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FICO and the Credit Bureau Cartel

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Re: FICO and the Credit Bureau Cartel

#61

Post by alistairSH »

matwood wrote: post #41
alistairSH wrote: post #28

Earlier quoted context omitted.

Not only do banks and credit agencies provide a "recipe" for improving your score, most do so free of charge (for existing customers). For example, I know my score swings by +/-30 points/month. I'm fairly confident that is due to the balance on my CCs varying when the score is calculated (there is nothing else about my financial situation changing - same house for a decade, same car loan for 5 years, no new credit li…

Mine swings monthly for the same reason, though not as much. The report I get tells me why it swings ('used credit balance').

Yeah, I was surprised at how much it swings, but it's high enough it shouldn't matter (and easy enough to not use the cards for a month, let it rebound, then borrow whatever I need to borrow).

The report from my bank never says why. It does list factors that contribute to my score, but they're all "good" (low usage as % of available, all payments on time, etc). And never change.

Re: FICO and the Credit Bureau Cartel

#62

Post by vel0city »

ghaff wrote: post #54
mschuster91 wrote: post #24

Earlier quoted context omitted.

> 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 p…

I'm definitely no expert on the law in every state, but from the states I know of there are central appraisal districts in charge of real estate tax appraisals. They already have to keep track of ownership of properties and their tax assessments, might as well just expand their domain to also include lien registries as well.

I totally get it would be quite a mess and complication and issue with federalism to have the federal government have a single database, but at least having real databases somewhere that can be publicly queried would be a massive step forward towards making title insurance no longer a thing.

Re: FICO and the Credit Bureau Cartel

#63

Post by neogodless »

splwjs wrote: post #50
steveBK123 wrote: post #12

I 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…

Last time I looked at the amortization schedule for a 30 year fixed mortgage the payback was about 250% of the loan amount. No other figures are consequential. Mortgages are a predatory thing pointed at the financially illiterate and the hopeless right now.

This is a pretty limited view of mortgages. In varies across countries, but in the U.S. a (relatively) low APR fixed rate 30 year mortgage is an amazing way to utilize leverage (only put up ~20% collateral) on an appreciating asset.

Paying $400,000 for a mortgage vs paying $80,000 and 6% over 30 years, but investing the remaining $320,000 in the stock market (returning ~7% after inflation) and your housing payment grows much slower than inflation.

That doesn't mean every mortgage is a good idea, or there aren't circumstances where the borrower ends up losing out, but it's a tool that can be utilized if you learn to understand it.

Re: FICO and the Credit Bureau Cartel

#64

Post by Workaccount2 »

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…

I think the idea is in good spirit, but it's important to be aware that gov backed services often run at a loss indefinitely. It's impossible to compete with a business that doesn't need to make money to exist. So you end up with just the government service.

Re: FICO and the Credit Bureau Cartel

#65

Post by ghaff »

vel0city wrote: post #62
ghaff wrote: post #54

Earlier quoted context omitted.

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 p…

I'm definitely no expert on the law in every state, but from the states I know of there are central appraisal districts in charge of real estate tax appraisals. They already have to keep track of ownership of properties and their tax assessments, might as well just expand their domain to also include lien registries as well. I totally get it would be quite a mess and complication and issue with federalism to have the…

I'm not opposed to the idea but someone needs to hold the bag when mistakes are made and then you're essentially back to having title insurance in some form even if it's the general taxpayer that is doing the funding.

Re: FICO and the Credit Bureau Cartel

#66

Post by JackFr »

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…

> For a period I had no FICO score, yet I was able to secure a loan from a Credit Union.

The credit union was content to use its own capital and hold your loan to maturity on its books. (I'm presuming you were probably a banking customer of the credit union, though I realize not necessarily.)

Non-credit union lenders though most often want to either sell your loan to investors or pledge it as collateral to borrow money for themselves, and for that they need a FICO.

> The score from what I have gathered when I learn really rewards those who remain in debt and pay substantial interest, not the frugal and financially stable (check to check is not financially stable). Basically encouraging to keep self in debt just at the edge of financial disaster's precipice.

That's not really true. Using a credit card for most of your expenses and paying it off in full every month is actually a great boost to your credit score. It's both an indication that you live within your means and you honor your agreements.

Re: FICO and the Credit Bureau Cartel

#67

Post by xivzgrev »

steveBK123 wrote: post #12

I 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…

Well that’s exactly the point.

There was another recent article here on cartels that suck small amounts of blood from lots of people. Too small for anyone to individually care but collectively a lot!

What’s particularly insulting is that credit scores are commoditized - they are free to go check. Technically it’s vantage score vs FICO but generally the same and definitely not worth $150.

Re: FICO and the Credit Bureau Cartel

#68

Post by throwaway173738 »

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…

> This cartel will never be broken up. Too much money goes into the politicians pockets to move for break-up.

They said this about Bell Telephone at one time too.

Re: FICO and the Credit Bureau Cartel

#69

Post by CoolGuySteve »

Workaccount2 wrote: post #64
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…

I think the idea is in good spirit, but it's important to be aware that gov backed services often run at a loss indefinitely. It's impossible to compete with a business that doesn't need to make money to exist. So you end up with just the government service.

Yeah that's why the only and best way to send packages here is the USPS.

Re: FICO and the Credit Bureau Cartel

#70

Post by Aspos »

Workaccount2 wrote: post #64
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…

I think the idea is in good spirit, but it's important to be aware that gov backed services often run at a loss indefinitely. It's impossible to compete with a business that doesn't need to make money to exist. So you end up with just the government service.

I see why you have this assumption, yet we have 20+ years of data proving that a private bureau can actually compete, flourish and innovate while serving majority of the reports while gov-run bureau ensures that prices stay manageable.
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