The careless errors of credit reporting agencies • Hacker News Board

Re: The careless errors of credit reporting agencies

#261

Post by nommm-nommm » Mon, Sep 12, 2016, 2:07 AM UTC

ThomPete wrote: post #255

nommm-nommm wrote: post #247

Earlier quoted context omitted.

You know credit score isn't the only thing used in a credit decision, right? On a credit application you are asked about assets, income, amount of rent you pay, and account balances. Credit score is one of many pieces of information used in lending. Alternative credit scores are starting to come on the market for people who pay bills on time but may not otherwise have a traditional credit history but they are pretty…

Debit card usage is not going to be fundamentally different than your debit card usage. So yes it makes plenty sense as it could show something about your general ability to stay financially healthy. You are asked about assets, income etc. but those things have very little effect on whether you get a credit card or not.

This makes absolutely no sense. You are using your own money when you swipe your debit card. You are using someone else's money when you swipe your credit card and you pinky swear you'll pay it back later.

You can't go into debt using a debit card because you are spending your own money you already have.

Re: The careless errors of credit reporting agencies

#262

Post by mikeash » Mon, Sep 12, 2016, 2:09 AM UTC

ThomPete wrote: post #255

nommm-nommm wrote: post #247

Earlier quoted context omitted.

You know credit score isn't the only thing used in a credit decision, right? On a credit application you are asked about assets, income, amount of rent you pay, and account balances. Credit score is one of many pieces of information used in lending. Alternative credit scores are starting to come on the market for people who pay bills on time but may not otherwise have a traditional credit history but they are pretty…

Debit card usage is not going to be fundamentally different than your debit card usage. So yes it makes plenty sense as it could show something about your general ability to stay financially healthy. You are asked about assets, income etc. but those things have very little effect on whether you get a credit card or not.

There are two basic scenarios that credit card companies want to avoid with their customers. There's the scenario where the customer buys a bunch of stuff they can't afford and then can't pay their bill, and there's the scenario where the customer can pay their bill but just doesn't feel like it.

Both scenarios are fundamentally impossible with a debit card, so I really don't see how there's any relevance here. It's not the purchasing end that they're interested in, it's the paying-it-back part.

Re: The careless errors of credit reporting agencies

#263

Post by nommm-nommm » Mon, Sep 12, 2016, 2:22 AM UTC

whorleater wrote: post #260

nommm-nommm wrote: post #258

Earlier quoted context omitted.

You assumed very, very wrong. FICO is based on your credit utilization (amount owed vs credit limit), history of repayment, mix of types of accounts (this has a minimal impact), number of new accounts, number of credit inquiries (aka hard pulls, this is also minimal), and length of credit history. You had credit available to you for four years and you manage it very, very well. Other scoring algorithms besides FICO m…

Yep, totally assumed higher loans -> higher repayment -> better ability to repay -> better credit. Definitely not as simplistic as I thought, thank you (and thedufer!) for making me realize this. Yay for accidental good debt management!

Think about it, someone who owes $50,000 and is making minimum payments every month is a lot more likely to default on a loan than someone who borrows a few hundred a month once in a while.

If you want to see your real Experian FICO 8 credit score for free you can do so at freecreditreport.com which is a site now owned by Experian. They break down each part of your credit score and grade you on each. (A-F)

Re: The careless errors of credit reporting agencies

#264

Post by popmystack » Mon, Sep 12, 2016, 2:25 AM UTC

mikeash wrote: post #240

popmystack wrote: post #228

Earlier quoted context omitted.

Considering renting history is not accurately reported in any meaningful form, I don't know how they disagree with me. Most people probably aren't willing to give up their car, I'd figure those that have credit issues are still most likely making car payments. It's one thing to say "I see you've been late on a few of your car payments, so we're going to give a higher interest rate." and it's something else to say "Yo…

Accurately predicting your likelihood of default is worth a ton of money. If every company makes bad assumptions like you describe, then a new company could make a ton of money by correcting those bad assumptions and giving out loans to people who can't get them otherwise. That doesn't mean that systematic failures can't happen, but they're pretty unlikely. It's much more likely that you underestimate the correlation…

> then a new company could make a ton of money by correcting those bad assumptions and giving out loans to people who can't get them otherwise.

This quite literally happens already.

Re: The careless errors of credit reporting agencies

#265

Post by nommm-nommm » Mon, Sep 12, 2016, 2:35 AM UTC

yason wrote: post #217

popmystack wrote: post #155

Earlier quoted context omitted.

>Citi gave me a credit card with a $3,000 limit as a college freshmen. How old are you? Just a few years ago, despite making a very decent amount of money and having no marks on my credit, it took an entire year for me to get a credit card. Reason: lack of credit history. A lot of people have similar stories. >This depends on your definitions a little bit. The part where you spend money that isn't yours and then pay…

I have a about $90k~ worth of available credit to me on my CC's alone. How many cards do you have? I understand it's mostly theoretical but I'm wondering why would anyone want to use their high-interest credit card to borrow even a few tens of thousands? Or any high-interest vehicle of debt for that much money, for that matter.

Credit cards may not be high interest as you may think. Depends.

Some credit cards have promotional low or no interest rates for a year or so. You can then balance transfer to another promotional rate card at the end of the year. Also many issuers (Barclaycard, AMEX, Capital One) have low or no interest rates for active duty military.

Re: The careless errors of credit reporting agencies

#266

Post by nommm-nommm » Mon, Sep 12, 2016, 2:39 AM UTC

makmanalp wrote: post #203

popmystack wrote: post #155

Earlier quoted context omitted.

>Citi gave me a credit card with a $3,000 limit as a college freshmen. How old are you? Just a few years ago, despite making a very decent amount of money and having no marks on my credit, it took an entire year for me to get a credit card. Reason: lack of credit history. A lot of people have similar stories. >This depends on your definitions a little bit. The part where you spend money that isn't yours and then pay…

> Prevent landlords from pulling credit history. I never understood this - why is someone else asking for your credit history a ding on your credit report? It seems really silly to me, but I must be missing something.

The ding is so small you won't notice it until you start having 8+ inquiries.

Re: The careless errors of credit reporting agencies

#267

Post by doug1001 » Mon, Sep 12, 2016, 2:44 AM UTC

sithadmin wrote: post #201

chipperyman573 wrote: post #184

Earlier quoted context omitted.

>Prevent landlords from pulling credit history. Your finances are not their business. I disagree, if you have a terrible credit history, leasing to you may be very risky. They aren't loaning you money, but they are trusting that you will have the money every month to pay them with.

>They aren't loaning you money, but they are trusting that you will have the money every month to pay them with. Even more importantly than that: the lessor gives the lessee custody and (limited) care-taking responsibilities over what, in most cases, represents a significant investment of capital.

i agree. In fact, when i signed the lease, i handed over a check for first and last month's rent plus a security deposit equal to another month's rent.

it's me, the tenant, who is loaning money to my landlord.

Re: The careless errors of credit reporting agencies

#268

Post by nommm-nommm » Mon, Sep 12, 2016, 2:49 AM UTC

ThomPete wrote: post #182

SystemOut wrote: post #115

Earlier quoted context omitted.

How do my parent's credit history have anything to do with my credit history in the US? Are you talking about co-signing for loans or possibly how a child can get a card under their parents' name? I didn't think either of those had any impact on the child's credit score.

You and your parents history in the US in general can have a an affect on whether you can convince a bank to give you a credit card or not not on the credit score. I am not talking about credit card history but about history of being a US citizen, having a bank account etc. I think a lot here are missing the point. The question is not about your credit score but about getting the credit card to begin with. Once you g…

No, no, no. Your parents history doesn't affect you in such a way!!!! (Unless you live with them and only in very certain ways) Thank God because my parents are scumbags. My dad is flagged in car insurance databases. When I get a car insurance quote they ask me "who is [my dad]?" I say "he's my dad and I don't live with him and he doesn't have access to my car." They say "OK" and we move on.

You also don't have to start building debt. Having a credit card you don't use is enough.

Re: The careless errors of credit reporting agencies

#269

Post by ThomPete » Mon, Sep 12, 2016, 2:52 AM UTC

mikeash wrote: post #262

ThomPete wrote: post #255

Earlier quoted context omitted.

Debit card usage is not going to be fundamentally different than your debit card usage. So yes it makes plenty sense as it could show something about your general ability to stay financially healthy. You are asked about assets, income etc. but those things have very little effect on whether you get a credit card or not.

There are two basic scenarios that credit card companies want to avoid with their customers. There's the scenario where the customer buys a bunch of stuff they can't afford and then can't pay their bill, and there's the scenario where the customer can pay their bill but just doesn't feel like it. Both scenarios are fundamentally impossible with a debit card, so I really don't see how there's any relevance here. It's…

You are way too tied up on the credit vs. debit part.

Thats not really important here.

You are not suddenly going to become financially irresponsible just because you get credit and yes you can determine someones financial responsibility by looking at their debit card usage that is why you can actually convince someone if you get rejected to look at your case again to show them additional information. This is why you can get a credit card in citibank if you have 25K in your savings account for 3 months straight and so on.

Re: The careless errors of credit reporting agencies

#270

Post by nommm-nommm » Mon, Sep 12, 2016, 2:52 AM UTC

sithadmin wrote: post #202

Broken_Hippo wrote: post #197

Earlier quoted context omitted.

Ok, here is the thing. Your parents credit score doesn't affect yours. At all. IT doesn't help you get a credit card, nor bank accounts. Unless: Someone has them cosign for a loan or credit card. This is somewhat common with a first car loan or some student loans, but less common with credit cards. They won't be able to do that if they have a low score. Otherwise, you are basically on your own. The credit stuff you w…

>Your parents credit score doesn't affect yours. At all. IT doesn't help you get a credit card, nor bank accounts. Perhaps one's parents can't help in any formal way, but for me, my parents' creditworthiness and relationship with a local bank helped get me my first credit card. Right before I left home for college, I applied for a credit card with my local bank, and was initially declined. When I asked for reconsider…

That's a very very special case and it only happened because you wanted it to.