Hacker News Reader

Comment by kneebonian | Hacker News Reader

> How else would you do risk management for loans? Without credit bureau where would the loan originator determine the risk of the loan? Would each individual be responsible have to store all payments and receipt of payment and submit that?

You act like this is ridiculous but the fact of the matter is that I would prefer that, because ultimately the difference agency in this situation I provide the lender my information that I control, in any other scenario my agency has been taken away by an outside group, whom I may or may not trust.

Hell imagine how different everything would be if instead of the Credit Unions working for the lenders I instead paid for a service myself that performed this service for me. The difference being one is done to me the other is done by me.

View on HN

> You act like this is ridiculous but the fact of the matter is that I would prefer that, because ultimately the difference agency in this situation I provide the lender my information that I control, in any other scenario my agency has been taken away by an outside group, whom I may or may not trust.

This wouldn’t work, because borrowers would only present receipts for credit they repaid on time while withholding information about lines of credit they failed to repay.

The point of credit history is that it exposes your past payments or failure to repay. It’s not an equivalent system if borrowers can just conveniently forget to mention the other loans they didn’t repay

> It’s not an equivalent system if borrowers can just conveniently forget to mention the other loans they didn’t repay

Which is, of course, what we currently have, except it's the businesses who are able to "conveniently forget to mention" instead of the borrowers.

I pay myriad bills on time and in full every month, but only three of them--all loans--report my positive payment history to credit bureaus. Yet all of them, from mobile phone providers to landlords to utilities to insurance companies, insisted on being able to look at that payment history. They get the benefit of being able to evaluate me on an incomplete set of data; why shouldn't I get the return?

(The answer as always is that we don't have any leverage. Simply saying "well, then don't use those companies" is a non-answer when every company does it the same way and all of them lobby government to keep it that way.)

Many places will report a debt to collections but not also send in data that you've been making regular payments.

>Which is, of course, what we currently have, except it's the businesses who are able to "conveniently forget to mention" instead of the borrowers.

>I pay myriad bills on time and in full every month, but only three of them--all loans--report my positive payment history to credit bureaus

Okay, but the reason for that seems to be due to practicality reasons rather than some sort of concerted effort to oppress consumers. The types of accounts that do get reported to credit agencies (off the top of my head: credit cards, student/car/personal loans, mortgages) have one thing in common: they all have high dollar amounts in at least one of: monthly payment, total owed, and available credit. Being able to stay on top of payments and/or not get into debt spiral provides a much stronger signal about your credit worthiness than you being able to afford the $100/month electric bill. Therefore, bills typically don't get reported, and presumably that's factored in the credit models. After all, the bills that you mention are mostly mandatory (eg. utilities), so it's reasonable to assume that if you don't have any such bills sent to collection, that you got those bills and paid them on time for all of your adult life.

There is nothing stopping a company from offering credit using this strategy. They don't have to source their credit rating from an existing credit agency.

Why would someone want to give credit this way, though? If the rating is provided by a company that is paid by the person requesting credit, why would the company giving credit trust it?

And there's also a middle ground where you could subscribe to a credit agency and own the data which you could have them supply to a potential lender.

Maybe a premium paid credit agency could be a thing?

Reply on news.ycombinator.com