[zonidjan]

It does when millions of people have similar anecdotes, and when the system is literally set up for it.

Places can report whatever they want to. And you can dispute it, but the person who report it will just say "no, we're right" and it'll stay up.

[nudiustertian]

This

I've been fighting with Equifax and TransUnion for 5 years to remove 30 year old reports on my credit history (which are clearly not me because im less than 25 years old)

[mehrdadn]

This is amazing. How are you running into trouble with this for 5 years? What is their counterargument?

[adrr]

If you could build a better algorithm to do underwriting, you could make billions. Companies try all the time like zest finance.

[munk-a]

Not being the worst is not the same as succeeding.

Following that logic the Burj Khalifa is a space elevator because no one has been able to build a better space elevator than that.

I have general objections to this sort of underwriting assessment being an ethical business for a private organization to begin with due to the immense amount of possibility for discrimination it opens up.

[harryh]

On the contrary, the modern credit scoring system has been a huge success when it comes to fighting discrimination. Previously banks left underwriting decisions to the whims of individual bankers. Unsurprisingly, many of these whims were based on things like the color of an applicants skin.

While there are certainly some arguments to be made about disparate impact under our current system basically everyone agrees that access to credit for minorities is much much better than it used to be.

[salawat]

Why? Why feed into it? This is the mentality that kills me.

Why double down and try to make something that is already being gamed? The very definition of insanity is doing The same thing over and over again and expecting a different result.

There is no right to operate a business that exposes everyone to risk they have no choice in whether to accept or not. Centralizing excessive amounts of data with obtuse and dubious control mechanisms/capacity for redress is a disaster waiting to happen.

Publicizing the risk, and privatizing the profits at it's finest.

[minton]

It wouldn’t put anyone at risk if we held lenders to a legal standard of proof that YOU signed a contract asking for money. It might be inconvenient but not compared to being stuck with debts you never agreed to.

[salawat]

The problem with that, is the story doesn't stop at "You" when another person can get enough information to act as you in a legal sense.

To me, this entire industry reeks of people engaging in risky behavior, but trying to externalize the costs/risks of said risky behavior, and consequemces be damned. Furthermore, they want the agency that gets externalized to "make money", something which encourages the minimum amount of investment humanly possible in making sure they are actually solving the problem in a way that doesn't merely create new ones.

Furthermore, it seems to me that the financial sector is eating the bloody world; as the metrics they gather are being gleefully used as discriminators in far more than just loan granting.

The system is either so critical to the way the economy works, that we should be willing to "sink" money in the interests of making the system as effective as possible (I.e. no dark pattern B.S., easy to use controls, easy to manage all interactions with, and maintained to the highest degree of security), or it isn't, and a discussion needs to be had whether having such valuable pots of exploitable data is something we should even tolerate as an acceptable exercise.

To be quite honest, I've seen more harm than good come out of the system given the ubiquity of the Credit history "bootstrap" problem, and now the compromise of a huge portion of the American population's personal data.

Trying to couch this as merely a case of "oh, we just need more contracts" without addressing the central problem of your identity essentially being hijacked by a bunch of for profit involuntary surveillance companies operating under an incentive structure pushing minimum viable effort in protecting your data, ensuring it's correctness, and restricting access to only appropriate reasons.

Throw in the failure of the FTC to clearly levy a strong enough penalty leaves me feeling this industry is a social liability in it's current form.

[mikeash]

Better for whom?

I’m sure the existing credit bureaus are great for the people who give them money. They sure suck for the rest of us, though. Fortunately for them, we get zero say.

[adrr]

Market is efficient. If underwriting wasn’t efficient, a company could utilize better algorithms and offer better rates and better determine risk to minimize default. This a multi billion dollar opportunity. People don’t care about who is underwriting their car or home loan, they care about rates.

[mikeash]

Equifax and their brother businesses give us low rates in exchange for exposing us to fraud risks whose monetary value is probably literally incalculable.

The thing is, we don’t get to choose whether we’re exposed to those risks. It happens whether we like it or not.

So let’s say I start a company that offers better TCO: my rates are a bit higher but this is more than made up for by a much lower fraud risk. Do I win the market? No, because Equifax’s fraud risk hits my customers just as much, so I’m not competitive.

Credit bureaus give us low rates because they externalize the costs. Since the costs are externalities, competition can’t beat them. It’s the financial equivalent of making cheap electricity by poisoning the community with emissions.

[adrr]

There are underwriting systems that don't pull credit reports. The loan rates are around 20% and go down as you develop a history with them. People have choices.

[mikeash]

They don’t really. Let’s say I choose to avoid the traditional credit system and go with one of these other things. Then some fraudster opens an account in my name with my info and suddenly I’m in Equifax anyway. Then Equifax gets breached and even more fraudsters use that info. I’m stuck trying to prove my innocence to creditors despite having supposedly chosen not to participate in that system.

[sokoloff]

"Your kneecaps are your collateral..."