The careless errors of credit reporting agencies • Hacker News Board

Re: The careless errors of credit reporting agencies

#101

Post by superuser2 » Sun, Sep 11, 2016, 5:56 PM UTC

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…

>you are trusted by definition

I felt pretty "trusted by definition." Citi gave me a credit card with a $3,000 limit as a college freshmen. A few years later I had an $8,000 limit card and a $10,000 limit card.

I bought my car certified-pre-owned under a program that writes favorable low-cost loans to recent college graduates with no or limited credit history (with an offer letter or paystubs).

You just aren't trusted with housing-sized amounts of money until you demonstrate responsibility with smaller dollar values first.

>basically creating debt and then paying it off

This depends on your definitions a little bit. You don't need to carry a balance and you certainly don't need to pay interest. You just need to create low but nonzero utilization on a credit card, pay it off every month, and not do anything else that might screw up your credit. I suppose you have debt in the interim between making the charge and paying it off, but most people don't consider it to be "credit card debt" if it goes away between statement cycles.

Re: The careless errors of credit reporting agencies

#102

Post by zo1 » Sun, Sep 11, 2016, 5:57 PM UTC

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…

It's not the only country in the world to do it. South Africa does it as well. You don't get credit by default, and instead you have to earn it by doing incremental "small" debt-like things. E.g. post-paid telephone accounts, buying small items of furniture on a payment system, etc.

Until you do those things, you are most likely going to get denied high-ticket loans such as mortgages and car-financing.

Re: The careless errors of credit reporting agencies

#103

Post by jsprogrammer » Sun, Sep 11, 2016, 5:57 PM UTC

lreeves wrote: post #86

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.

When you see that happening, please urge the affected to correct the record and to take to court any entity that makes decisions off the false information. Fees and penalties can be recovered and awarded.

Re: The careless errors of credit reporting agencies

#104

Post by lrem » Sun, Sep 11, 2016, 5:58 PM UTC

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…

It is also present in Ireland and I'd bet in the UK too.

Re: The careless errors of credit reporting agencies

#105

Post by DenisM » Sun, Sep 11, 2016, 6:00 PM UTC

I would think big data and machine learning could disrupt this industry completely, allowing much more accurate trustworthiness scores.

Is anyone working on it? Seems like a lot of money just sitting on the table.

Re: The careless errors of credit reporting agencies

#106

Post by Karunamon » Sun, Sep 11, 2016, 6:00 PM UTC

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.…

The trick there is to stay far away from the individual sites and only use annualcreditreport.com

Re: The careless errors of credit reporting agencies

#107

Post by lreeves » Sun, Sep 11, 2016, 6:03 PM UTC

jsprogrammer wrote: post #103

lreeves wrote: post #86

Earlier quoted context omitted.

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.

When you see that happening, please urge the affected to correct the record and to take to court any entity that makes decisions off the false information. Fees and penalties can be recovered and awarded.

Unfortunately I've just been a third party in both situations and the people urged did not complain :-(

Re: The careless errors of credit reporting agencies

#108

Post by ThomPete » Sun, Sep 11, 2016, 6:03 PM UTC

rco8786 wrote: post #89

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.

It's absurdly backwards because it's asking you to create debt which normally is the opposite of showing you are good with money and I would question the validity of seeing people paying back limited debt to be indicative of ex. borrowing for a house.

You could instead just look at the history of their debit card usage to figure out whether they are trustworthy.

As I said though I understand why they do it, it's just not a very useful model IMHO but because it's big money and it's complex to change it most probably wont for now.

Re: The careless errors of credit reporting agencies

#109

Post by zo1 » Sun, Sep 11, 2016, 6:04 PM UTC

toomuchtodo wrote: post #90

tn13 wrote: post #76

Earlier quoted context omitted.

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?

> "Why no outage over that"

There is plenty of outrage over that and all sorts of other things, just not enough to change the way things are. Too many interests, too-many individuals with their entire lives and mindsets invested in the way things work at the moment. As someone that advocates less state-involvement at all levels, I find it incredibly frustrating to watch day to day things unfolding. Every single facet of our lives is affected and skewed by the state in one way or another. Sometimes in a good, and sometimes in a bad way.

Re: The careless errors of credit reporting agencies

#110

Post by ThomPete » Sun, Sep 11, 2016, 6:05 PM UTC

superuser2 wrote: post #101

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…

>you are trusted by definition I felt pretty "trusted by definition." Citi gave me a credit card with a $3,000 limit as a college freshmen. A few years later I had an $8,000 limit card and a $10,000 limit card. I bought my car certified-pre-owned under a program that writes favorable low-cost loans to recent college graduates with no or limited credit history (with an offer letter or paystubs). You just aren't truste…

You are american you have a history and your parents have a history.

This is not something that you can have different opinions about it's how the US credit history system works by definition.

Not saying one is better than the other, it's just how it works in the US.