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How Equifax Became a Private IRS

mattstoller.substack.com

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Re: How Equifax Became a Private IRS

#91

Post by gruez »

33955985 wrote: post #19
refurb wrote: post #14

Earlier quoted context omitted.

If “paying you debts” is an “invisible tome of rules” then I’m all for it. Let’s be honest, credit score pretty accurately reflect what they are supposed to measure - credit worthiness.

A reasonable take if you ignore how this system reinforces existing inequality + the ways this system is used outside its original scope. Also you have to admit it’s kind of fucked up that there’s no total opt out mechanism.

> A reasonable take if you ignore how this system reinforces existing inequality

Sure, it "reinforces existing inequality" but what should we do about it? I'm pretty sure punishing people for stealing stuff "reinforces existing inequality", but does that mean stop doing that? Giving high paying jobs to the most qualified candidate also "reinforces existing inequality", but does that mean we should allocate jobs via lottery? Many things "reinforces existing inequality", but they exist for a reason. "reinforces existing inequality" is just a thought terminating cliche.

> the ways this system is used outside its original scope.

What are some examples?

>Also you have to admit it’s kind of fucked up that there’s no total opt out mechanism.

I mean, you can sort of opt out by refusing to give consent for people to run credit checks on you. The problem is that if you don't they assume you must have terrible credit, so you get denied for a lot of things.

Re: How Equifax Became a Private IRS

#92

Post by kevin_thibedeau »

ethbr0 wrote: post #77
vuln wrote: post #74

Earlier quoted context omitted.

I don't disagree that the companies are selling your contact information and most likely some fuzzy information ranges (age, gender, martial status, rent/own, income) that's all that's really needed to snail mail "pre approvals" hint you're not really approved for anything until you sign to allow them to actually pull your credit. Preapproved just means you meet the minimum threshold of potentially making them more m…

Outside of state laws and HIPAA, what national laws in the United States limit information sharing from a private party?

Video rental records is it. Everything else is up for sale.

Re: How Equifax Became a Private IRS

#93

Post by seanmcdirmid »

jorf wrote: post #23
seanmcdirmid wrote: post #15

Earlier quoted context omitted.

Those are minor and often temporary dings compared to not paying back loans on time or at all. For example, if you don’t have a loan history, your score isn’t low enough that you can’t get an apartment or get a car loan. Then by doing those things you can build credit. The other things, open and closing accounts too quickly, or making lots of loan inquiries over a short period of time, lead to temporary dings that re…

> if you don’t have a loan history, your score isn’t low enough that you can’t get an apartment This is not true. Many places will deny an applicant for zero loan history, effectively forcing people to get a credit card in order to obtain housing.

That never happened to me when I came back from China (unable to get a credit card for 9 years because I didn’t have a Chinese ID card, so no credit history within the 10 year window they keep track), nor did it happen to my wife, who obviously didn’t have any history as a new immigrant. We didn’t have problem getting a rental with proof of job/income. And without the job/proof of income, even with 10 credit cards, many of these places won’t rent to you regardless of your credit rating given eviction laws.

I get it, there must be some place that denies rental based on lack of credit history, but I would guess it is so rare that you’d have to stretch really hard to find an example.

Re: How Equifax Became a Private IRS

#94

Post by gruez »

epgui wrote: post #69
xyzelement wrote: post #68

Earlier quoted context omitted.

// If there was an error in your score, you'd have no way of knowin I don't think that's true. I remember many years ago getting a free credit report on myself (it may have been a free trial from a monitoring service but I believe you can also just get it from the agencies itself) You get to see the data that is factored into your score. Anything that majorly dings your credit should be obvious (eg Experian thinks yo…

You can know in the most obvious subset of cases of error, but if your score is 573 and it's supposed to be 605, good luck figuring that out. > Is there a reason you think this isn't possible? The methodology for the calculation of credit scores is secret. You can't go on the internet and figure out how they do it. They don't tell you, they don't publish it, you can't know. Therefore you don't have the ability to che…

> You can know in the most obvious subset of cases of error, but if your score is 573 and it's supposed to be 605, good luck figuring that out.

Presumably you're talking about the case where somebody never checks their credit report, goes out to get a car loan or whatever, and gets a worse interest rate because there's an error on their report. My question is, what are they supposed to do? They're already required to give you a free report per year. There are various services that give you your score and report for free multiple times per year. I guess a push model would work better, but would you want all the credit bureau to send you a letter to your address on file every time your credit report changes?

Re: How Equifax Became a Private IRS

#95

Post by gruez »

Retric wrote: post #55
piyh wrote: post #29

Earlier quoted context omitted.

It's a score, not a fortune teller. It's for financial modeling, and only one thing of many that lenders look at.

The entire point of a credit card score is to predict the future. Being bad at that because of inherent inaccuracies in their methodology is a problem.

>Being bad at that because of inherent inaccuracies in their methodology is a problem.

The parent poster already mentioned that it's "not a crystal ball". It doesn't have to be perfect. Sure, there are some edge cases where it fails, but if it works 99% then it's good enough. On the flip side, do you really want a minority report like system that can predict your future credit with 100% accuracy?

Re: How Equifax Became a Private IRS

#96

Post by jessaustin »

gruez wrote: post #88
jessaustin wrote: post #16

Earlier quoted context omitted.

Even in our most dystopian RAND-suggested bedtime story vision of a "communist hellhole", those proles who happened to possess a ruble when they got to the front of the breadline could buy a loaf. In the supercapitalist future, all transactions will require the approval of more than the two involved parties. Good luck buying anything if you ever express skepticism toward the great and powerful credit bureaus.

>Even in our most dystopian RAND-suggested bedtime story vision of a "communist hellhole", those proles who happened to possess a ruble when they got to the front of the breadline could buy a loaf. In the supercapitalist future, all transactions will require the approval of more than the two involved parties What's preventing a "communist hellhole" from implementing something similar? Is it something about state owne…

What's preventing a "communist hellhole" from implementing something similar?

Nothing? I referred to a fantasy, not reality. (Don't get confused.) It's possible I missed one of the cautionary tales I was supposed to catch to truly inculcate the proper American fear and hatred of foreigners. If you can point me to some 1980s-era capitalist propaganda that features this particular horror, I'll concede the point.

Back in the real world, it seems possible that e.g. China already has this, or will soon. I wouldn't take either side in the "is China communist?" argument, for fear of offending. I don't care very much, because I don't live in China. I'm concerned with the particular drain that my own nation is circling. You apparently share my apprehension; otherwise you would have argued that this wouldn't happen here rather than that it will also happen there.

Re: How Equifax Became a Private IRS

#97

Post by grantc »

SamuelAdams wrote: post #41
coderintherye wrote: post #26

One thing Matt mentions but doesn't go into is how this could (should?) be a government service. In fact, there is the IRS's IVES program: https://www.irs.gov/individuals/international-taxpayers/inco... but it is already fairly antiquated. There's a great opportunity here for the IRS to provide this service (with revenue from charging the requesting entities), with citizens being self-sovereign over what data is shar…

This is a good idea, but I’m skeptical if the IRS has enough funding and resources to manage another service. They barely have enough funding for the current backlog of filed tax returns.

The IRS can't even provide a simple reliable service to verify a TIN; they're not getting into the IVE game.

Re: How Equifax Became a Private IRS

#98

Post by b112 »

sokoloff wrote: post #54
medvezhenok wrote: post #33

Earlier quoted context omitted.

The closed card drops off your account history after ~10 years, so your score shouldn't immediately go down. Technically, I'm not sure that the credit scores can differentiate between you closing a card and the bank closing your card (the latter might be some sort of signal of potential change in creditworthiness) In general, credit scores are optimized for the average consumer - and so behaviors around the edges don…

In general, your score would immediately go down as your credit utilization would go up (outstanding balance over total available credit).

In Canada, Equifax et al tend to reduce score at each over 80% revolving credit account utilization.

Re: How Equifax Became a Private IRS

#99

Post by SilasX »

jorf wrote: post #23
seanmcdirmid wrote: post #15

Earlier quoted context omitted.

Those are minor and often temporary dings compared to not paying back loans on time or at all. For example, if you don’t have a loan history, your score isn’t low enough that you can’t get an apartment or get a car loan. Then by doing those things you can build credit. The other things, open and closing accounts too quickly, or making lots of loan inquiries over a short period of time, lead to temporary dings that re…

> if you don’t have a loan history, your score isn’t low enough that you can’t get an apartment This is not true. Many places will deny an applicant for zero loan history, effectively forcing people to get a credit card in order to obtain housing.

Correct, but a nitpick: it's not quite an issue (as the parent said) of the score being low per se. From my own experience, in the time when I had no credit history, when I went on annualcreditreport.com or the alternatives, it would happily tell me that I had a credit score of 720-740, but any time I would apply for an apartment, or even the most usurious credit department store credit card, I would get rejected.

So yes, the lack of a credit history makes you look artificially like a bad risk, leading to rejections, but not because the system reports you as "normal person with low credit score" -- that would actually be an improvement!

For those who want to know, I eventually got out of the catch-22 by following up with the service department of a financial-advisor-affiliated credit card, and answering some questions like about employment history.

Re: How Equifax Became a Private IRS

#100

Post by wmf »

gruez wrote: post #73
TheDong wrote: post #63

Earlier quoted context omitted.

My parents taught me that debt was bad. They told me that credit cards were traps to get you into debt, that preyed on poor impulse control, and that it was better not to have one. If you can't tell, my parents grew up in a time when the credit score system didn't really matter, and didn't understand it. I did not get a credit card. I did not have any loans, for school or anything else. My credit score wasn't even a…

>My credit score wasn't even a number, it just didn't exist. Even the bank I banked with, which could see that I had more than $8k USD deposited monthly, that could see I had $30k in an account with them, would not give me a loan to buy a car. Right, because it's a credit score, not a finance score. I'm not sure what you want here. Do you want credit bureaus to collect even more information about your financial life…

I see this as an education problem. People need to be taught the specific rules of credit scores in addition to general personal finance.
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