez 4y ago
      The average HN reader isn't a telepath. If you posted a link about a different subject without any accompanying explanation about why it's related, and other readers get confused, that's on you. Your follow up reply makes the same mistake, but it's worse because it's obvious that at least one person isn't seeing the connection, yet you don't make an effort to provide such an explanation.
gruez 4y ago
>And the FICO/Vantage scoring system can be computed from the data, they don't just spit out a hidden number generated by some ML model. AFAIK those models aren't public. If you search around you'd find some vague factors and aproximate weights, but nowhere near enough data to reproduce the scores yourself. For the typical consumer and company, they're a black box just like a ML model.
- judge2020 4y ago
  Checked the Experian website (their "freecreditreport" product, aka the thing that tricks people into foregoing annualcreditreport) and they provide weights for how much each contributes: Payment History: 35% of score. in no particular order: - Late payments 30+ Days ("About 98% of FICO High Achievers have no missed payments at all") / Late Payments 60+ Days / Accounts Always Paid as Agreed / No Delinquent Accounts - Collections ("FICO® Score 8 only considers collections with an amount of $100 or greater. Virtually no FICO High Achievers have a collection listed on their credit report") / Late Payments 60+ Days / Derogatory Public Records Amount of Debt: 30% of score. in no particular order: - % revolving credit: ("For FICO High Achievers, the average ratio is less than 7%.") - Number of Accounts with Balances ("FICO High Achievers have an average of 3 accounts carrying a balance.") - Total balance on revolving and open-ended accounts ("Most FICO High Achievers owe less than $2,500 on revolving and/or open-ended accounts such as credit cards, charge cards and department store cards.") Length of credit history: 15% of score - Average age of accounts ("Most FICO High Achievers have an average age of accounts of 9 years or more.") - Age of Oldest Account ("FICO High Achievers opened their oldest account 25 years ago, on average.") Amount of new credit: 10% of score ("FICO High Achievers opened their most recent account 2 years, 7 months ago, on average.") Credit Mix: 10% of score ("FICO High Achievers have an average of 11 revolving accounts, 5 installment accounts, 6 credit cards) Also, a trend I see is that almost every option says "Authorized user accounts aren't considered in the calculation of this attribute", which might be a big contributor as to why Credit Karma / Vantage Score numbers are almost always higher than FICO, which leads to people thinking they have a higher number when they walk into a car dealership / apply for a loan. But you're right in that I don't see any actual weights or FICO simulators.

gruez 4y ago

>If could practically avoid having my information sent to bad actors they would be incentivized to treat my data with care. who are the "bad actors" in this case? Equifax? Whoever equifax sold the information to? Whoever equifax got the information from? >This is an example of where good government regulation can be introduced (giving consumers the option to opt out) rather than what I would consider bad government regulation (trying to specify how the companies should behave directly). As the parent poster has mentioned, you can already "opt out" by not getting a loan. I agree that it'd be nice if some government regulation allowed to you to have your cake (ie. get loans) and eat it too (not have it reported), but there are two obvious problems: 1. One man's "private information" is another man's free speech. Why should a company be prevented from making true statements about its business dealings with you? You can leave nasty yelp reviews for businesses that have behaved inappropriately. Why shouldn't businesses be able to leave nasty credit reviews for individuals that failed to make payments? 2. On more practical level, opting out might put you in a high risk pool. Part of the enforcement mechanism for repaying loans is that if you don't, your credit gets wrecked and your life becomes harder. If you opted out of credit reporting, that's one enforcement mechanism that a lender wouldn't have, and therefore will adjust accordingly. Going back to the yelp analogy, imagine if yelp allowed businesses to opt out of reviews. Would you want to go to such a business, all else being equal?

falcolas 4y ago
> you can already "opt out" by not getting a loan Just wanted to comment on this to say: This is impossible. The reason why it's impossible is subtle because it comes from a source you'd not expect: Utility payments (power, gas, water, sewer, cable, internet, satellite, etc.). Utilities are always charged and paid for after they're delivered, and are thus loans and reported to the credit bureaus. Also, credit bureaus don't just report on loans/debts. They also report on public proceedings that may or may not have financial consequences. And your employment record is also reported by many company's HR departments to these same bureaus. So, short of going Ted Kaczynski (and even he had enough of a public presence to probably also have a credit report), you will exist in all of Credit Bureaus' databases.
- 4y ago