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by jsemrau 1344 days ago
Because in lending you need to rely on a data source to provide information about repayment behaviour, sanctions, fraud flags, outstanding loan volumes, historical loan volumes, etc in a neutral, reliable, verified, and consistent manner.

While in theory it's possible to calculate a credit score, the complexity of the reports these companies provide go much deeper.

Further, these companies operate across jurisdictions allowing for cross-border activities and economies of scale for MNC's.
2 comments
yucky 1343 days ago
Although you answered the question, and you answered it correctly by stating the obvious, it reminds me that this sort of answer is no longer appreciated by large segments of the population because it lacks "empathy".

What a strange world we live in. And it happened so quickly.

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jsemrau 1342 days ago
My answer doesn't lack empathy but is based on years of work experience. If you are lending money to people you don't want empathy or subjectivity you want to make sure that the person can repay the money. And that is not only to protect the lender but also to protect the borrower[1]

[1] https://asic.gov.au/about-asic/news-centre/find-a-media-rele...

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yucky 1341 days ago
I was agreeing with you, but I was probably being too sarcastic.
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gremlinsinc 1343 days ago
Pretty sure credit and loans existed before credit scores. In the 30s and 40s for example. The relationship was built on 1:1 trust, not all historical things you've done.

Imagine a dating network where you could see how every ex rated someone, nobody would sign on for that, yet this is exactly what a credit reporting agency is.

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jsemrau 1342 days ago
No it isn't. Lending is next to Prostitution one of the industries that exists for the longest time in some cases 5000 BC [1]

Trust relationships are mostly subjective and do not scale well to individuals that do not have established networks. You can compare that to modern Venture Capital businesses where it is incredibly hard to even get a pitch if you are not well connected.

You might have heard the story of Adam Neumann raising 300M for his new PropTech business. Why would he get this amount of money? Because (1) he has shown that he can build businesses that generate revenue in the Billions (2) he is connected to the right people worldwide allowing him to raise funds and attract talent with ease. That places him in the 0.0001% of entrepreneurs.

And that is what modern credit bureaus deliver as a SaaS product. An easy way to understand if people can repay a loan (execute), run a profitable business, and are trustworthy.

[1] https://en.wikipedia.org/wiki/Usury

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