Comment by legitster
1 day ago
The problem with this is the biggest, most important, and sketchiest data brokering services (credit monitoring) are all but entrenched in law at this point.
1 day ago
The problem with this is the biggest, most important, and sketchiest data brokering services (credit monitoring) are all but entrenched in law at this point.
I don't really know what you expect, people are obviously going to want to know your credit history when they're lending to you. If you can't tell what loans someone has, they could have opened a hundred different accounts and used the money in the casino.
How should credit reports work?
Well, there are multiple approaches, but here's one that worked well for me: when I purchased a home in the country where I now live, and the mortgage lender asked for a credit report from the (high-privacy) country where I lived the longest, what they got was a letter from that country's central bank listing the penalties for requesting that information. Up to and including jail time.
Suddenly the credit report was no longer a prerequisite to the mortgage.
That is rad. Is your high-privacy country friendly to immigrants? Asking for a friend...
But for real. You say you no longer live there, so I'm assuming you left for more opportunities. My wife and I are interested in countries with opportunities for engineers and privacy. Bonus points if there is engineering research opportunities.
Wouldn't this make credit riskier for lenders, reducing access to credit in general and thus making housing less accessible especially to working people?
Not asking polemically, I just have never studied economics and wonder if my intuition here is flawed
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You are so full of BS it's scary. No credit report is a non-starter at any financial institution that wants to stay in business. They won't be giving you a loan unless they know you are wealthy e.g. own 17 investment properties already. 'High-privacy' countries is code for 'tax-haven', and 'my money in the Cayman Islands' means your bank is about to run afoul of AML and KYC laws if they give you a loan. And this is the whole world: doing business with America means adopting their financial posture i.e. penalties for doing business with money launderers.
You bring your own data to each credit check.
It feels onerous as an idea because bank statements, monthly bills, payslips, will bequests, stock vests and trades, bank robberies*, and investment income each have different ways of being tracked. At least most of these records of individual financial activity come with a PDF these days. It wasn’t that long ago that applying for a loan meant scanning in papers for your lender to review.
Computers are smarter now. Not only can they read documents (or at least match the shapes against shapes they’ve been told are real) but they can also understand the contents too (or at least match the words against ideas they’ve been told are real.)
There may well yet be a future Data Valhalla where individuals hold their life.zip themselves, and upload whatever bits of it are needed to get that Nordstrom store card / car financing / cheeseburger loan without having an intermediate credit agency.
*I feel there’s a kernel of a joke there about a bank robber asking for a receipt with the loot in anticipation of declaring it on their tax return.
I don't see how this works in reality - The issue is that users wouldn't upload negative information (e.g. county court judgements or the bank robbery from your example).
Credit isn't like insurance where these things can be checked later during a claim (which can then be denied) - you need to know the person is a bad-payer before you send them the ten thousand dollar loan as that affects the terms, not afterwards when they default and you can't get your money back.
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The point of the credit agency is to work for the lender?
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How did lending work before nationwide mass surveillance of consumers and reporting on their activities?
It typically required more direct sources of trust. If you were a grocery store, you might let customers you personally knew to be good for it, run up a 'tab' and settle on payday. If you were a bank, you might only lend to rich high-class people. You can find this all around the world today; the US is a standout for credit scoring and for access to credit. When a British person wants to sell their house, it has to happen on the same day that the buyer sells their old house, and the house they're moving into to be sold, and so on in a big same-day daisy-chain, until you hit someone who has enough cash for initial outlay. In Japan, up until very recently, you could expect your boss to need to co-sign your apartment lease (and your landlord to immediately escalate any disagreements to your boss).
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Poor people couldn't borrow and middle-class people paid really high interest rates. Credit ratings are pretty much what enabled the expansion of availability to everyone.
Why should they work. We used to think that money lenders were evil.
Yes, and then in the interim we invented having a hundred trillion dollars in GDP. I prefer having access to credit and so does everyone who owns a credit card. If you own a house, you didn't have its cash value when you bought it; neither your car, nor (most likely) your education. In the days of no borrowing, we solved the problem with ramshackle one-room buildings with dirt floors, handcarts, and the one book whose distributors desperately wanted everyone to have it for free.
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You send them digitally signed statements from other lenders (who are legally required to give them for free with accurate info) or independent rating agencies, they evaluate them and make a decision. They can have their own model or license one from FICO.
That does mean banks can't know if you lie by omission and hide some unpaid bills, but they can raise the evidence requirements to compensate and I think everyone deserves a second chance.
Having someone vouch for you.