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FICO and the Credit Bureau Cartel

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Re: FICO and the Credit Bureau Cartel

#101

Post by Workaccount2 »

mint2 wrote: post #91
Workaccount2 wrote: post #83

Earlier quoted context omitted.

None of those are links in a chain of private markets. They are their own government monopoly markets. If the government is going to become the defacto credit rating agency, they might as well be the defacto lender. Obviously loan rejections and low scores will be unpopular and an easy lever to push on for more votes, so just ditch the credit ratings all together and have a government lender that lends taxpayer money…

That is incorrect, those are not government monopolies, those spaces have private options. FedEx, DHL, UPS and government USPS Parks - there’s a ton of types with equivalent public and private versions Police - private security Firefighters - there are private fire fighters who protect houses threatened by wildfire - they just don’t need to respond when it comes to responding to stuff like traffic accidents and healt…

I mean, you can edge case away any argument. My neighbor uses solar and batteries so I guess the power company isn't a monopoly?

Re: FICO and the Credit Bureau Cartel

#102

Post by supertrope »

vundercind wrote: post #82
Aspos wrote: post #57

Twenty or so years ago Experian and FairIsaac were paid by USAID to help build credit bureau infrastructure in Kazakhstan. USAID also paid their legal departments to help draft a law which would govern the whole process. And guess what, in the result we got much fairer, more efficient, far more future-proof infra than the US has today. Gov licenses credit bureaus and runs its own one. Banks must report to all license…

A lot of things in the US would change for the better if we installed a new government for ourselves using the techniques we have when we assist or replace foreign governments. There’s a ton of stuff we have and do, including some fundamental stuff (our system of voting, for one) that’s known to be really bad compared to the “state of the art”. But, in part because of some of those bad elements, we only ever get to a…

>replace foreign government

Like a CIA sponsored military coup? Or aerial bombing?

Re: FICO and the Credit Bureau Cartel

#103

Post by BizarroLand »

supertrope wrote: post #102
vundercind wrote: post #82

Earlier quoted context omitted.

A lot of things in the US would change for the better if we installed a new government for ourselves using the techniques we have when we assist or replace foreign governments. There’s a ton of stuff we have and do, including some fundamental stuff (our system of voting, for one) that’s known to be really bad compared to the “state of the art”. But, in part because of some of those bad elements, we only ever get to a…

>replace foreign government Like a CIA sponsored military coup? Or aerial bombing?

From what I gather in the Federalist Society Papers, the original intent was that we would reinvent our country every 25 years or so, draft a new constitution and incorporate all of the changes that we needed to continue to function with the precept of being a great society, "Of the people, by the people, for the people".

However, requiring 100% of states to affirm the new constitution was difficult enough in 1776 when there were only 13 states and they all had a common enemy to band together against.

Doing that now would probably be impossible or require antilogic so extreme no human could read it without their ears bleeding from the brain hemorrhage.

Re: FICO and the Credit Bureau Cartel

#104

Post by chollida1 »

flerchin wrote: post #100
chollida1 wrote: post #98

Earlier quoted context omitted.

Ok, so if someone impersonates me and sells my home and runs off with the money this is one scenario that title insurance covers my losses. How does a government database help in this case? This is a scenario that happens more often than you'd think with empty condos and a foreign owner who isn't around to look after their property. You'd still need title insurance even though you have a "government maintained databa…

That scenario is in fact not covered by title insurance. Title insurance would be for the schmuck who bought your house. I'm not saying that the function of title insurance companies would go away, but it would largely be obviated by an accurate single source of truth for land titling, and yes some insurance function that the government could provide for a much smaller fee.

It is indeed covered as I've had a personal friend have to use it for that reason. The buyer got to keep the house and the old owner had title insurance pay them for the loss of their home.

Re: FICO and the Credit Bureau Cartel

#105

Post by FireBeyond »

WaitWaitWha wrote: post #43

> Even if a lender thinks the customer would be a good risk, the lender has to buy a FICO score regardless. This isn't completely correct. For a period I had no FICO score, yet I was able to secure a loan from a Credit Union. It did require me to show my assets and income flow, but the Credit Union was able to provide me with a loan. The score from what I have gathered when I learn really rewards those who remain in…

Right. There is certainly a component of risk in the models but there’s also “how valuable a credit consumer are you”.

Which is why things like closing accounts or paying loans early actually hurt your score. CRAs and their advocates say “we lost a datapoint so our uncertainty increases”, acting as if that historical data has no value.

When I was applying for a mortgage and my credit was as “clean” as it has been (balances, accounts, etc.) Verizon filed a collection over what was a fraudulent account. Score dropped 140 points. In the course of three business days that collection was deleted, and my score went back up… 50 points.

Multiple factors, I know, but that also makes me think that even some of those deleted trade lines and delinquencies and others are still floating around and factoring in.

Re: FICO and the Credit Bureau Cartel

#106

Post by balderdash »

Workaccount2 wrote: post #73
balderdash wrote: post #51

The ridiculous thing is that the FICO score is so focused on commercial profitability rather than risk. You get lower score if you as a consumer optimise your cost of credit, price shopping/taking advantage of new rates/offers… it’s really a credit and likely profitability score

I have an 800 score while always being tight with my wallet. The most valuable thing to lenders is someone who can 100% be counted on to always pay, even if things outside their control turn against them. People chronically fail to understand this, and end up putting themselves in financially precarious situations i.e. paycheck-to-paycheck living.

Yes, but credit scores penalise people for many actions that have more to do with being perceived to bad customers than bad credit risks.payment history is only 35% of your score and and if you add it credit utilization, your only talking about ~2/3s of the score…

You can’t get a perfect score if you change credit cards on a regular basis or cancel a zero balance card, people have worse credit because they paid off their student loans years ago or bought an older/cheaper car with cash as opposed financing one (less credit “diversity”) all of these things penalize people who have always paid their bills

Re: FICO and the Credit Bureau Cartel

#107

Post by balderdash »

SpicyLemonZest wrote: post #84
Workaccount2 wrote: post #73

Earlier quoted context omitted.

I have an 800 score while always being tight with my wallet. The most valuable thing to lenders is someone who can 100% be counted on to always pay, even if things outside their control turn against them. People chronically fail to understand this, and end up putting themselves in financially precarious situations i.e. paycheck-to-paycheck living.

I do not have an 800 score despite never missing a payment on any account. I don’t know why my score is lower (they don’t tell you!) but my general understanding is that the original commenter is right and my score would be higher if I had more credit products.

Yeah payment history is only 35% of your score, amount of debt is 30% of your score (stupidly they want that to be below 7% of available (revolving credit) - meaning they penalise if you spend $1k/month on a credit card (and pay it off each month) and your limit is $10k, where as if your limit was ~$16k they look upon it favourably), length of history 15% (changing loan providers or credit cards hurts you here - despite flawless payment history), credit mix 10% (so if you just have credit cards this hurts you)

Re: FICO and the Credit Bureau Cartel

#108

Post by vundercind »

supertrope wrote: post #102
vundercind wrote: post #82

Earlier quoted context omitted.

A lot of things in the US would change for the better if we installed a new government for ourselves using the techniques we have when we assist or replace foreign governments. There’s a ton of stuff we have and do, including some fundamental stuff (our system of voting, for one) that’s known to be really bad compared to the “state of the art”. But, in part because of some of those bad elements, we only ever get to a…

>replace foreign government Like a CIA sponsored military coup? Or aerial bombing?

The “friendlier” nation-building stuff, from being invited to help (as in the original example) to installing new states in countries we’ve conquered (you see now why the quotes on “friendlier”).

Less so the coups. Usually with those we just want some degree of fealty or alignment. Dictators are easier to predict and control in that way, and one fuck of a lot cheaper to install than a functioning democracy.

Re: FICO and the Credit Bureau Cartel

#109

Post by isthatafact »

astura wrote: post #21
Harmohit wrote: post #2

I wonder if open source software can play a role in this. Maybe we can have an open source algorithm for determining credit ratings and private companies only provide a secure database of ratings. It will also offer the lay person insights into how the credit rating is exactly determined. They can know what is causing their rating to be less than desired and take appropriate action, instead of watching a random youtu…

FICO already tells you what goes into their scoring algorithm. It's not a mystery. https://www.myfico.com/credit-education/whats-in-your-credit...

I was curious, so I checked that page and did not find the equation used to calculate the "score", only vague hints.

Is there a formula, spreadsheet, or code that people could use to verify their score? Or is it indeed a mystery?

Re: FICO and the Credit Bureau Cartel

#110

Post by 0x5f3759df-i »

vundercind wrote: post #82
Aspos wrote: post #57

Twenty or so years ago Experian and FairIsaac were paid by USAID to help build credit bureau infrastructure in Kazakhstan. USAID also paid their legal departments to help draft a law which would govern the whole process. And guess what, in the result we got much fairer, more efficient, far more future-proof infra than the US has today. Gov licenses credit bureaus and runs its own one. Banks must report to all license…

A lot of things in the US would change for the better if we installed a new government for ourselves using the techniques we have when we assist or replace foreign governments. There’s a ton of stuff we have and do, including some fundamental stuff (our system of voting, for one) that’s known to be really bad compared to the “state of the art”. But, in part because of some of those bad elements, we only ever get to a…

Yep, there’s a reason we didn’t give Germany and Japan our “exceptional” electoral college system.

Tech debt exists in constitutional law as well.

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