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Comment by vinceguidry | Hacker News Reader

I hope you're being specific in your wish for Equifax to be shut down and not the whole consumer credit reporting industry. That industry solves a very, very real problem for consumers, and countries without credit reporting also don't have consumer access to credit, making, among other things, finding mortgage loans virtually impossible.

The privacy angle is minuscule compared to the human costs of not having consumer debt.

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I am someone who believes the world would be better off without these companies. My argument generally goes like this:

- Credit existed before reporting agencies

- It's possible to verify creditworthiness without a reporting agency

- Reporting agencies aren't particularly good at their job anyways

You may dislike the first two arguments, because obviously they make debt more expensive. I don't think that's the worst thing in the world. So, I'll focus on the last point.

Credit reporting agencies often have incorrect info. Here's an FTC study that says one in five have wrong info that was corrected. [0]

You may argue that I should use the other number, ie. people who still had errors after fixing it: 2.2%. But, it oftentimes by the time you fix an error, the opportunity to get the thing you want (ie. job, apartment, car, house, etc) has passed.

But even if the data was correct, the way they generate the score manipulates people into taking on more debt than they should and take on worse debt.

Getting and using one or more credit cards is the easiest ways to improve your credit score, and this is honestly bullshit. Credit cards encourage bad spending habits and trap people in debt. The credit card companies rely on people carrying a balance and a really good way to make that happen is to make sure everyone uses their credit cards for everything.

Meanwhile, things that should improve your score often don't. For example, rent and utility payments only count if they are reported and a lot of landlords or companies don't report or only report if you don't pay.

Maybe it's not the credit reporting agencies' problem if people don't report good behavior. And, I don't know what efforts they've made at getting more people to report. But my bias tells me that they probably just don't care.

[0] https://www.ftc.gov/news-events/press-releases/2015/01/ftc-i...

>- Credit existed before reporting agencies

>- It's possible to verify creditworthiness without a reporting agency

Absolutely, it was called "whether the banker knows you from church as a good Christian man".

The whole credit reporting industry depends on others absorbing their massive negative externalities. The companies are the equivalent of gross polluters dumping benzene into reservoirs.

> The privacy angle is minuscule

It is infuriating to see the suffering of the individual victims of identity theft dismissed so cavalierly. If the credit reporting companies had to pay for all the harm they cause they would be bankrupt many times over.

Even if credit rating serves a purpose, how does the system get reformed to bring true redress to those negatively affected by it?

And if getting a mortgage or a similarly big decision was the only time you needed a credit score, that would be one thing. Problem is in the US, a stupid number of things requires a credit score, including some mobile phone contracts (!).

Having grown up in a credit-averse and cash-focused society, I don't think they're that necessary. What people do instead in build a relationship with your local bank. Of course, once you're used to a credit-driven society it's hard/impossible to go back. People apparently hate being told "No you can't afford that new car".

Would you go back to those days?

In my twenties when I left the military I lost the ability to pay back my debts. It took me some 9 years to decide to clean up my credit. Living without a credit score is absolutely possible right now.

One simple way to change credit reporting is to make the process "opt-in". Credit reporting agencies can only report on consumers that agree to have their information reported. They could still collect publicly available data but couldn't report unless they have a consumer's ongoing agreement. Essentially, everyone's report is "frozen" by default and the agencies are automatically monetarily liable unless have an explicit agreement for this unfreezing.

That said, I'm not sure a world without consumer debt would be that much worse.

This is pretty much how it works already. When you sign for a credit card/loan/etc. the agreement includes language saying you also agree for it to be reported to a credit agency.

Credit reports are not frozen by default, per gp's suggestion. That would prevent those who want to inquire about an individual's credit from finding anything out without the individual taking concrete action to unfreeze the account.

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