5 ms·
Here's an idea: lets burn down FICO and the credit reporting bureaus. After all things seemed to work fine before credit scores. Perhaps we put too much "stock
by no_wizard 3y ago
Here's an idea: lets burn down FICO and the credit reporting bureaus.
After all things seemed to work fine before credit scores. Perhaps we put too much "stock" in them in the first place. There has to be better ways to manage this.
One way I could forsee is a government agency that acted as a reporting depot. Then you could forbid the sale of information, and create legislative firewalls for it to keep it out of the hands of other agencies[1].
Though I will continue to argue that credit scores are deeply flawed[0].
[0]: FWIW, I have excellent credit too, so I hardly run into any real issues with it, but I have see the other side of this table. They are often used in such a way I would classify it as prejudiced discrimination with extra steps. For bigger / riskier loans. You could instead opt for point in time financial audits, for example.
[1]: Two things of note. One, last I looked into this, the government very much pulls credit reports on pull without any oversight as it sits today. Two, there is a history of legislative firewalls that do work, they need clear and strong oversight provisions, and today we have almost zero oversight of the credit bureaus. I'd roll the dice on creating something akin to the GAO or Federal Reserve type agencies (that is to say, very independent from lawmakers and presidents but still have competent oversight), but for something that functions for the intentions behind what these scores are suppose to be for.
- ziddoap 3y ago>lets burn down FICO and the credit reporting bureaus. This seems to be the harder problem. I read potentially better solutions all the time, but I never read about how to get to that point first.
- no_wizard 3y agoIts lack of motivation really. I think people have become ingrained / numb to them that they don't really think about it until they have a problem, or some sector of society gets repeatedly screwed by the bureaus etc. There's been no systematic callout of the bureaus in wider society, that I can tell.
- Vvector 3y agoWe are not the customers, we are the product. The customers are the banks and other entities that want to check our credit. Probably the only answer is legislation
- judge2020 3y agoWhat are these better solutions? The bureaus exist because companies can only quote you loan products if they have a good [enough] understanding of how responsible you are with debt and paying existing creditors. You could make arguments about some pitfalls with the score, but any other creditworthiness system will need a lot of data if lenders want to be able to trust it to provide insight to your monthly debts and payment history.
- 317070 3y agoMany European countries do not have a credit score system. Companies and banks are a lot less inclined to give you credit, but I don't see how that is a bad thing for society?
- tagyro 3y agoGermany enters the scene. There was a recent article about Schufa - https://news.ycombinator.com/item?id=39395329 https://news.ycombinator.com/item?id=39395329.
- alexb_ 3y ago> After all things seemed to work fine before credit scores. Perhaps we put too much "stock" in them in the first place. There has to be better ways to manage this. The old way to do it, pre-credit score, is that they would take a look at your zip code, take a look at the color of your skin, and decide if you were a "trustworthy individual"
- lazide 3y agoNow now, don’t be nasty. They’d also look at the quality of your suit, or lack thereof, your accent, and try to guess your religion.
- Aloha 3y agoOr you'd have tot take out a literal letter of credit from your bank - who would use all of that, plus some other stuff to assess your worthiness.
- winrid 3y agoThat's just ridiculous. Modern countries like France do not use credit scores. They just look at your last few bank statements.
- judge2020 3y agoFrom what I can find online, is it true that “Fichiers Banque de France”, owned by the French Government, has a de facto credit system to log credit defaults (so that lenders can deny you if you’ve missed payments for too long in the past)?
- hakfoo 3y agoA actual state-run system has at least some legal accountability. When a politician gets a loan denied due to bogus data, I'm sure heads would fly. It's probably also subject to whatever their equivalent to FOIA and whistleblowing laws are over there. The private sector gives us the worst of everything: it's an obnoxious panopticon, PLUS being incentivized to be untransparent and seek out eternal growth.