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
FICO and the Credit Bureau Cartel
51–60 of 136 posts
Re: FICO and the Credit Bureau Cartel
#52I'm not sure how many times we're going to re-learn this lesson:
* You cannot regulate a monopoly into good behavior. Recent example: Apple.
* You must destroy it.
All of these regulatory bureaus are a waste of time. Let the FTC loose like a Mantura.
Re: FICO and the Credit Bureau Cartel
#53Earlier quoted context omitted.
Pretty much, yeah. A credit score is a descriptor of the risk of financial loss when lending the individual concerned some money. So the only real way to grow and keep the score high is: * Pay your credit card and loan statements when they are due (late payments imply you don't have money). * Keep credit inquiries to the minimum necessary (an inquiry means you're asking for a loan, implying you don't have money). * D…
> Keep credit inquiries to the minimum necessary (an inquiry means you're asking for a loan, implying you don't have money). This one should be outright banned, as it's effectively anticompetitive - there are thousands of banks on the planet, and it should be anyone's right to make an inquiry at each and every single bank to make sure one gets the best rates.
Yes, but the reason they say to do all the inquires around the same time is b/c many inquires spread out is a negative signal. It can mean that banks are turning a borrower down for whatever reason so they are now looking for a bank to take on the risk.
Re: FICO and the Credit Bureau Cartel
#54I would point out that "400% increase in mortgage credit check fees" sounds probably a lot worse than the actual number - which is like.. $150 at the time you are getting a mortgage. Of all the fees associated with buying your average $400k home, I don't think the $150 credit check fee is the big pain point. Title insurance is a much bigger scam/cost. The various state & local taxes at closing are orders of magnitude…
> Title insurance is a much bigger scam/cost. Given the horror stories that crop up regularly on HN or Reddit, these insurances actually make sense.
In the US, it's unrealistic to assume there's a canonical federal database which tracks every potential title complication including property tax liens at the local level. In my case, I had a (resolved) issue where the property/house I was buying was a subdivided larger property with an agricultural lien (for an apple orchard) that hadn't been lifted yet.
Titles have a lot of opportunities for complications in many places; there's no simple technology fix.
The insurance is annoying but it's an area that has the potential for really expensive issues.
Re: FICO and the Credit Bureau Cartel
#55Earlier quoted context omitted.
> Title insurance is a much bigger scam/cost. I wouldn't cut out Title insurance, I have two friends for whom it saved low 7 digits each due to fraud in one case and liens in another. It's incredibly important in today's market and I can't see how you can call it a scam, unless you also view car/health/life insurance as a scam as well, in which case we just disagree:)
I think what parent actually means is that there are better solutions for it than insurance. E.g. a central registry of ownership and liens would probably solve 99% of the cases that you need insurance for. The insurance is a scam in the way that there are technical solutions that would obviate the need for this "service", but that solution is against the interests of the service providers. Very much like tax returns…
In those cases where the government handles recording all transfer, there is typically a fund which covers loss due to fraudulent or erroneous transfers. Thus there is still title insurance, it's just hidden from view.
Re: FICO and the Credit Bureau Cartel
#56I'm not sure how many times we're going to re-learn this lesson: * You cannot regulate a monopoly into good behavior. Recent example: Apple. * You must destroy it. All of these regulatory bureaus are a waste of time. Let the FTC loose like a Mantura.
> Let the FTC loose like a Mantura.
The wind instrument?
Re: FICO and the Credit Bureau Cartel
#57Twenty 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 licensed bureaus and may choose which bureau to pull reports from. This means a report from any bureau is as good as from any other one.
Having a gov player in the market effectively creates a price ceiling, so a private bureau has to sell data for less than the government-run bureau. Private bureau has to keep innovating to justify its existence and thus keep creating new products which predict creditworthiness better and better. Credit report includes all the raw information, so banks are free to compute their own score and are not bound to anything stupidly archaic and awkward such as US FICO score, don't need to rely on any external score at all. It is the XXI century, computing a credit decision out of a few hundred datapoints takes milliseconds, costs nothing. So gov-run bureau sees a fraction of a % of the load yet effectively moderates the whole market. The largest private bureau is owned by banks (like VISA used to be) and thus is working in the best interests of the banks.
Many (if not all) problems we see in the US financial sector are the result of regulatory and legislative negligence. Just some lazy folks trying to run things the way there were in the 80es.
Re: FICO and the Credit Bureau Cartel
#58Re: FICO and the Credit Bureau Cartel
#59Earlier quoted context omitted.
Pretty much, yeah. A credit score is a descriptor of the risk of financial loss when lending the individual concerned some money. So the only real way to grow and keep the score high is: * Pay your credit card and loan statements when they are due (late payments imply you don't have money). * Keep credit inquiries to the minimum necessary (an inquiry means you're asking for a loan, implying you don't have money). * D…
> Keep credit inquiries to the minimum necessary (an inquiry means you're asking for a loan, implying you don't have money). This one should be outright banned, as it's effectively anticompetitive - there are thousands of banks on the planet, and it should be anyone's right to make an inquiry at each and every single bank to make sure one gets the best rates.
FICO considers hard inquiries (other than for credit card applications) within 45 days of each other to be just one hard inquiry.
Re: FICO and the Credit Bureau Cartel
#60> 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…
A good credit union will bring loans to the board of trustees and often approve them when no Bank will.
For most individuals, building a relationship with a local credit union is an asset in and of itself.