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The careless errors of credit reporting agencies

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Re: The careless errors of credit reporting agencies

#81

Post by gcr »

ufmace wrote: post #74

Speaking of credit annoyances, I've seen a lot of "dark patterns" appearing on the credit agency websites for ordering your Federally-mandated free annual credit report. Their workflow for getting the credit report is structured to push you towards signing up for some kind of monthly subscription to some monitoring service, to the point where it's very difficult to find the buttons to just get the free credit report.…

From what I've seen, CreditKarma doesn't have many dark patterns like that. It doesn't have to be this way.

Re: The careless errors of credit reporting agencies

#82

Post by sverige »

tn13 wrote: post #66
sschueller wrote: post #14

The whole credit reporting system is a money making racket and there is zero interest in keeping the information in it accurate. No one is held responsible for mistakes and the suffering people go thought because of it.

Most things in this world are about making money. Credit reporting system works pretty well and it is evident by the fact that we have seen mortgage bubble burst (where government forced banks to ignore credit ratings) and student loan bubble building up (ditto as housing loans). The marginal gain in making it more accurate is not very much so I am pretty sure banks will not put efforts in that direction. Also, banks…

The error rate is far higher than 1 in 10000. More like 1 in 4, and 1 in 20 with serious errors.

The credit rating idea was born out of the Southern morality culture. "Are they good people? Let's put a number on it and sell it!"

The flip side of that is that they can't possibly be wrong unless you prove it, and even then, they're so butt hurt that you called them out on it that they'll take their time fixing it, if ever. The idea is that they're right, you're wrong, and they have powerful friends who protect them from being sued for slander.

Re: The careless errors of credit reporting agencies

#83

Post by ThomPete »

The US is as far as I know the only country in the world who have a positive creditscore system.

At least in Europe it's mostly based on a negative creditscore i.e. you are trusted by definition but if you don't pay your bills you end up not being allowed access to credit.

In the US they don't trust you per definition and instead you have to prove that you are good with money by basically creating debt and then paying it off.

This is obviously to say the least absurdly backwards, but I believe there is a rational explanation and that is that the US is a country of immigration and so you had to find a way to allow foreign people without any history and no reason to trust them.

Re: The careless errors of credit reporting agencies

#84

Post by sidlls »

tn13 wrote: post #66
sschueller wrote: post #14

The whole credit reporting system is a money making racket and there is zero interest in keeping the information in it accurate. No one is held responsible for mistakes and the suffering people go thought because of it.

Most things in this world are about making money. Credit reporting system works pretty well and it is evident by the fact that we have seen mortgage bubble burst (where government forced banks to ignore credit ratings) and student loan bubble building up (ditto as housing loans). The marginal gain in making it more accurate is not very much so I am pretty sure banks will not put efforts in that direction. Also, banks…

> Credit reporting system works pretty well

Citation needed.

> (where government forced banks to ignore credit ratings)

This is simply not true. The mortgage bubble burst when big investment and gambling/speculation institutions could no longer cover the shorts against mortgage bond derivatives and the incentive for packaging questionable mortgages into the underlyings disappeared. These mortgages weren't all (or even mostly) to poor people with no ability to pay, and the government didn't force anybody to do anything.

These same banks paid ratings agencies to ignore the bad mortgages in these securities specifically so they could increase the volume of mortgage bond sales. So your example is actually one that shows that ratings agencies' products are not necessarily accurate (some might call them fraudulent, even).

Re: The careless errors of credit reporting agencies

#85

Post by josephjrobison »

sethammons wrote: post #72
thechao wrote: post #61

Earlier quoted context omitted.

For instance: Time Warner Cable screwed up my cable package, charging me 220$ (a la carte) rather than 90$ (bundle). I contacted them, they admitted the mistake, and fixed the next month---I still ended up out 65$. I'd really like that money (moral imperative), but there's no legal way for me to seek relief for that small amount. If TWC messes up 1/50 accounts, once a year, for 50$, then they stand to make 500k--1mm$…

I know nothing about law, but I would think a class action lawyer could do a monthly or quarterly (or how ever long it takes for critical mass to be achieved) case on that and make decent recurring income I bet. Provide a site where folks can dispute their charge, and get back 50% of the disputed amount after the case is settled. Every month, the lawyer brings the same case against the "big guy" but with a new list o…

Sounds similar to the Sprint class action lawsuit where customers were being charged minor amounts of extra money, but in aggregate it added up to a ton. Sprint lost that case and lost millions.

Re: The careless errors of credit reporting agencies

#86

Post by lreeves »

sschueller wrote: post #14

The whole credit reporting system is a money making racket and there is zero interest in keeping the information in it accurate. No one is held responsible for mistakes and the suffering people go thought because of it.

I would hope the entities purchasing the credit reports (landlords, employers, whomever) would care about their accuracy but usually this doesn't seem to be the case. From what I've seen any false negatives around bad credit just ends up in a person being passed upon during evaluation as a tenant or employee and nobody follows up with the ratings agencies.

Re: The careless errors of credit reporting agencies

#87

Post by ianlevesque »

thechao wrote: post #61
necessity wrote: post #56

More effective than any regulation would be a legal system that actually made it possible for the small guy to sue the big guy for damages.

For instance: Time Warner Cable screwed up my cable package, charging me 220$ (a la carte) rather than 90$ (bundle). I contacted them, they admitted the mistake, and fixed the next month---I still ended up out 65$. I'd really like that money (moral imperative), but there's no legal way for me to seek relief for that small amount. If TWC messes up 1/50 accounts, once a year, for 50$, then they stand to make 500k--1mm$…

Why not self-represent in small claims court?

Re: The careless errors of credit reporting agencies

#88

Post by PythonicAlpha »

In Germany, it was long years the custom, that when somebody asked the agency about his score, they in turn dropped his score.

This is not legal anymore, as much I know, but still also in Germany, your fate is sometimes bound to the street, in which you live, instead of your own behavior.

Re: The careless errors of credit reporting agencies

#89

Post by rco8786 »

ThomPete wrote: post #83

The US is as far as I know the only country in the world who have a positive creditscore system. At least in Europe it's mostly based on a negative creditscore i.e. you are trusted by definition but if you don't pay your bills you end up not being allowed access to credit. In the US they don't trust you per definition and instead you have to prove that you are good with money by basically creating debt and then payin…

I'm curious why you think that is absurdly backwards. Not necessarily disagreeing, but it's not hard to justify wanting to see a history of repayment vs trusting by default.

Re: The careless errors of credit reporting agencies

#90

Post by toomuchtodo »

tn13 wrote: post #76
themartorana wrote: post #40

Earlier quoted context omitted.

Same goes for every credit rating agency in the country (world?). Remember all those AAA rated swaps? It is disturbing how the entire economic system is set up to make life harder on those it's hardest on. Poor, in debt, barely making ends meet? You're lucky if you can get a credit card for under 30% APR. Mortgage rates historically low? Not for you. Need a loan? Sucks to be you. Finally clawed your way out of debt,…

It makes perfect sense. Loans are borrowing you need to pay back. If you dont pay back then some honest hardworking person loses his savings. When we ignored the basic laws of economics we had a mortgage crisis and thousands of people lost their savings and jobs.

Which honest hardworking person shoulders the burden when the federal reserve poofs a billion dollars into existence? Why no outrage over that, but we complain about those who default when the default rate is priced into a financial product's APR and profit margin?
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