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There is no free lunch. Limiting credit checks to AGI just means everyone will assumed to have an unknown credit history and will have much higher rates. You

by refurb 4y ago

There is no free lunch. Limiting credit checks to AGI just means everyone will assumed to have an unknown credit history and will have much higher rates. You ready to get a mortgage at prime plus 5% instead of prime plus 1%? But let me guess, we could create a law about that? Having the government do things doesn’t magically mean market forces don’t apply any more.

coderintherye 4y ago
The point is not about limiting it to AGI, the point is setting limits on what data is shared so that you as the consumer always control what a requesting company sees. Don't want your data shared? No problem, you can set to deny all requests. Only want to share AGI but not your entire return, just allow that field, etc. Correct me if I'm wrong, but your response also seems to indicate you don't work in financial services. No company is providing credit based solely on income verification (well, not that I'm aware of maybe some fintech is doing it). Most all credit providers are collating data from various sources to make their decision and it varies more than you might think on what goes into a credit decision. Further, I don't think there's any need at all for laws for this as you suggest, rather just let the IRS offer it as a competing service with private industry. I know many companies that would sign up right away for such a service at the right price point.
- vuln 4y ago
  People don't understand how credit scores work and you want to give them the power to allow granular permissions? Just like Facebook gave people granular access to their privacy settings? If the general population doesn't read EULAs and speed clicks through 99% of dialogs presented. I highly doubt people won't check the _allow all_ box once and be done with it. Hell Apple gives my significant other the ability to ask apps not to track and they tap to ALLOW the app to track because "I don't mind ads and they'll show me better ads."
  - j33zusjuice 4y ago
    Some percentage of people making bad decisions doesn’t mean all people should be forced to make bad decisions. Yes, it’s a good thing that Facebook and apple allow those controls. Yes, it’s a shame more people don’t care about controlling their data. That doesn’t mean people who do care shouldn’t be able to control it. What point are you trying to make, exactly?
- deleted 4y ago
  [deleted]
- foota 4y ago
  I believe their point is that if you don't provide any piece of information, the consumer of it would just assume the worst. Or, they would average it out, so that the burden of not being accurate would affect the people that do provide it.
mindslight 4y ago
> You ready to get a mortgage at prime plus 5% instead of prime plus 1%? So then homes would become more affordable, as monthly payments are the limiting factor? Sounds like a win-win, if that actually were to happen. But it seems unlikely for secured credit.
- refurb 4y ago
  No, why would homes be more affordable? Credit would tighten up immensely starting with those who don’t have sufficient income.
  - mindslight 4y ago
    The main limit for people buying houses is the monthly payment. When interest rates go down, abstract asset prices go up to compensate. When interest rates go up, abstract asset prices go down. So your scenario of interest rates going up would actually make housing more affordable. Lower asset prices encourage things like making a larger downpayment (rather than suffering PMI), and making it reasonable to pay off a mortgage early. But as I said, the change in interest rates is unlikely to be that large for secured credit like a mortgage, as the main thing guaranteeing the loan is the asset itself.
raverbashing 4y ago
> You ready to get a mortgage at prime plus 5% instead of prime plus 1%? And for that I had to pay interest/fees on all the other crap so that I "build a credit history" Interesting, I wonder if someone did the math on that (and that 5% is overinflated I think not even the NINA loans were that high)
- refurb 4y ago
  What “interest and fees”? I have a high credit score and have never paid a fee or any interest.
  - raverbashing 4y ago
    CC Annuity? Or even the implied CC fees the purchaser pays indirectly by increased prices Car payment interest? Student loans?
    - refurb 4y ago
      I’ve never had a credit card with fees. I built up a great credit score with a single, no fee card, that I paid off each month. Total cost $0. You don’t need an interest paying loan to have a good credit score.
      - tarranoth 4y ago
        I don't understand the US credit score at all. What's the predictive value of you paying off a mortgage based on you just shopping with a credit card? Sure if you can't pay your normal shopping cart, probably you shouldn't really be getting a mortgage, but the predictive value besides that seems lost on me. Surely a bank could just ask your payslip info and get a more accurate feel whether or not you are creditworthy?
        refurb 4y ago
        I don’t follow. Shopping with a credit card literally involves managing a line of credit. You don’t see how that relates to creditworthiness? You also believe purely income information is a better indicator of credit worthiness? It tells you almost nothing (which is why income plus all current expenses is used).

by refurb 4y ago

coderintherye 4y ago

The point is not about limiting it to AGI, the point is setting limits on what data is shared so that you as the consumer always control what a requesting company sees. Don't want your data shared? No problem, you can set to deny all requests. Only want to share AGI but not your entire return, just allow that field, etc. Correct me if I'm wrong, but your response also seems to indicate you don't work in financial services. No company is providing credit based solely on income verification (well, not that I'm aware of maybe some fintech is doing it). Most all credit providers are collating data from various sources to make their decision and it varies more than you might think on what goes into a credit decision. Further, I don't think there's any need at all for laws for this as you suggest, rather just let the IRS offer it as a competing service with private industry. I know many companies that would sign up right away for such a service at the right price point.

vuln 4y ago
People don't understand how credit scores work and you want to give them the power to allow granular permissions? Just like Facebook gave people granular access to their privacy settings? If the general population doesn't read EULAs and speed clicks through 99% of dialogs presented. I highly doubt people won't check the _allow all_ box once and be done with it. Hell Apple gives my significant other the ability to ask apps not to track and they tap to ALLOW the app to track because "I don't mind ads and they'll show me better ads."
- j33zusjuice 4y ago
  Some percentage of people making bad decisions doesn’t mean all people should be forced to make bad decisions. Yes, it’s a good thing that Facebook and apple allow those controls. Yes, it’s a shame more people don’t care about controlling their data. That doesn’t mean people who do care shouldn’t be able to control it. What point are you trying to make, exactly?
deleted 4y ago
[deleted]
foota 4y ago
I believe their point is that if you don't provide any piece of information, the consumer of it would just assume the worst. Or, they would average it out, so that the burden of not being accurate would affect the people that do provide it.

mindslight 4y ago

> You ready to get a mortgage at prime plus 5% instead of prime plus 1%? So then homes would become more affordable, as monthly payments are the limiting factor? Sounds like a win-win, if that actually were to happen. But it seems unlikely for secured credit.

refurb 4y ago
No, why would homes be more affordable? Credit would tighten up immensely starting with those who don’t have sufficient income.
- mindslight 4y ago
  The main limit for people buying houses is the monthly payment. When interest rates go down, abstract asset prices go up to compensate. When interest rates go up, abstract asset prices go down. So your scenario of interest rates going up would actually make housing more affordable. Lower asset prices encourage things like making a larger downpayment (rather than suffering PMI), and making it reasonable to pay off a mortgage early. But as I said, the change in interest rates is unlikely to be that large for secured credit like a mortgage, as the main thing guaranteeing the loan is the asset itself.

raverbashing 4y ago

> You ready to get a mortgage at prime plus 5% instead of prime plus 1%? And for that I had to pay interest/fees on all the other crap so that I "build a credit history" Interesting, I wonder if someone did the math on that (and that 5% is overinflated I think not even the NINA loans were that high)

refurb 4y ago
What “interest and fees”? I have a high credit score and have never paid a fee or any interest.
- raverbashing 4y ago
  CC Annuity? Or even the implied CC fees the purchaser pays indirectly by increased prices Car payment interest? Student loans?
  - refurb 4y ago
    I’ve never had a credit card with fees. I built up a great credit score with a single, no fee card, that I paid off each month. Total cost $0. You don’t need an interest paying loan to have a good credit score.
    - tarranoth 4y ago
      I don't understand the US credit score at all. What's the predictive value of you paying off a mortgage based on you just shopping with a credit card? Sure if you can't pay your normal shopping cart, probably you shouldn't really be getting a mortgage, but the predictive value besides that seems lost on me. Surely a bank could just ask your payslip info and get a more accurate feel whether or not you are creditworthy?
      - refurb 4y ago
        I don’t follow. Shopping with a credit card literally involves managing a line of credit. You don’t see how that relates to creditworthiness? You also believe purely income information is a better indicator of credit worthiness? It tells you almost nothing (which is why income plus all current expenses is used).