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The careless errors of credit reporting agencies

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Re: The careless errors of credit reporting agencies

#251

Post by PebblesHD »

adrianmacneil wrote: post #129
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…

NZ and Australia both have positive credit score systems (both introduced in the past 10 years). I wouldn't necessarily agree with a gut reaction that positive credit scores are absurdly backwards. It makes sense that I would trust someone more as a borrower if I know they have repaid debts in the past (versus having no history at all). The system could probably use improvements and more regulation, but I don't think…

My only concern with the system is that it treats people with no need or desire to have a credit card as 'risky', even if they have excellent assets and income. I'm personally unable to sign up for a mobile phone plan because I don't have a credit score, yet I rent a home, own a decent car and earn decent money without the need to borrow... This was only an issue because the person rejecting my application was relying on a computer screen to say 'denied' and where there is no room to say 'thats a bit silly'.

Re: The careless errors of credit reporting agencies

#252

Post by CaptSpify »

blakeyrat wrote: post #57
kartan wrote: post #3

How much is this connected to not having a real id card? For me is always weird when you see things like "no flight lists" and it is just a list of names. In Spain or Sweden your ID will be listed and the rest of people named like you spared of being harassed. Another concept that I don't understand is that USA's social security number has to be kept secret or otherwise your identity can be stolen. How that is even p…

Every State in the US has ID cards, but citizens aren't required to obtain one at any point. (Although a heck of a lot of basic things-- driving a car on a public road, boarding an airplane, buying alcohol-- are gated by them.) What we don't have is a Federal ID card. The TSA tried to impose one, but a lot of States are pushing back against it. (Washington State called the TSA's bluff and obtained a 2-year "extension…

> The SSN was never intended to be ID...

Wasn't that basically BS from the beginning though? What other purpose would it serve?

Re: The careless errors of credit reporting agencies

#253

Post by nommm-nommm »

whorleater wrote: post #226
hellogoodbyeeee wrote: post #137

Earlier quoted context omitted.

It sounds like you are at least ten years out of college. Federal regulations have changed and now it is more difficult for a college student to access credit cards

Graduated this year, Citi literally handed me a $5000 limit with minimal history (I had a credit card I used ~100 times across 4 years of college) and basically told me to go nuts.

That's not minimal credit history, that's quite a bit of credit history.

It doesn't matter how many times you swipe your card, you can get a card and never use it and and still counts for your credit history. The point being you have credit available to you but you aren't using it. You have four years of not running up your credit card, that's huge.

Re: The careless errors of credit reporting agencies

#254

Post by twblalock »

ThomPete wrote: post #244
twblalock wrote: post #164

Earlier quoted context omitted.

> 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. First of all, you can have an excellent credit score without paying a penny of interest. All you have to do is buy things with your credit card, and pay the bill in f…

First of all. Yes you can have an excellent credit score without paying a penny of interest, but the second you use it you are by definition in debt. Whether there is interest is besides the point. You can't just decide not to pay it back. And most people don't use it like that which is why it's such a good business. Second it's a fairly know issue that the way creditscore is established is pretty flawed. You can hav…

> You can have 10mio on your account, but if you have no job or own your own company it will actually affect your credit score.

That's not true. Your FICO score does not take into account your employment status, nor your income.

> With regards to the debit card the point is that the kind of purchases you did before you got a credit card, aren't going to change dramatically or fundamentally after you get one.

If that were true, it would contradict your earlier argument that "most people don't use it like that which is why it's such a good business." Your statements cannot both be true.

Re: The careless errors of credit reporting agencies

#255

Post by ThomPete »

nommm-nommm wrote: post #247
ThomPete wrote: post #242

Earlier quoted context omitted.

Perhaps it's my English that's just not allowing me to communicate clearly but I think people are missing the point here. There are plenty of other ways to credit companies could gauge inside your economic maturity as much of your financial history have been done via debit card for more or less the same transactions that you are going to use your credit card for. In other words the information is there already becaus…

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.

Re: The careless errors of credit reporting agencies

#256

Post by whorleater »

nommm-nommm wrote: post #253
whorleater wrote: post #226

Earlier quoted context omitted.

Graduated this year, Citi literally handed me a $5000 limit with minimal history (I had a credit card I used ~100 times across 4 years of college) and basically told me to go nuts.

That's not minimal credit history, that's quite a bit of credit history. It doesn't matter how many times you swipe your card, you can get a card and never use it and and still counts for your credit history. The point being you have credit available to you but you aren't using it. You have four years of not running up your credit card, that's huge.

Is it? I was under the assumption that credit history was based on actual payment amounts and the amount paid back, instead of just paying it back. From that I assumed the ~100 or so $4 purchases each I made wouldn't matter much.

EDIT: Huh, apparently I've been ill-informed about credit history [1]. Guess I've been a dumbo and one of today's lucky 10,000.

[1]: https://www.reddit.com/r/personalfinance/comments/188xmi/is_...

Re: The careless errors of credit reporting agencies

#257

Post by mcshicks »

codegeek wrote: post #17

Some steps to monitor your credit (USA): 1. Signup for https://www.creditkarma.com . Yes, you can argue about giving your credentials to a 3rd party company and they show you ads but credit karma sends me real time activity on my credit report FOR FREE. I get offers etc but I am happy since I can keep an eye on my credit report from all agencies. (except Experian who want you to pay them for report). 2. Get a free cr…

In California at least you can "security freeze" your credit reports so no one can apply for credit in your name. You have to temporarily "unfreeze" them (with a pin code) for someone to get a report. I was a victim of identity theft many years ago (from an employee in my company no less), and while I didn't loose any money, it was a huge hassle to straighten it out. If you don't regularly need services that require a credit report freezing them is much simpler than monitoring the credit agency. I did this many years ago and it really is a lot simpler solution in my opinion than constant monitoring.

Incidentally when I was an identity theft victim they didn't remove the incorrect information, they just said the fraudulent credit cards were "never late" and thus would not affect my score. I thought that was lame.

https://oag.ca.gov/idtheft/facts/freeze-your-credit

Re: The careless errors of credit reporting agencies

#258

Post by nommm-nommm »

whorleater wrote: post #256
nommm-nommm wrote: post #253

Earlier quoted context omitted.

That's not minimal credit history, that's quite a bit of credit history. It doesn't matter how many times you swipe your card, you can get a card and never use it and and still counts for your credit history. The point being you have credit available to you but you aren't using it. You have four years of not running up your credit card, that's huge.

Is it? I was under the assumption that credit history was based on actual payment amounts and the amount paid back, instead of just paying it back. From that I assumed the ~100 or so $4 purchases each I made wouldn't matter much. EDIT: Huh, apparently I've been ill-informed about credit history [1]. Guess I've been a dumbo and one of today's lucky 10,000. [1]: https://www.reddit.com/r/personalfinance/comments/188xmi/…

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 may weigh different things differently but FICO is currently used in most lending decisions so it's what matters for now.

Re: The careless errors of credit reporting agencies

#259

Post by lettergram »

frognition wrote: post #232
lettergram wrote: post #169

Earlier quoted context omitted.

I work for Capital One and their target customer is actually people without credit scores. As far as I know, it's the only company that actually targets these customers as the primary revenue stream and also makes money. The way it works, is they usually only give someone a $500 limit, then double the limit every 6 months If you pay monthly. Once you get a job you can get a bump to $2000 limit with the 1.5% back easy…

Why in the world would you want 100k of credit?

Increases credit score, plus I wanted the sign up bonuses. That's only on 5 cards too, btw...

It increases your score because you have a lower credit utilization and you have more available to you (supposedly signaling how responsible you are).

Re: The careless errors of credit reporting agencies

#260

Post by whorleater »

nommm-nommm wrote: post #258
whorleater wrote: post #256

Earlier quoted context omitted.

Is it? I was under the assumption that credit history was based on actual payment amounts and the amount paid back, instead of just paying it back. From that I assumed the ~100 or so $4 purchases each I made wouldn't matter much. EDIT: Huh, apparently I've been ill-informed about credit history [1]. Guess I've been a dumbo and one of today's lucky 10,000. [1]: https://www.reddit.com/r/personalfinance/comments/188xmi/…

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!
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