_______ __ _______ | | |.---.-..----.| |--..-----..----. | | |.-----..--.--.--..-----. | || _ || __|| < | -__|| _| | || -__|| | | ||__ --| |___|___||___._||____||__|__||_____||__| |__|____||_____||________||_____| on Gopher (inofficial) URI Visit Hacker News on the Web COMMENT PAGE FOR: URI Credit Scores Can Run â and Ruin â Our Lives DIR text version Brendathomp9 wrote 1 day ago: I had this public records on my credit for close to 8 years now and I have always worried about it until I got to work with VIRTUALHACKNET @ GMAIL .COM , My Paul which was one of the hackers in the team was so nice to me , his listening ears to my issues gave me hope at first even before getting into work with their team , In just 5 weeks they were able to get the records erased and my credit score boosted to 815 as well .. I can actually say that I ever had such peace of mind that I have now in quite a long time and Iâm thankful to these Incredible team of great credit specialists . r00tanon wrote 3 days ago: There is also new "recession resiliency" score that is trumping even high credit scores now. Another money grab on the part of CBs that credit card companies are using to justify raising rates even on good standing accounts. simonswords82 wrote 3 days ago: I find it abhorrent that organisations (Experian/Equifax) who I have never directly done business with have a license to collect, use and sell my very personal information for financial gain. I had hoped with the implementation of GDPR I would be able to write to these con artists and ask them to remove my information but alas apparently my personal right to object does not automatically mean they have to stop processing my data see more here: [1] The whole arrangement is a total scam. URI [1]: https://help.equifax.co.uk/EquifaxOnlineHelp/s/article/HowdoIa... fleddr wrote 3 days ago: Here in the Netherlands we have a simpler system. Any non-trivial credit such as your mortgage, car loans and student loans are registered centrally at an institute called the BKR. When you regularly fail to make payments on these loans, you may be marked with a negative rating. So it's fairly binary information: good or bad. Over here, day to day payments are done with debit, so no detailed "small credit" history is recorded at all. In my case, this BKR institute has a single entry, my mortgage, and soon none at all. So I'd then have no registered credit at all, and thus also no score. ...which is celebrated by creditors. A complete lack of data is interpreted as you being the most financially sound person possible. This high trust culture doesn't come out of nowhere. Culturally, payment discipline overall is very solid as we have somewhat of an anti-loan culture (don't live beyond your means). Further, you're not going to get away with defaulting on loans, there's no mercy for it here. wang_li wrote 3 days ago: In the US a credit report has things like you havenât paid on this bill for 30 days, for 60 days, for 90 days. Or your account was sent to collections. And monthly balances on your debts. And how much revolving credit you have. Not sure exactly what you mean by small credit, but your daily purchases or spending is not on your credit report. Itâs largely similar to what you describe but the information, good and bad is kept for 7 years. fleddr wrote 3 days ago: I was under the assumption that in the US, a lot of people pay with credit instead of debit. If they pay with credit, I would assume this adds to their credit history and score? Is that not true? astura wrote 3 days ago: It shows up as a revolving line of credit on your credit report. It shows your credit limit and the balance on your last bill. EVa5I7bHFq9mnYK wrote 3 days ago: I think in the US credit score system rose as a way to work around racial discrimination laws. bondolo wrote 3 days ago: Do credit scores and the costs of borrowing associated with specific scores correlate to the actuarial risk of default or is it just a huge scam to justify usury? What is to stop them from charging twice as much for 2% additional risk? "It is not our fault you have less than perfect credit" caethan wrote 4 days ago: Relevant article from patio11 on how to fix this problem if you have it: URI [1]: https://www.kalzumeus.com/2017/09/09/identity-theft-credit-rep... teddyh wrote 4 days ago: URI [1]: http://www.threepanelsoul.com/comic/credit-rating-agencies martin_bech wrote 4 days ago: As a European, the credit score system seems completely bonkers.. sharker8 wrote 4 days ago: Credit scores are part of the marketing scheme to make people think they need mortgages. Slight exaggeration but not far from the truth. alar44 wrote 4 days ago: How else do you pay for a house? partiallypro wrote 4 days ago: I don't understand your point, you can have over an 800 credit score without ever having a mortgage. waynesonfire wrote 4 days ago: to play devils advocate, it can also do the opposite as it lowers rates for responsible folk, especially for responsible struggling folks. banannaise wrote 4 days ago: Credit scores for people who are responsible and struggling will be much closer to the scores of those who are irresponsible, rather than those who are responsible and not struggling. For the most part, the credit system expects perfection, so if you're out of work for several months and need to keep yourself fed, you're going to earn a black mark that will be a lot of work to counteract. Even if you manage to keep it spotless, credit scores still give a lot of weight to "having access to a lot of credit, and not using it", or "having a mortgage that you've been paying consistently for years", both of which mostly require you to already have good credit to get. LatteLazy wrote 4 days ago: Is it true that one reason the US has such a strong credit score system is the lack of reliable data on who people are? In the UK we have credit scores, but they're pretty irrelevant. What matters here is being able to show who you are (a matter of looking you up on things like voter lists) and you never having been taken to court for your debts (County Court Judgements). In fairness we also have a lot less unsecured debt and a much more punitive bankruptcy system... kube-system wrote 4 days ago: You have to know who someone is to look up their credit in the US, so that's not the reason. I'm guessing the biggest reason is your latter point -- it is very easy to get a lot of credit in the US and relatively easy to have it forgiven. thecleaner wrote 4 days ago: I am utterly flabbergasted regarding how and why am open source credit rating model doesn't exist. These people rely on third party providers whose data is "ok" if I am being generous. They do ridiculous data science and its basically critical software engineering being done by morons behind closed doors. 0daystock wrote 4 days ago: Credit Scores are bad, but "The Work Number" and other creepy derivative products are getting so much worse. There is a literal ledger of our salaries being shared by companies to presumably coordinate wages - how is this ok? banannaise wrote 4 days ago: And then we have "tenant screening services" which give major negative marks for things like being taken to court for eviction, even if it was years ago and even if the judgment was in your favor. These are, of course, not covered by the Fair Credit Reporting Act, so nobody is required to tell you what's on your report or allow you to dispute it, nor do they even have to tell you they used the report in denying you an apartment. the_svd_doctor wrote 3 days ago: They are covered by the FCRA URI [1]: https://www.ftc.gov/business-guidance/resources/using-cons... banannaise wrote 3 days ago: !!!! thank you for the info! That's news to me... and probably to most landlords. tediousdemise wrote 4 days ago: It's okay because we're just servants tied to our bank mortgages with little to no say in what the elite shareholder-run private sector dictates behind closed doors (and in which the legislative elites are also privvy/permissive). Year over year, your freedoms and finances will slowly dwindle. A law is passed that destroys your privacy... local/state/federal taxes are increased... the cost of groceries and housing keeps creeping up... but your employer need not cut you any slack, because you're just a number in one of their spreadsheets, serving a means to an end. There are no laws that dictate companies must pay a livable wage; instead we are brutalized and battered by the free market, with nothing left but a steadily decreasing quality of life. ProfXponent wrote 4 days ago: I locked my credit when I left the US, and I have no intention of ever unlocking it. Free yourself from a broken system and experience the world that doesn't treat you like a wage slave. kkielhofner wrote 4 days ago: There's yet another credit score type system that has significant effects on the ability to participate in the financial system that's much less known: [1] It's known (quite infamously) to essentially keep unbanked populations unbanked. Long story short if you've had overdraft fees, bounced checks, etc opening new accounts at banks that utilize ChexSystems becomes nearly impossible. On one hand there have clearly been people that have taken advantage of banks being siloed and abuse overdraft protection, etc to essentially get loans they can knowingly abscond with. Just move on to another bank. Repeat. On the other hand, ChexSystems is much less well known and a bit more "shadowy". The old story of "I use my debit card, mismanage my activity against direct deposit/balance, get hit with overdraft, then overdraft again once the fee hits, etc and next thing I know I'm $500 in the hole because of a $2.50 debit at a convenience store and now I'm essentially banned from every bank." In the case of the debit card example (or credit cards) banks could do what they used to and actually decline the charge. However they've clearly figured out it's much more profitable to allow the charge and just hit people with (often excessive) overdraft and over credit limit fees. URI [1]: https://www.investopedia.com/what-to-know-and-do-if-you-re-lis... bob1029 wrote 4 days ago: I have personally implemented this product for several financial institutions. In my experience, many are simply doing it as a form of KYC (i.e. customer authentication) than an actual "is this a bad customer" check. I have seen some really janky shit too. Every FI I have ever worked with ultimately decided to implement some "exception" process to be able to work with customers when there is some system outage or other unexpected results come back. Additionally, every institution I worked with also provides some form of second-chance product offerings to customers who come back with a red-hot report. Obviously, these products do not offer overdraft or other line-of-credit features, but they are real checking accounts for all other purposes. From my perspective, it's not an ideal system. But then again, I don't know that ideal is possible or desired. I think if Chex didn't exist, something else certainly would take its place. I've watched some other vendors exit the space recently, so I think they are now the last/biggest player. verisimi wrote 4 days ago: You sound like you're not sure that what you implemented was good for anyone. bob1029 wrote 3 days ago: If you are implying there is some sort of ethical harm in undertaking this kind of work, I can assure you the thought was crossing my mind the entire time. My choices were ultimately: 1. Implement this product as specified, doing everything in my power to ensure rules are being followed throughout. 2. Quit my job in protest, bringing down my tiny startup company. 10 people are immediately out of work. Our client finds someone else to implement chex for them anyways. verisimi wrote 3 days ago: FWIW, I just submitted a link on morality with regards to software: URI [1]: https://news.ycombinator.com/item?id=31517222 verisimi wrote 3 days ago: I do consider the ethical implications, of which there are many. I think we are coding ourselves into dystopia - where technology will not be serving us, but we will be serving it. We might be there already. Which 'governance structure'/'rule creating structure' is going to ensure that the moral elements are considered? Or do they simple wave through the legislation big corporations' lobbyists have written? Will big corporations' so-called the 'ethics committees' give us the moral outlook we need? (I don't think so - they are about justifying the unjustifiable, it seems to me.) What is better - that 10 people you are out of work, or that - as you say - someone else will implement this? These questions are very hard to answer. There are lots of coders who will do whatever-it-is without hesitation. Ultimately, I guess we will have to do as we each see fit. What I say: morality is a question for the individual, so how do you judge yourself? That is one way to guide oneself through the mire. sokoloff wrote 4 days ago: My bank (USAA) allows me to configure it to automatically take a credit card cash advance (rounded up to the nearest $100 increment), which is my preference for the every-other-decade situation where I would otherwise have an overdraft. ensignavenger wrote 4 days ago: There are lots of banks now that don't use ChexSystems now,some bank tech companies that you can get accounts with your mobile phone, so that helps for some of the populations. As far as the debit card issue goes- if you are bad at managing your accounts- you should always opt out of overdraft ability, an option that consumers have legally had for several years. If you opt out of electronic overdrafts, your bank cannot legally charge any overdraft fees for those transactions (they will probably decline the transaction... but if they do allow it, you can't be charged a fee if you have opted out). see URI [1]: https://www.consumerfinance.gov/about-us/blog/understanding-... ge96 wrote 4 days ago: That was an awkward experience, I tried to open a bank in person and was blocked because of Chex. It is my fault though, but for example I opened a Citi checking account and never used it but somehow it had some minimum balance or something, started charging me... I had to pay like $38 or something to close it. I had the overdraft fees problem with BofA too and recently some suit was settled/I got a $20 check. JDBs suck but I did turn my stuff around eventually eg. 300s to 750s. Wistar wrote 4 days ago: I once had a check for about $900, drawn from a home equity line with tens of thousands available, rejected at a camera store by the Chex system which the store used at POS. There was no recourse that I could find despite spending quite a bit of effort trying. This was many years ago but remains a mystery as my credit was, and remains, great. ac29 wrote 4 days ago: > In the case of the debit card example (or credit cards) banks could do what they used to and actually decline the charge. However they've clearly figured out it's much more profitable to allow the charge and just hit people with (often excessive) overdraft and over credit limit fees. It should be noted that overdraft services have been opt-in only since 2010: URI [1]: https://www.consumerfinance.gov/rules-policy/regulations/100... newman8r wrote 4 days ago: > In the case of the debit card example (or credit cards) banks could do what they used to and actually decline the charge. I use citibank and they've recently announced that they're going back to the old ways of just declining the charge, and eliminating overdraft fees. Hopefully that's a trend that other banks are also following. nradov wrote 4 days ago: Pretty much every US bank allows account holders to disable overdraft protection for checks and debit cards. It's just a question of whether that account feature is on or off by default. Most banks used to turn it on by default, perhaps motivated by the overdraft fees. Now industry practice is shifting and more banks are disabling it by default. I prefer to have overdraft protection turned on. I usually keep very little money in my checking account and transfer any excess to other accounts. But a couple of times I screwed up the timing (my own fault). Paying my bank an overdraft fee was a lot better than bouncing a check. 7speter wrote 4 days ago: > I use citibank and they've recently announced that they're going back to the old ways of just declining the charge, and eliminating overdraft fees. Hopefully that's a trend that other banks are also following. I have to wonder what the incentive is for them to go back to that instead of easy profit Gigachad wrote 3 days ago: Could be good marketing/competitive advantage. toomuchtodo wrote 4 days ago: Regulatory fear. glenneroo wrote 4 days ago: I prefer the way banks do it here: you don't pay an overdraft fee, nor are you denied (unless you have a non-fixed income). Instead, it's treated like credit and you pay a low percentage at the end of the quarter/year depending on how long you stayed negative. I can't remember the numbers exactly but I've paid at most around 20 Euro after having gone -1000 for more than a month. SilasX wrote 4 days ago: If you were going to phrase that the way most (inflammatory) articles talk about short term loans (like payday), you could instead say that you were charged 26% APY. nradov wrote 4 days ago: Why not just use a credit card? tfehring wrote 4 days ago: Most US banks and credit unions offer a similar service, called an "overdraft line of credit." Overall I think it provides the best experience for the customer, but there are a few issues. You have to know about it and apply for it. You need a good enough credit score and/or regular income to qualify. And many of the people who currently lose money to overdraft fees would probably just max out their line of credit (commonly $1,000) and then continue to overdraft while also paying $80/year or whatever in interest. Sohcahtoa82 wrote 4 days ago: A hybrid approach is the best way to go, IMO. Like...allow up to $500 to be overdrafted with interest being charged. If you reach $500 in overdraft, then decline any further charges. pirate787 wrote 3 days ago: Not spending more than you have is the best way to go. seattle_spring wrote 3 days ago: Sometimes you have much more, just in a different account. anthonypasq wrote 4 days ago: seems like an awful lot of risk for a bank, unless they can see you have the money in another account you hold with them. Still, you're essentially treating your checking account as a credit card yet they are giving you almost no interest rate instead of the 20% seen on credit cards? Seems fishy glenneroo wrote 4 days ago: I maybe should have mentioned that we also have direct deposit here for pretty much everything i.e. the bank knows where you're employed and how much income you make per month. I've heard from e.g. students without permanent jobs that they don't usually get this perk (anymore). But yes, it's essentially a credit card with very low interest rates, although I have a credit card as well and the debt is automatically deducted from my bank account at the end of the (CC billing) month. There is also a section in the online banking to view CC transactions even though it's a separate entity from the bank, so any changes to e.g. region locking, limits, etc. must be done via the CC website. woobar wrote 4 days ago: This (the bank knows where you're employed and how much income you make) is only possible with one account per person, right? In the US people that do direct deposit are also treated differently by the banks. Both on the surface, i.e. you get better interest rates, and under the hood (fraud models adjusted). partiallypro wrote 4 days ago: With Chase you can choose if you want them to do this or to overdraft and charge you a fee. By default overdraft protect is off, so charges are just rejected. SOLAR_FIELDS wrote 4 days ago: That's good that it's default to decline. It wasn't always that way. In fact, overdraft protection used to be the mandatory and only option. The reason that you have an option is actually not because of Chase's goodwill, but due to an Obama-era law that requires banks allow end users to turn off overdraft protection: [1] There are some unfortunate and annoying loopholes. In particular, if you have a recurring, subscription based fee (instead of a typical debit card transaction) they can and still will charge you overdraft fees for that. URI [1]: https://www.cbsnews.com/news/obama-signs-sweeping-financ... kkielhofner wrote 4 days ago: That's great news. We can only hope that with awareness and competition that once again becomes the standard! ARandomerDude wrote 4 days ago: Solution: go to a local credit union (not a bank) and ask to speak to a manager. Explain your situation and that you want to fix it but can't. Many credit unions can open a no-frills checking account as essentially a probationary account for you that you can convert into whatever you want after a few months of good history. Source: I used to work at a credit union and we did this for people all the time. TameAntelope wrote 4 days ago: I just love this narrative that someone who has lived their whole life with a fraught relationship with banks, overdrafting regularly, having trouble keeping their life in order, etc. will suddenly have the organization and forethought to walk into a bank, ask to speak with a manager, and be able to credibly promise that they want to fix this relationship. I'm not saying people can't change, but it's naive as hell to think that they will on a dime such as you suggest. 7speter wrote 4 days ago: Also these institutions have protocols set up so as not to be able to see any âmanagerâ at a given location. Hell in New York, it seems that a lot of inner city brick and mortar banking locations are becoming atm kiosks with maybe 1 or 2 employees there⦠not as tellers but instead to help with using the atms. gkop wrote 3 days ago: Ironically, Iâve seen âkiosks-onlyâ at one bank branch in the Bay Area, and it was a local credit union. throwaheyy wrote 3 days ago: That would be because they have so many locations. You could walk down the street and around the corner to find another one. Or are you saying that a bank manager is actually hard to find in NYC? 7speter wrote 3 days ago: NYC isnât only manhattan island HideousKojima wrote 4 days ago: Well if they can't get their shit together long enough to do something like that then this credit score system for checking accounts sounds perfectly reasonable to me. TameAntelope wrote 4 days ago: I've been thinking about this a lot, and I think this is a good example of how we could do better as a society; some people who can't get checking accounts definitely can't handle the responsibility. Most of these people however, handle responsibility 10x as complex as this on a regular basis, and something is missing, either in a lack of shared cultural values (a lot of the unbanked are foreigners I think), or a lack of understanding of consequences (how many times have you heard the "I didn't know I'd fall down this well of overdraft fees"?). In other words, the people involved usually are trustworthy in a generic "is it safe to bank with them", they're just not plugging into the system in a way that fits the defaults. I'd almost argue that the banking system ought to be more flexible to maximize its compatibility with as many people as possible, and thus far hasn't because of the drive to maximize certainty and minimize all forms of risk. I have no answers or real solid ideas for how to do this, but "it's all on them" doesn't quite feel right. These are (mostly) good people who will pay you back if you lend them money, and that should matter! I think my comment got construed as "people can't change so it's all their fault" and I meant it more as, "financial systems should be willing to move closer to where these people are already at, and stop demanding these people make all the changes." I also don't know how feasible that is, so... IDK! Just thinking via writing, I guess. ARandomerDude wrote 4 days ago: It's not a narrative, it's my life experience. I saw it first hand, many times, which is why I commented. Sadly, there are many who will not become more responsible with time. But there are also many who will, and I'm glad to have been able to play the smallest role in helping people who genuinely want a fresh start. TameAntelope wrote 4 days ago: Sorry I didn't mean to suggest what you had said didn't happen, I very much believe you that people came in and said those words. What I have a harder time believing, and not just in this situation but in a lot of conversations about the unbanked, is that these people will, after a lifetime of having problems with the banking system, suddenly "see the light" and start behaving in ways that are compatible with that same banking system. This "fresh start" seems like the bad narrative, to me. I believe people seek it, and I believe they're hopeful about it, but I don't believe it's realistic to just assume. I definitely want to live in a world where people can choose to change, but suggesting that they actually will do that is, to me, not realistic. I feel like a more effective approach would be to change how the banking system works, but I imagine that comes with a myriad of undesirable costs. digisign wrote 4 days ago: This is very "fixed" mindset you're applying to others. Some portion of the populace grows up every year. There should be a path to re/build your life once that happens. bluefirebrand wrote 4 days ago: > I feel like a more effective approach would be to change how the banking system works, but I imagine that comes with a myriad of undesirable costs. It seems likely to me that people who can't navigate the current banking system at a basic level would struggle with any banking system you introduce. Or just any system in general. jhartwig wrote 4 days ago: Thanks for being a realist! I was thinking the same thing. hyperdimension wrote 4 days ago: I'm apt to be that cynical as well, but if what the original commenter said is true, that provides me with a little hope. It's so easy to slip through the cracks in the system, so to speak. A sudden medical bill or car problems, for instance. I realized on my drive to work today that my car is the only thing keeping me from poverty. Luckily, I have tools in the back and would probably be able to fix it myself. :) Also, once you're in it, you're in it, and it's a strong cycle. You don't always have the luxury of things we often take for granted like having a nice outfit to wear, reliable transportation to an interview, and finally not even having a mailing address if you even end up getting a job offer. It's like the places that offer a free shower and "nice" outfit (for an interview) to homeless people. Sometimes all it takes is that little boost to get (to be sure, the right person with the right attitude) someone back on their feet. I've luckily never been in that situation, but I can empathize and understand how a completely ordinary person could quickly end up there. gkop wrote 4 days ago: How about a solution to the structural problem? This isnât my domain, but just spitballing, we could use public funds to advertise credit unions in low income neighborhoods. Would credit unions want this, or would it lead to harmful consequences? Another way of asking this is, how come credit unions take these customers that banks wonât? pandemicsoul wrote 4 days ago: Postal banking would be a good solution. It would allow the post office to offer basic banking services for folks like this that can't access it at commercial institutions. mjevans wrote 4 days ago: You need to allow everyone to do banking via this resource and they should also want to use it as a bank. Otherwise you'll run into a situation where that bank is associated with risky customers and is thus treated based on that reputation. pandemicsoul wrote 2 days ago: Yeah, I did not mean to imply that postal banking would just be for high-risk customers. There are no postal banking plans where that's a restriction â everyone would have access to it, including many who are too far from a bank to have regular access. The post office is the government's widest reaching physical presence in this country with more locations than any other part of government, so it makes sense that this would be an inroad into banking for lots of people. jumelles wrote 3 days ago: Easy, give every SSN a corresponding USPS/public bank account sokoloff wrote 4 days ago: Donât let the perfect be the enemy of the good/better. If USPS banking helps the unbanked by only 50 units of help instead of a maximum of 100, itâs still a 50 point improvement. If Morgan Stanley or JPMorgan can offer me a better banking deal than the post office could, thatâs no reason to not have the post office offer banking. I agree it should be open to everyone, but donât agree that there can be a maximum of zero-point-zero difference in customer base vs other banks. formerkrogemp wrote 4 days ago: Oh it's a little more pernicious than that. ChexSystems and a few other companies are used to check a database when cashing a check at major retailers in the US. Walmart and Kroger utilize this third-party vendor to deny check cashing (including payroll checks) to people who're on the same list as those who can't open bank accounts. Good luck getting that check cashed for less than $20-30. Source: I used to work in retail. nradov wrote 4 days ago: That's why many larger employers (including Walmart) now offer unbanked employees the option of getting paid with a pre-paid card instead of a paper check. kkielhofner wrote 4 days ago: Wow, I wasn't aware of this use of ChexSystems but from the standpoint of banks, check cashers, etc that makes business sense. From the perspective of people trapped in this system paying 10% in fees to cash a $300 check is outrageous - but at this point it's more or less what they have to do and that's "just the way things are". gruez wrote 4 days ago: >However they've clearly figured out it's much more profitable to allow the charge and just hit people with (often excessive) overdraft and over credit limit fees. Wait, so which one is it? Do banks want to exclude people with overdrafts because they're bad customers (for whatever reason) or do they want those people because they can rake in the overdraft fees? a1369209993 wrote 3 days ago: > Wait, so which one is it? They want customers they can extract usurious and otherwise abusive fees from. They don't want the subset of those that will fight back against said abuse, which is what they use ChexSystems for. The latter also randomly hits some people from the (rest of the) former group, but not enough of them to impact the bank's finances. kkielhofner wrote 4 days ago: Why can't it be both? With the proliferation of "free checking" without so much as a minimum balance in most cases banks have essentially created a selection system to continually marginalize customers that aren't profitable while selecting for customers that are. From the standpoint of a business (which banks are) this is understandable. However as has been noted in other comments banks also serve a utility function and for the the type of customer that routinely doesn't have $2.50 in their checking account to trigger that overdraft in the first place several hundred dollars in fees might as well be a million. Of course they take off and the account gets closed. Now, because of a $2.50 loss to a bank, they're essentially excluded from the most basic functions of the financial system while people like us continue to benefit from free products, preferred interest rates, credit card points, etc. Simultaneously, if due to some perfect storm of events (cash flow, mistakes, etc) if customers more similar to us somehow end up in this situation we'll pay the fees. The bank has a "valid" reason to boot the poor, they make a ton from the middle-ish class, and they stay in good favor with those of us that are more wealthy. They can't lose. The extremely simple (but overall less profitable solution) is to just decline the charge. My preferred status at banks is being subsidized by the poor and that doesn't sit right with me. I've tried credit unions but they're almost completely unable to meet my needs. IncRnd wrote 4 days ago: They probably want those people as customers in order to garner fee payments, but they won't extend credit to those people. Those are two different activities. gruez wrote 4 days ago: except, the parent post claims the system to "essentially keep unbanked populations unbanked" and "opening new accounts at banks that utilize ChexSystems becomes nearly impossible". Presumably if you want these people to be your customers and rack up fees, you'd want them to at least hold an account? JumpCrisscross wrote 4 days ago: > if you've had overdraft fees, bounced checks, etc opening new accounts at banks that utilize ChexSystems becomes nearly impossible To clarify, if you've had a checking account closed because of outstanding fees, and you never paid those fees, it will show up in ChexSystems. This deserves scrutiny, e.g. for bad record keeping. But at its core, if you're regularly borrowing via overdrafts and bouncing checks, you're looking for a different banking product than the garden-variety checking account. radicaldreamer wrote 4 days ago: Youâre looking for a revolving credit line JumpCrisscross wrote 4 days ago: > Youâre looking for a revolving credit line Or an account that does not permit cheque writing and will bounce a transaction instead of letting it overdraft. nullfield wrote 3 days ago: This is the requirement now-affirmative consent/opt-in: [1] If they make it really easy for you to opt in/a quick checkbox then they can make money. That said if someone is living so tight and wants a transaction declined if their account doesnât have the funds, the financial should make that easy and obvious to do. Behaving otherwise is predatory. URI [1]: https://www.nafcu.org/compliance-blog/overdraft-protec... nicoburns wrote 4 days ago: > Or an account that does not permit cheque writing and will bounce a transaction instead of letting it overdraft Seems like the problem might be that this system will also prevent people who have a bad reputation in it from getting one of these accounts? JumpCrisscross wrote 4 days ago: > this system will also prevent people who have a bad reputation in it from getting one of these accounts? Could. In practice, plenty of banks fill this niche [1] URI [1]: https://letmebank.com/banks-that-dont-use-chexsystem... metacritic12 wrote 4 days ago: I wonder if this is statistical discrimination. Like in theory, someone who closes an account $2.50 in the negative does very little damage to the bank directly. The $2.50 is a small fraction of the annual overhead of the bank account. Yet these behaviors are highly correlative of unprofitable checking customers. The entire checking account model seems to be based on whales that return the bulk of the profits. If you sneeze wrong, your statistically 10x less likely to ever become that whale. From a profit maximizing POV, it totally makes sense for banks to do this. But from a "banks are a basic utility" point of view, it doesn't seem to make sense. gscott wrote 4 days ago: Bounce fees are highly profitable. Large banks earn over a billion dollars in bounce fees yearly each. metacritic12 wrote 3 days ago: This is true, but bounce fees are a minority of bank revenue. I just pulled the BofA 2021 10K [1] and it shows $3.5bln in service charges, but $24bln in interest income. URI [1]: https://imgur.com/a/cGjM5Gi throway782 wrote 4 days ago: Why must profitability to a banker matter to public optimization of agency? If anything the banker just becomes a thought policing grifter who empowers agency of some without any oversight. A banker is nothing more than a fallible human. Why record in my inner monologue theyâre to be seen as more than that? Prior to open discourse online, public relations teams did a stellar job convincing people financiers are special. Iâve been in the room with people that attend Davos. They mock and ridicule the public as they decide who is worth what to their bottom line. Theyâre uniqueness is a hallucination. Contemporary society is leveraging well understood propaganda techniques to take advantage of the same biological quirk religion stumbled upon by accident. One person is one person. Not some figurative thought leader we must kowtow to. xeromal wrote 4 days ago: It seems like there could be two kinds of customers at a bank. One who doesn't get to operate on credit or overdraft protections, but still can us the bank as a means to keep their money safe while allowing customers who can be trusted to still use those extra resources. Seems like a win win for everyone. Banks should probably be required to allow at least a minimal bank account even to people who aren't the best with their money. dalyons wrote 4 days ago: Win win for everyone except the banks, they make huge amounts of money off punitive overdraft and are not interested in letting that go. $12.4 billion in overdraft fees in 2020 samstave wrote 4 days ago: A credit union I used to belong, had a piece of paper hanging on the wall right next to the tellers, it had their running income monthly from overdraft fees. Before the 2008 real estate collapse, this number was less than $100,000 per month. During the recession, I noted it was going as high as $600,000 per month. At one location in Sunnyvale Ca. sjostrom7 wrote 4 days ago: I don't doubt you, since you saw this first-hand and didn't hear it from your friend's cousin's dog. But what purpose could a sign like that serve for tellers? samstave wrote 3 days ago: It wasnt for the tellers, it was literally for the banking customers. It was the statement of revenue the credit union had - the overdraft section was a single line on the document... I am uncertain as to why they posted it, aside from a "transperency" for the credit union members... xeromal wrote 4 days ago: I could be outdated, but weren't overdraft feels turned off by default during the Obama era? You have to go out of your way to turn them on now. Retric wrote 4 days ago: Many banks actually make most of their profits from fees not whales. A X$ overdraft fee quickly enters payday loan territory in terms of profit vs capital at risk. dalyons wrote 4 days ago: Exactly. Most banks lose money on servicing a standard checking account with debit card for people with no cash flow issues. They make it back in fees(mostly overdraft) off those who struggle - itâs a direct subsidy of the better off by preying on the poor. Disclaimer: I work for a neobank (chime) which inverts this model and has none of these fees and does free overdraft nullfield wrote 3 days ago: Then youâre just making all your money on interchange, right? clairity wrote 4 days ago: > "Most banks lose money on servicing a standard checking account with debit card for people with no cash flow issues." that's simply not true. the marginal cost of a checking account is on the order of a dollar. the breakeven on that is on the order of holding (and otherwise using) a deposit of a $100 for a month or two. banks are not losing money on the balance of their checking deposits in any conceivable way. that's a just-so story told and retold uncritically to convince the gullible that fees are "necessary". they're not. they're pure profit, and borne of pure greed. no bank requires fees to function profitably. Retric wrote 3 days ago: Marginal costs can be deceptive, yes sending a debt card in the mail is cheap and you donât need extra staff or locations for a single customer. However, the infrastructure need to support a million additional customers is expensive even if a single customer doesnât seem to add any significant cost. clairity wrote 3 days ago: it's tricky but not deceptive. raising that point in this context indicates you've fallen for form of the sunk cost fallacy via conflating two separate business decisions (the investment decision with the pricing decision). we need to say no to these unsubstantiated, regressive fees, full stop. Retric wrote 3 days ago: I donât see how acknowledging the truth is somehow supposed to support a bank argument. I would happily ban these fees until the industry adapted to a new normal. That said, donât let your views blind you to the truth. Unscrupulous actors will often drive an industry into predatory practices, itâs correctable but only when people understand the dynamics involved. clairity wrote 3 days ago: > "donât let your views blind you to the truth....correctable but only when people understand the dynamics involved." indeed. those sunk costs don't matter in this context, which is why they were originally, and should continue to be, excluded. it's extraneous, obfuscating, and most damningly, apologetic. ntoskrnl wrote 4 days ago: It seems like customers who get rejected by ChexSystems would be more likely to overdraft frequently and be profitable to the bank. Why are banks using the system to deny them accounts? FireBeyond wrote 4 days ago: I ran into this many years ago with the transaction reordering scandal, when KeyBank turned a series of transactions on a given day (that were all cleared funds, to be clear) that should never have overdrawn me, and left with me with roughly $100 in the bank, instead ended up with me being $400 overdrawn, thanks to an absolute slew of overdraft fees, that the bank (and I) refused to budge on. My ChexSystems entry wasn't removed until there was a lawsuit against the bank. AnIdiotOnTheNet wrote 4 days ago: People always told me growing up that I should get a credit card, to start building credit for when I eventually wanted to buy a house. I didn't bother, because buying things on credit always seemed sill to me. Come time to buy a house and those people were still all "oh boy, you're going to have a hard time!", but you know what? Having no credit history wasn't a problem at all. I had to arrange for bank representatives to talk to some bill collectors and authorize them to talk about my payment history, that's it. Sure, maybe I didn't get the best rate in the world, but it was a pretty fair one. I feel like stories like this are intentionally played up for the benefit of the credit industry. bryans wrote 4 days ago: There are actually very few regulations regarding the credit score "system" -- if it can even be called that -- and it shows. The system is grossly abused by everyone involved, and typically the only people experiencing the effects of that abuse are already in the most vulnerable positions. It's quite reprehensible what humans are willing to do to each other over an unpaid bill, almost universally representing a completely non-relevant amount of revenue for the companies. How many lives have been disrupted or ruined over sending $15 to collections? pessimizer wrote 4 days ago: It was a prelude to the modern private surveillance industry. Virtually any legislation affecting that would effect the credit rating agencies. kube-system wrote 4 days ago: Because it's just math applied to the highly regulated credit history system. The way that the score is calculated is inconsequential, as long as the underlying credit history is correct. bluedino wrote 4 days ago: You never opened a single account other than that? You in essence have no credit, then. throwoutway wrote 4 days ago: This is exactly why China implemented a âsocial creditâ system, which is an authoritarian version of this kind of power. TuringNYC wrote 4 days ago: The US system is also authoritarian: - There is almost no easy way to fix bad problems. The fixes require huge bureaucracy that only highly motivated people can solve - We like to pretend it works. It does, except for 5% of a population and it really sucks if you aren't in the 95%. People in the 95% dont realize how bad it is for the 5%. By the 5% i'm talking about legitimately credit-worthy individuals being unfairly denied by the system (not un-credit-worthy legitimately denied.) - We like to pretend it is private market driven, but the private orgs driving it have almost government-level power to control your life by cutting off funding gruez wrote 4 days ago: >>This is exactly why China implemented a âsocial creditâ system > The US system is also authoritarian, except >- There is almost no easy way to fix bad problems ...as opposed to the chinese system? The whole aim of the social system seems to be to allow punishing people for infractions without having to go through the messy process of criminal prosecution. pessimizer wrote 4 days ago: If "authoritarian" here means virtually identical, except that they also include crimes and misdemeanors. I bet we could do that in the US if the oil on the slope was inclusion of "hate speech/crime." Hiring someone with a history of that is a liability, and lending to those people could lead to losses if they are fired. ProfXponent wrote 4 days ago: The US credit system is plenty authoritarian in its own right. jimmaswell wrote 4 days ago: Banks, private entities, deciding who to do business with based on a number they calculate is absolutely not authoritarian. It comes nowhere close to the concept of authoritarianism unless you think a dress code at a club is also authoritarian. TrackerFF wrote 4 days ago: Here in Norway, we don't have any credit score in that sense. Rather, we have sort of a "credit history" system, which shows the following: -When there's been registered wage garnishment (by court) against you. -When there's been registered a lien against your property. -When you've entered a court-ordered debt payment program. -When you've been registered as bankrupt. And by law, these things have to be deleted when you've settled your debt. In any case, it's difficult to get those things by accident. Usually you're at the end of the process, and have been through civil court. With that said - it should be mentioned that Norway is a INCREDIBLY creditor friendly country, as far as the law goes. If a creditor really want their money back, they can / will take you to court, and eventually get a garnishment on your wage or welfare money. Or property/vehicles/personal belongings lien if you don't have any income. I like the system as it is. I really don't like the idea of constantly having to do things with respect to a credit score - and I'm not talking about gaming the system or being a deadbeat, but trying to maximize my credit score for the sake of keeping it high. josephcsible wrote 4 days ago: > And by law, these things have to be deleted when you've settled your debt. So if I paid off my debt on time, and you made your creditor fight tooth and nail for five years and get a court judgment to get your debt paid (but it is paid now), future lenders would have to treat us the same? kube-system wrote 4 days ago: We don't have "a credit score" in the US either. We have a credit history, much like you describe. For the businesses that review someone's credit history, the credit agencies provide some assortment of algorithms to help quantify it for them. This is colloquially called your "credit score", but in reality, there isn't a single credit score, there's a bunch of different algorithms and everyone uses a different one. The equivalent to a US "credit score" in Norway would be, a creditor's formula for determining creditworthiness from your credit history. The alternative to algorithmic scoring is often worse: someone making a subjective judgement call. Which, historically, is fraught with discrimination. IncRnd wrote 4 days ago: > We don't have "a credit score" in the US either. We have a credit history, much like you describe. Not exactly. There are MANY credit scores in the US and several credit agencies. Different score calculations occur for different purposes, mortgages, credit card, automobile, and so forth. Plus there are different versions of each credit score's model. Each credit reporting agency keeps a separate credit file per person. Each person's credit file contains credit histories from various creditors. Not all creditors report to all credit reporting agencies. Not all credit reporting agencies receive the same information from a creditor, even when receiving information. The score for a particular person may differ between different credit reporting agencies, credit scoring models, or any of various other factors. kube-system wrote 4 days ago: You are just rephrasing what I said. IncRnd wrote 4 days ago: That's incorrect. Each borrower has multiple credit histories not a single credit history. david927 wrote 4 days ago: No... we very much have a "credit score." I'm American and don't like credit cards. I have a shockingly low credit score simply because I choose to pay using debit cards and I don't take loans. I never miss a payment and I earn a very good living but you wouldn't guess that based on my credit score. In Norway my credit history would be golden; it's the opposite here. Edit: I stand corrected. Thanks, I understand now. jedberg wrote 4 days ago: > because I choose to pay using debit cards This is not a very smart way to do things. You'd be much better off getting a credit card with no fees and rewards points, buying everything with that, and then paying it off every month. You'll have stronger legal protections on your purchases, and you'll earn reward money without paying any extra. You can even pay off your bill with the reward points. And as a bonus you'll build up your credit score, which can affect you in lots of ways unrelated to loan rates. nebula8804 wrote 3 days ago: So I do this but I'm beginning to suspect the real reason they have all these rewards is partially due to data selling of spending habits. Usually when you get a new card there is a little slip that details what you can and cannot opt out of when it comes to data collection and selling to third parties. sgjohnson wrote 3 days ago: > So I do this but I'm beginning to suspect the real reason they have all these rewards is partially due to data selling of spending habits. No. Rewards are funded by merchants (interchange) and by people who actually pay the 19.9% annual interest. david927 wrote 4 days ago: I know but I hate the system and don't want to be bullied into participating. zhynn wrote 4 days ago: I wish i could afford to do what you are doing, but I can't survive in 2022 USA and support my family without access to credit. It is maybe possible, but it is wildly impractical. And the ability to borrow helps to smooth out the turbulence of life (unexpected emergencies or broken things). When I was in my 20s my credit was so bad I couldn't get loans and when life threw a curveball, it could take a ton of energy to sort out how I was going to deal with it. Now I just dip into the credit that I have available to deal with the situation. But I hate it. It feels insane to me that we as citizens don't have more regulatory control over credit systems. I envy you, but I also know that what you are doing is not practical for me. jedberg wrote 4 days ago: I mean, you do you, but you're really only hurting yourself here. You're literally throwing away money to stick it to "the system" which doesn't care. kubanczyk wrote 4 days ago: david927 is not hurting himself, he's simply paying a bit more for a setup which prevents him from spending money he doesn't have. Understandable approach. waynesonfire wrote 4 days ago: doesn't take much to get some history. astura wrote 3 days ago: You don't even have to actually use revolving credit to build credit history - it's good enough to apply for a credit card then shred it when it comes. "Not running up the credit card" is significant points in your favor. They'll likely close your account for inactivity after a few years, and the account stays on the credit report for a decade after it's closed. david927 wrote 3 days ago: That's an amazing idea. I had no idea. I'm going to do this. Thank you! fragmede wrote 3 days ago: Not all credit cards are zero-fee, so if you chose to do this, make sure you choose one of those (or just close the card). bee_rider wrote 4 days ago: You have a credit history, which multiple companies will apply their algorithms to to get a score. The algorithm will take into account things like "this history doesn't have a lot of debt, so we don't know if they repay," and generate a lower score. gruez wrote 4 days ago: None of what you said contradicts the parent post, which is simply refuting the claim that we have some sort of "official" credit score. In reality we have credit history, and various data vendors apply your history to their models to determine a rating for you. 2rsf wrote 4 days ago: More or less like Sweden, and everything is digitally interconnected to the main population registry so things like that usually don't happen: > TransUnion, one of Canadaâs two main credit bureaus, had reported her as deceased. We also moved out of the stone age and faxes practically don't exist and all certificates are digital: > Two years of faxing in detailed documentsâincluding Daveâs death certificate marvin wrote 4 days ago: I was about to point out the obscene creditor friendliness of Norway when I saw you extolling the virtues of our credit system, so I'm glad you did it first. The part of fairly tracking poor payment history is good, the rest, not so much. We effectively have a form of wage slavery by law. If a person has debts that are unpayably big and is not (or no longer) eligible for the once-each-lifetime-only "personal bankruptcy", where one signs a contract to pay all property and incomes for five years towards one's debts before the remaining is erased, one is on the hook for the remaining debt for the rest of one's life. No recourse. Economic damage judgements in court do not qualify even for the five-year 100% garnishment contract. Someone impacted by this has no incentive to work ever again, because everything they earn above the survival minimum will be garnished. I'd hazard a guess that most of them end up on welfare. So it's not all good, unfortunately. I mentioned social unity punishments in our culture in a different thread the other day; this is another example of that. gruez wrote 4 days ago: >If a person has debts that are unpayably big and is not (or no longer) eligible for the once-each-lifetime-only "personal bankruptcy" source for bankruptcy being "once-each-lifetime-only"? A quick search says that's false: URI [1]: https://www.findlaw.com/bankruptcy/after-bankruptcy/how-of... kube-system wrote 4 days ago: The US has very forgiving bankruptcy code, notably so. Much of the world is less forgiving. TrackerFF wrote 4 days ago: He's was quoting me and referring to here in Norway, not US - where it is very much a one-time deal. Over here, we can't really just "declare bankruptcy", it's a very lengthy process - which takes years. It's more like a court ordered program where the debtor and creditor agrees that the debtor is going to pay as much as possible towards the debt owed, for the next N years, and after that - all debt is erased. You're allowed to keep just enough of your salary to cover the most basic living expenses, everything else goes to the creditor. This also means not being credit worthy, which in turn could mean no cellphone plan, no insurance, no mortgage, no auto loans, no consumer loans, etc. Everything you buy, you have to buy with cash up-front. From start to finish, all that could take 5-10 years. And before you even sign a contract where you and the creditor agrees upon such a plan, the debt collection agencies are probably hounding you down on a daily basis, making whatever debt you had to begin with N times more expensive. The good news is that when you've held up your end of the agreement, it's gone. But you only get once chance. If you - for whatever reason, any reason at all - end up in the same situation, you're practically a debt slave. Which could mean wage/welfare garnishments for the rest of your life. This is especially true if you have multiple debt collection agencies bogging down individual debts with added and compounding fees. But to be fair, this is not normal. Very few end up being two-time losers - but sadly it could be entrepreneurs and small business owners, if they haven't structured their companies the right way. buescher wrote 4 days ago: When you hear Europeans get horrified that in the USA a medical problem (or whatever) could drive you into bankruptcy, this is the context. They are usually more horrified than you might realize, because there is a bit of miscommunication going on. Can you inherit debt in Norway? You can in Germany. You don't in the USA. Can you as a Norwegian declare bankruptcy in the UK or is that off the table now that they're out of the EU? marvin wrote 3 days ago: > Can you inherit debt in Norway? You can, but it would be voluntary. Inheritors can choose all assets and all debts, or nothing. Unsure about the bankruptcy tourism idea. I'm pretty sure it would take many years. Moving countries for tax purposes, for instance, takes five years for all obligations to clear. krastanov wrote 3 days ago: Would it matter that UK is not in the EU given that Norway is also not in the EU? buescher wrote 3 days ago: Oops. Well I suppose thereâs that. Iâll add that I have no idea how âbankruptcy tourismâ works, other than that people do it. Itâs odd that one can do it at all. kleinsch wrote 4 days ago: Theyâre talking about Norway, which doesnât follow US bankruptcy code. sgjohnson wrote 4 days ago: > trying to maximize my credit score for the sake of keeping it high. Just being a deadbeat will do exactly that. It takes 0 effort. Put your purchases on a credit card, and settle it in full every month. chociej wrote 4 days ago: Put some charity donations on autopay using a dedicated credit card, then configure the card to autopay the balance every month. Or, get hyperoptimal and set it up so that your overall credit card utilization stays at 1%, which is better under the FICO system than 0%. Nextgrid wrote 4 days ago: > Put your purchases on a credit card, and settle it in full every month. If you don't need credit then taking on credit is an extra thing to manage. I personally like all my spending being on my debit card and coming out of my account so I have a single balance that reflects how much money I have. I don't want to deal with an extra company especially when their business model ultimately relies on trying to get me to miss a payment so they can charge fees/interest. xeromal wrote 4 days ago: I don't like anyone having access to my bank account so I tend to see a credit card as an abstraction. If someone skims my debit card, that's my problem. If someone skims my credit card, that's my credit card's company's problem. I don't give out my debit card and I only use it at trusted ATMs. EliRivers wrote 4 days ago: Do you not have an option to just automatically have the full amount paid off from your account every month? I've never had to do anything involving paying a credit card; on getting the card, I tell them to just take the full amount every month from my bank and that's what happens until years later for whatever reason I cancel the card. They might well like me to miss a payment so they can charge me interest, but it's never going to happen. This is a genuine question; I know that other countries do things differently. Is that not an option where you are? Nextgrid wrote 4 days ago: It does, but that payment takes several days to clear and messes up your bank's analytics. I use a modern bank that gives me a real-time overview of my spending and categories it, but this all goes out the window if all your spending is on a credit card and the only thing your bank sees is a single payment (to your credit card provider) once a month. kube-system wrote 4 days ago: Does your bank not offer a credit card? Here in the US it is common for banks to both provide traditional banking services and credit cards, and when you open your banking app, both accounts are together. gruez wrote 4 days ago: >I use a modern bank that gives me a real-time overview of my spending and categories it You depend on your bank for this type of stuff? Isn't that basically begging for vendor lock-in? It makes far more sense to have a vendor-agnostic solution (eg. mint or personal spreadsheet), so your analytics aren't at the whims of your bank. ikr678 wrote 3 days ago: In Australia at least, all banks/institutions provide those transaction analytics as the registered business number of the company you transact with has a category attached to it by our tax office. If I look at my recent expenses in my banking app, I can see that I got a coffee (food&beverage), bought fuel (transport) and paid freight cost on a case of wine from my frequent flyer miles rewards program (incorrectly classed as travel). It's not 100% accurate but gives a good enough overview in the app week by week, and I sit down quarterly to look at things properly in a spreadsheet. Nextgrid wrote 4 days ago: I don't have enough money to care seriously about this yet, so I don't mind if my bank discontinues the service (and can reevaluate then). However, in the meantime it's there and it's convenient so I use it and the simplicity of my financial "stack" (one account for everything) makes it work well. A credit card would break that and introduce unnecessarily complexity including another company that I'd rather not have to deal with (also, I'm not aware of any modern credit card providers that would give me a decent experience). nradov wrote 4 days ago: Almost every major US bank also issues Visa or MasterCard credit cards, and integrates spending on those cards into their account analytics. pnutjam wrote 4 days ago: Just a customer, but I use Cap1 and I can make a payment on my card and unless it's Fri/Sat/Sun, it will post to my bank the next day. It always shows as pending in the morning and clears that evening. I can also make a payment and it will update my CC limit the same day if needed. jkaplowitz wrote 4 days ago: The vast majority of my monthly spending (with a few notable exceptions like mortgage and electricity bill) goes on a single credit card. That card's website and app also gives me an overview of my spending and categorizes it. What you say can work in the credit card world. And as the other commenter's reply says, all my credit cards pay me cash back or a points system which is redeemable for things with high cash value. There's a real quantifiable cost to not using them. teakettle42 wrote 4 days ago: Not a very modern system if it cannot account for a credit card. If youâre not using a credit card, youâre: - Adopting significant risk (debit card protections are not as strong as credit card protections) - Failing to establish a credit history - Giving away a significant amount of money. Credit card transaction fees are included in all prices. I use a card that gives me 2% cash back on all purchases â effectively, most or all of the transaction fee. ikr678 wrote 3 days ago: Other countries have stronger/ better enforced consumer protection laws so credit card chargebacks are less necessary. I fail to understand how you are giving away 'significant' money by spending from your own account? Are you referring to being able to earn interest on savings for the month before you have to settle the credit line? kzrdude wrote 4 days ago: I don't enable these bank analytics (sweden) since that accepts their laundry list of terms for that service, suddenly opening for the bank to mine that data. Without agreeing to it, I have more protection. is0tope wrote 4 days ago: While I see your logic, ultimately using a credit card makes a lot of sense as long as you pay it off on time. Not only do you get the (small) benefits of the cashback or points, but you have added fraud protection also. Not sure how it is where you are, but where I am the payment is automatically done every month from your bank account. There is 0 chance of missing a payment, as long as you have a sufficiently positive floating balance in your account. If someone do not, then I would question their suitability for a credit card in the first place. steelframe wrote 3 days ago: > you have added fraud protection also My bank provides fraud protection for my debit card. A card for my account got skimmed and was used to withdraw cash from an ATM. Got my money back with a single phone call to report the fraudulent activity. bee_rider wrote 4 days ago: These companies are making money somehow. If they are exploiting people more clever than me, then I'll probably fall for it too. If they are exploiting people less clever than me, seems pretty evil, I don't want anything to do with that. CPLX wrote 4 days ago: How they are making money isn't a secret. They take a percentage of the transaction from the merchant you pay every time you make a charge. It's effectively free from your perspective, the merchant is willing to share some of your money to allow you the convenience of paying by card. Nextgrid wrote 4 days ago: > Not only do you get the (small) benefits of the cashback or points Maybe in the US - in Europe where interchange is capped, credit card rewards aren't worth it. Not to mention, I like my privacy and don't want to deal with any rewards or offers programs anyway. > but you have added fraud protection also. In practice, all the fraud I've been victim of always fit within the card networks' dispute resolution rules. The only time I can think of this being necessary is airlines that go bust (where a card network dispute would technically succeed but fails because there's literally no money to claim back anymore). > where I am the payment is automatically done every month from your bank account. There is 0 chance of missing a payment, as long as you have a sufficiently positive floating balance in your account. If someone do not, then I would question their suitability for a credit card in the first place. See my other comment here: URI [1]: https://news.ycombinator.com/item?id=31504046 sgjohnson wrote 4 days ago: > Maybe in the US - in Europe where interchange is capped, credit card rewards aren't worth it. Not to mention, I like my privacy and don't want to deal with any rewards or offers programs anyway. Not if you have an American Express card. Interchange is capped only if there's more than 3 parties to the transaction, which is not the case on AmEx. jsmith45 wrote 4 days ago: > In practice, all the fraud I've been victim of always fit within the card networks' dispute resolution rules. The only time I can think of this being necessary is airlines that go bust (where a card network dispute would technically succeed but fails because there's literally no money to claim back anymore). Does the dispute process have all disputed money be instantly returned to the account? With a credit card, you can simply turn off the auto payment system, and simply not pay the fraudulent part, and you still have your money in the bank account. With a debit card, in the US the banks typically have 10 business days to determine if there was fraud and give your money back. (If the investigation takes longer they return the money on the tenth business day pending the results of the investigation, and if they determine it was not fraud they will take the money back again.) And in the US many people life paycheck to paycheck with effectively zero savings. If their account is zeroed out due to fraud, Things can get expensive quick. For example, your rent payment is probably too large to be covered by banks overdraft protection, so you will likely get hit with three bounced check fees. of at least $25. One from you bank from the first attempt. Then a later re-presentment attempt will also fail, and you will get a second fee from your bank. Finally, you will get a bounced check fee from your landlord. Of course since your payment did not go through, you will likely end up with a late fee. etc. For other bills they could be small enough that you only get hit with overdraft fees, and not the rest. But if not, then things can snowball VERY quickly. And There could be other consequential damages like losses from being unable to get certain items while they are on sale, or even things like the stress of all of this preventing you from closing a sales deal, meaning you lose out on a substantial commission, etc. And while you can typically get the bank imposed fees waived due to the fraud, as long as they can determine that you would not have suffered those fees if the money had been there, the bank won't always cover all the the incidental and consequential damages. (The terms of service always exclude those). gruez wrote 4 days ago: >> but you have added fraud protection also. >In practice, all the fraud I've been victim of always fit within the card networks' dispute resolution rules I think there's an element of "fraud protection" that you're missing. If your debit card gets breached and someone racks up $2000 worth of charges on it, the $2000 is immediately gone from your bank account. If rent/bills are due soon, that might be bad. On the other hand if you have a credit card, you have at least 3-4 weeks since the bill is issued before you have to pay, which means 3-4 extra weeks to get it resolved/refunded without having it affect your finances. 2rsf wrote 4 days ago: That. I was addicted to credit cards and small payments but now I pay everything debit, cash in other words, and life became much more simple and predictable maxerickson wrote 4 days ago: Their business model is a 1 to 3 percent fee on every transaction they are involved in. My credit card company sends me a notification when a statement is ready and another friendly reminder a week before the bill is due. They make money on interest also, but they would rather have someone that spends and pays off a lot than someone that carries a modest balance. Nextgrid wrote 4 days ago: > Their business model is a 1 to 3 percent fee on every transaction they are involved in. In Europe and the UK, interchange is capped to a level that wouldn't support running a financial institution. > They make money on interest also Interest only gets charged a month after (at least on most UK credit cards), so if you're using it "the right way" and paying it off every month you will never incur any interest. It's good for you but ultimately proves that credit card providers rely on the (generally less financially-savvy) people who don't/can't use it "the right way" and incur interest or fees. That's honestly a pretty predatory business model I have no interest in supporting. > My credit card company sends me a notification when a statement is ready and another friendly reminder a week before the bill is due. True but why should I even statements and bills for spending what is my money in the first place? My argument is that you should only use a credit card when you actually need credit and not to merely game a broken system. sgjohnson wrote 4 days ago: > My argument is that you should only use a credit card when you actually need credit and not to merely game a broken system. Credit cards are literally the dumbest way to borrow money, second only to payday loans. So you definitely shouldn't use them when you _actually need credit_. But you should use them to build up your credit score, so you can get extremely cheap credit when you actually need it. maxerickson wrote 4 days ago: The article is about North American credit scores, so I guess it isn't completely ridiculous to assume that if it is unstated. Does your bank not have a system showing you what transactions you did in a month? The credit card statement is the same thing, for a different account. mcntsh wrote 4 days ago: I've been working since I was 16 years old and I've had sparkling credit my entire life. I pay my cards in full every month; never missed a payment for 10+ years, paid off my car early. I moved abroad and forgot about a $30 dollar balance with AT&T which brought my FICO score to 600. One 30 dollar bill means I can no longer qualify for a mortgage or a car payment or anything. MisterSandman wrote 3 days ago: This is a bit misleading. One missed payment doesn't lead your score to drop by so much. I'm assuming you never found out about it and it went to collections because you never paid the bill for a year or more. bcassedy wrote 4 days ago: I've had a similar experience when changing mobile provider. For whatever reason it seems like that last bill posts late and never shows up. In the past I didn't have autopay turned on so I just didn't even know about the debt until I started getting letters from collections firms 6 months later. I imagine that these last bill things end up dinging a lot of people's credit. Luckily I've paid them when I find out about them and my credit bounces back once the payment in full is reported. daniel-thompson wrote 4 days ago: A grey-hat method of dealing with this would be to dispute it with Equifax, TransUnion, and Experian and choose a plausible dispute reason ("I never knew about it" or whatever). Regardless of the merits of the claim, it's likely their "investigation" will resolve in your favor and they'll just remove it (and your score will bounce back immediately). It doesn't necessarily feel great... but remember that you're literally just a number that they couldn't care less about. FireBeyond wrote 4 days ago: When I was going through the mortgage process, my broker recommended a credit repair company, whom I learned had three broad purposes (the reason I mention this is in point three): 1. Relieve the psychological / emotional stress of debt collectors hounding you by redirecting that to them. 2. Offering to settle debts. Realize, though that "Paid in full" and "Settled in full" are different statuses to a CRA. And both have an entirely negligible impact on improving your credit score - the damage is done when the negative tradeline is reported. HOWEVER, for mortgages, there's some merit in resolving this. "Yes, it got to that point, but I did take care of it" is better that "Yes, it got to that point, and then I continued to ignore it." 3. How do these agencies also "improve" your credit? They dispute every negative tradeline, regardless of accuracy. If the tradeline isn't verified (because smaller/more manual agencies don't have the time/inclination, especially if they've got their money now), it is removed, like it never happened. If it IS verified? They dispute it again. And again. In the hope that at some point the creditor will fail to meet the verification requirements. Nothing magic. ryathal wrote 4 days ago: I doubt this would work. Credit reports are for lenders, and credit bureaus side with their true customer. daniel-thompson wrote 3 days ago: YMMV but it's worked for me. astura wrote 3 days ago: The FCRA requires them to prove you owe the debt. Debt collectors often can't do this, especially if your debt has been resold - these are often resold as an Excel spreadsheet. PascLeRasc wrote 4 days ago: If this doesn't work, submit another dispute around Thanksgiving - the creditors have 30 days to respond before it's automatically resolved in your favor. In my experience it does actually feel good to do this. brundolf wrote 4 days ago: At some point, when a system is so broken and unjust, I think it's no longer unethical to exploit it given the opportunity bondolo wrote 3 days ago: When was it ever just or working? leet_thow wrote 4 days ago: I had a similar thing happen to me. I disputed the charge via Credit Karma, explaining that the service never worked so I never paid. It was removed within a few days. upupandup wrote 4 days ago: for me it was AWS/DO billing. I lost the original phone number/email attached to it which makes it impossible for me to login to that account. I just no longer rely on credit or use credit cards anymore. I buy everything with cash. Funny enough my bank is constantly calling me that they can lend me money. Our modern Credit/interest/rent system is parasitic at best. In some cultures, it is deemed immoral and outright banned. However I don't know what the alternative is. Who would lend money without any expectation of return? Who would buy bonds if they cannot sell it for a higher price? throwaway98797 wrote 4 days ago: credit scores recover quick you could cause six figure loses to a bank by short selling your home and still have workable credit within 2 years Mezzie wrote 3 days ago: I declared Chapter 7 two and a half years ago and I currently have a score in the mid-700s. Granted, my bankruptcy was due to medical stuff rather than irresponsibility. MisterSandman wrote 3 days ago: That's awful to hear, hope you're doing better now. Mezzie wrote 3 days ago: My fortunes have improved dramatically, mostly due to the pandemic, ironically. I need remote work and have some background in Instructional Design. I'm FAR more valuable now than I was 3 years ago. Odd how that works. goatherders wrote 4 days ago: Pay it off. Wait a month. You'll be fine. mcntsh wrote 4 days ago: It went to collections. That stays on your credit for 3-5 years. goatherders wrote 4 days ago: Incorrect. Pay it off in full. They will report that to the credit folks and it will be removed. roflyear wrote 4 days ago: This is incorrect. They do not have to remove it. They can, if you ask nice, but they do not have to. valeness wrote 4 days ago: This is patently false. They will remove it if they are feeling particularly jolly when you call and ask. But they are under no obligation to do so and they have denied this action to me before. goatherders wrote 4 days ago: Rephrase: my credit was a disaster in my 20's. I paid off dozens of collections accounts in my 30s. All of them were removed. My personal experience has been that it is 100% true that, if paid in full, the item is removed. Better? parkingrift wrote 4 days ago: Iâve been in this situation and you can make repayment contingent upon deleting the negative remarks. As in you send me a letter certifying youâll delete the remark, and I will remit payment. If they refuse then you can just refuse to pay until they relent. Their only alternative is to take you to court or sell to the next collection agency down the line. Creditors and collection agencies wonât take that action except as an absolute last resort. FireBeyond wrote 4 days ago: One of the challenges with this is that technically the TOS between a creditor and the CRA forbids the practice of "pay for delete". So you may get lucky, but oftentimes, you may not. gaadd33 wrote 4 days ago: They do have to mark it as paid at least under the FCRA if you are in the US. bryans wrote 4 days ago: That's actually not true. If you pay the collection agency, the derogatory mark gets removed within weeks. You also typically only need to pay half the amount. If they try to get you to pay the whole thing, just tell them you're using your tax refund to pay off debts, but you only have $X left, where X is half the amount owed. alostpuppy wrote 4 days ago: Thatâs not my experience. The only derogatory items on my credit report are medical debts I have long since paid off. bryans wrote 4 days ago: You have the legal right and ability to remove any mark if you've paid it off. Both of the agencies have online options for removal requests. [1] URI [1]: https://www.experian.com/disputes/main.html URI [2]: https://www.transunion.com/credit-disputes/dispute-y... bluedino wrote 4 days ago: Other creditors are worried you would move abroad and forget to pay them for years. mcntsh wrote 4 days ago: For sure it's a valid concern and warrants a mark on my record probably but a 30 dollar bill after 10+ years of pristine activity basically removing my ability to take out a loan is a little unfair. kome wrote 4 days ago: Credit Scores in the USA is basically developed into a social score. No European countries (with the possible exception of the UK) use a similar system. I wonder why Americans just keep going for it. ramesh31 wrote 4 days ago: >I wonder why Americans just keep going for it. We trade one for another; there's no social caste, royalty, or nobility here. Your worth as a human being is determined entirely by the sum of your assets. jimmaswell wrote 4 days ago: You don't need a vault of gold to have a good credit score. All you have to do is have some credit and use it responsibly. Too much for some people to handle so they decry it as unfair. nisegami wrote 4 days ago: The credit score system benefits the ones who have the most power to change it. That's why there's no real motivation to remove it. mcntsh wrote 4 days ago: > No European countries (with the possible exception of the UK) use a similar system There's SCHUFA here in Germany csunbird wrote 4 days ago: Yup, and you are not able to even rent a house without a positive score. bsenftner wrote 4 days ago: Credit scores can only affect your life if you live on credit. I spent 20 years without a credit card, and the only impact was being a hassle to rent a car. but as far as cars go, I do the unthinkable: I save and buy with cash. I simply do not use credit. Beyond my house payment, I purchase everything up front, including the nice and hefty discount when paying insurance in full for the year. It is a pain in the ass to get used to not using credit, but it is so, so worth it. andrewmcwatters wrote 4 days ago: I have also had this experience. Renting a car is very strange in that regard, but other car rental businesses are happy to take my business with a refundable security deposit, so not my problem. In fact, I find it strange and shortsided, because the people without credit are generally going to be the people who have less of a hard time fulfilling their payment obligations. Other than that, it has never affected my life. You can get a manually underwritten mortgage still today. There is always someone else who wants your money more. throw8383833jj wrote 4 days ago: this seems like the logical conclusion to me. I was scanning the comments for something like this and surprised that others didn't come to this conclusion. digianarchist wrote 4 days ago: I've leveraged credit quite a lot in my life and paid very little in the way of interest. That leverage has netted me quite a lot of money be it actual return on investment or being able to position myself to earn more, by moving countries. nisegami wrote 4 days ago: This is simply not true. Your credit score is frequently taken into consideration applying to rent a place to live. AnIdiotOnTheNet wrote 4 days ago: I rented my first two apartments with no credit history whatsoever before buying a house (and acquiring a mortgage) with no credit history at all. MisterSandman wrote 3 days ago: In 2022, in most large American cities, searching for a place to rent with no or a bad credit score can be a death sentence. You're limiting your options drastically. bsenftner wrote 4 days ago: How's about staying in the same rent controlled apartment for 32 years, so I can save? That was amazing, as I was still paying $950 when my neighbors were paying $2200 for a smaller place. technothrasher wrote 4 days ago: > It is a pain in the ass to get used to not using credit, but it is so, so worth it. Using credit to buy things you can't afford is a bad idea, but using credit to better leverage your money is very useful. Especially with increasing inflation, having debt that you have no trouble servicing isn't a bad thing. adrr wrote 4 days ago: How did you get home loan if you didn't have any debt to build up your score and credit history? AnIdiotOnTheNet wrote 4 days ago: It was easy in my case. As I recall, all my bank wanted to do was 3-way call a few bill collectors so I could authorize them to talk about my payment history. bsenftner wrote 4 days ago: It's called putting down $150K in cash, and having a stable job. Also, my credit "score" is "N/A". avgcorrection wrote 4 days ago: Certified stud. adrr wrote 4 days ago: Putting $150k down is like standard since you need to put down 20% anyway. Are you paying like significantly higher interest rate like a jumbo loan? If you don't have a credit score, the government won't back it so its more risk on the bank and you're paying a much higher interest rate. Banks also don't keep the loans and package them up and sell them. If you don't have a credit score, not sure how they would do that. No score would qualify as subprime. bsenftner wrote 4 days ago: Most people's 20% down is also a loan. Plus, in addition to that $150K down payment, I can point to my savings account with more than the loan debt inside. The only reason I have a loan is for the tax relief, if not for that I'd have purchased the home completely. My home loan is under 2%. ryathal wrote 4 days ago: That's a stupid reason to have a loan, unless you really like paying banks more than the government. It's still a loss to you with the tax deduction. adenozine wrote 4 days ago: How can we cooperate to get rid of them? jimmaswell wrote 4 days ago: I don't want to. Any system will have mistakes (and there are legal remedies for this particular system already), but for the vast, vast majority of people, their score is a fair reflection of whether you should lend to them. I've been responsible with credit my whole life, never had a bad mark appear on my report, and consequently never been denied an application. kome wrote 4 days ago: changing the legislation and the credit market, copying (dunno) the french or italian system and regulation. German system is pretty bad, but not as bad as in the US. sokoloff wrote 4 days ago: Starve them of their income stream by committing to never take credit, saving and paying cash ahead of time for every purchase? Get everyone else to agree to do the same. Demand for credit scoring will plummet (and with it, the income stream to the scoring agencies). Open a lending institution that will lend money to anyone with no credit checking? Hope that you donât get adverse selected out of business, but if you donât and can compete without it, demand for credit scoring will plummet. Or petition your representatives to make this particular type of service illegal. throw8383833jj wrote 4 days ago: And, also need to get rid of all regulations that prevent shopkeepers from charging credit card fees (or discounts for cash buyers). If you're paying for everything with cash/debit, you're paying those credit card fees unless merchants can charge different prices. sokoloff wrote 4 days ago: In the US, cash discounts have been explicitly allowed since around 2010 (via the Durbin amendment to the Dodd-Frank law). Merchant agreements were updated to reflect these possibilities. (Visa's is under 1.5.4.14 Discount Offer â US Region and US Territories, 5.6.2.1 Convenience Fees â AP, CEMEA, and US Regions, 1.5.5.2 Surcharges [and possibly others].) Accepting, handling, counting, accounting for, and securing cash (against insider and outsider threats) is not without cost either. RHSeeger wrote 4 days ago: > Open a lending institution that will lend money to anyone with no credit checking? Hope that you donât get adverse selected out of business, but if you donât and can compete without it, demand for credit scoring will plummet. This seems unlikely to succeed. You'd wind up having to give the same rates to everyone, because you have no real way to assess risk individually. As such, you wouldn't be able to compete on rates for people with good credit. lisper wrote 4 days ago: The solution to the particular problem reported in TFA is simple and obvious: allow people to sue credit reporting agencies for damages if they report false information. You will be amazed how fast these things will get resolved if that reform is adopted. Of course that won't happen because regulatory capture, but let's not wring our hands and pretend that this is a fundamentally difficult problem. It's not. boatsie wrote 3 days ago: You absolutely can sue under the FCRA for violations, but thereâs a few major problems. First, even if you find a lawyer to take it on contingency, there are quite a few hard costs that are still out of pocket. Postage, document prep fees, travel expenses for depositions, expert witnesses, etc. It can literally be thousands of dollars. Second, if your state does not allow for punitive damages for this type of violation, you need to prove damages. It is hard to quantify what the economic damage is of a credit denial or difficulty finding a lender is, and thus they will tie you and your lawyerâs time up with arguing this, even if they concede they erred. Third, there is a serious time commitment to make in a lawsuit. Interviews, timely filings, certified mailings, depositions, etc. Easily tens of hours possibly hundreds. Now, the type of person who can afford the time and expense of doing these things is generally also the type of person who can ignore a small hit to their credit score or a higher interest loan. Thus, these types of suits are not commonplace. That said, I know someone who did this and was successful in getting a settlement. partiallypro wrote 4 days ago: You can report incorrect information to the credit rating agency TheOtherHobbes wrote 4 days ago: In the UK you can also sue for defamation, which can be worth substantial damages if you win. Not many people realise this. Not speaking from personal experience, but I'm aware of a small number of cases where credit agencies, shops, and banks were sued for downgrading a credit score because of their own mistakes. I suspect this would be less likely to succeed in the US. But it's interesting that technically a downgraded credit score - especially with proof of consequent harms and expenses - is very close to the legal definition of defamation. londons_explore wrote 4 days ago: In many cases the information is true. Ie. you really did pay a $1.50 bill 17 years late because the bills were sent to your old address. The real fix is to only allow credit reporting systems to report on current debt, not any past debt or behaviour. (on top of the liability for mistakes you propose). FollowingTheDao wrote 4 days ago: Here is a better solution. Just do not care about your credit score. Seriously. It is all BS. They make you think you need these things, it is all marketing. scarface74 wrote 4 days ago: Unless you need silly stuff like a place to stay or car insurance Landlords check your credit if you rent and most people canât pay cash for a house. londons_explore wrote 4 days ago: Depends if you need a mortgage or credit card to buy stuff... And remember even if you don't technically need those things, you might be much wealthier by the end of your life if you use those things, since both are effectively leveraged investment vehicles, allowing you to invest more and get more returns in good economic times. FollowingTheDao wrote 4 days ago: If you need credit to buy stuff your problem is not going to be solved by going into debt. Tell me how buying a TV on a credit card is a leveraged investment. You know who gets rich? People who do not spend their money. And don't make it sound like "investment" is always a positive thing. many people are still paying for their "investments" from 2008. scarface74 wrote 4 days ago: So should people just wait to buy a house until they cab pay cash? TheOtherHobbes wrote 4 days ago: Perhaps the economy should be structured in a way that allows people to do that without being forced into debt. thrwyoilarticle wrote 3 days ago: I work for an employer who pays me in arrears. They are indebted to me. They could pay me up-front, but then I'd be indebted to them. Maybe there can be a system where dollar bills slowly peel out in front of me as I do my daily work? Debt exists for a reason. It's more useful than cash. scarface74 wrote 4 days ago: So how would you âstructure the economyâ to allow someone to buy a house without debt and that allows them to both save for a house and pay for some place to live while you are saving? tristor wrote 4 days ago: Perhaps it should... but it isn't. It's perfectly reasonable to believe that it should be this way, but it's irrational to behave as if it /is/ this way, when it isn't. The reality is that, at least in the US, it is a requirement for nearly everyone to have a mortgage to purchase a house and even for those who can afford to purchase without a mortgage it makes more sense to get one anyway since mortgage interest is usually lower than the rate of returns for other investments you would be keeping the cash in, and you get tax benefits both by not realizing gains to liquidate investments to buy a house and the interest for the mortgage is tax deductible via the mortgage interest credit program. Acting as if anyone is realistically out here buying houses in cash other than corporate investors / REITs, is silly. Even people on significant tech salaries are both better served and much more probably to have a mortgage even in LCOL areas. kleinsch wrote 4 days ago: Investment or not, youâre claiming people should only buy cars and houses for straight cash? News flash - most of this country isnât sitting in six figures of tech savings. FollowingTheDao wrote 4 days ago: I live on disability and bought the van I live in with cash so do not tell me you need credit to buy a car. Housing may be the exception, but you do not need a good credit score to get a loan for a house. Banks do not make these decisions on credit score alone. [1] What I am saying is that people should be spend less, save their money, and never going into any kind of debt, and ignore their credit score. URI [1]: https://www.ramseysolutions.com/real-estate/no-credi... scarface74 wrote 4 days ago: Please donât quote Ramsey. His whole mission is to funnel people into his high cost advisor and loan products. He also says that you should give 10% to the church while getting out of debt. FollowingTheDao wrote 4 days ago: Sorry, I donât look at people with an all or nothing attitude. I disagree with Ramsey on so many things, specifically his greed, but heâs not wrong about the ability to buy a house without a ton of leverage. scarface74 wrote 4 days ago: He very much encourages buying a house with 20% down. He just encourages you to do it through non standard underwriting criteria with high interest rates where he gets a cut. avgcorrection wrote 4 days ago: > Of course that won't happen because regulatory capture, but let's not wring our hands and pretend that this is a fundamentally difficult problem. It's not. Regulatory capture is a huge issue, it is difficult to solve, it is the real mother-issue of many other issues (like this one, you argue), and is fundamental to modern governance. Credit scoring is transitively a fundamentally difficult problem. kome wrote 4 days ago: Or just regulate credit better. tyingq wrote 4 days ago: There's also the issue of various creditors giving them bad information. I don't know how successful you might be suing a credit reporting agency if they were given bad info by some debt collector. londons_explore wrote 4 days ago: In the USA, in most cases, you can't in court point to someone supplier and say 'it was their fault, not mine'. Instead, the correct approach is to pay damages, and then, in a separate case, try to recover damages from that other party that you claim is at fault. If the other party is bankrupt or can't be found, you're gonna lose out. eberkund wrote 4 days ago: Credit reporting agencies are publishers of information. Publishers have editorial responsibility for the information they distribute, the excuse that they were given bad info by some random tipster doesn't hold up. IncRnd wrote 4 days ago: The FCRA already is a law that governs credit reporting agencies. Given that, are you sure they are publishers in the manner you imply? gruez wrote 4 days ago: Do you think hacker news should be sued for inaccurate information posted by its users? triceratops wrote 4 days ago: Hacker News is protected from this by Section 230 of the CDA. Credit bureaus aren't covered by the CDA since they aren't online or interactive information providers. ascagnel_ wrote 4 days ago: Hacker News allows basically any user with an account to submit posts and comments, and generally do not deal with data that has a material impact on others; there is no financial or contractual arrangement between HN and individual users beyond a standard ToS and moderation. Credit ratings bureaus enter into contractual agreements with both data suppliers and their customers and frequently deal with data that has a material impact on those who have no direct arrangement with the ratings bureau. I don't think it's unreasonable to expect a higher degree of data integrity and reliability in that case, and HN vs. a credit bureau is a terrible comparison. tyingq wrote 4 days ago: I'm not understanding how that works exactly, outside of very basic vetting that things like name, ssn, etc, match up. A fair amount of disputes, for example, are identity theft. The loan company sharing into with a credit reporting agency would be supplying data that looked right. lelandfe wrote 4 days ago: Those most affected by incorrect credit scores will have no financial ability to sue a multibillion dollar credit agency. Those with the financial ability will have little incentive to do so. mywittyname wrote 4 days ago: These kind of cases can be streamlined by law firms. Not every case drags on for years. People regularly sue, for example, insurance companies. Both parties kind of know where they stand, and judges prefer that parties find a settlement that works. nevi-me wrote 4 days ago: Or simpler than law firms, an ombud process that fights for the consumer. We have something like this in my country, where we have laws against reckless lending. My mom is unemployed and medically unfit to work. She was given a credit card, which I found out about after a few years. I spent 2 years passively trying to sort the issue out with the bank, to no avail. I finally went to the banking ombud earlier this year, and the bank wrote off her debt a few days after. I could have gone further and tried to get her "bad credit" from the bank expunged (there's a complaints process), but it disappears after 2 years, so I just left it to be. BobbyJo wrote 4 days ago: This is simply not true. Plenty of lawyers work for a cut of the proceeds, and big companies don't like going to court. My sister, who works for 15$ an hour, has successfully sued two very large companies when they don't hold up their end of a contract. Even if only 'some' of the people wronged sue, it will lead to better practices for everyone. luckydata wrote 4 days ago: yeah, suing a corporation with a pro bono lawyer is a low friction way to deal with systemic economic injustice and consumer hostile business practices. In what world? c'mon. BobbyJo wrote 4 days ago: It's high friction, but doable. Companies generally settle when they know they're in the wrong (get everything in writing kids) thanks to a wonderful concept known as "juries". Juries hate when companies do wrong by the little guy, because they are themselves the little guy. orzig wrote 4 days ago: I would love to hear more of that story. Iâd also assumed it was impossible and could definitely be convinced by evidence BobbyJo wrote 4 days ago: She sued my grandfather's home-owners insurance for not paying the full price of plumbing work (they offered half, knowing that wasn't the contract) when some pipes collapsed under his house. She won, plus got extra money for having to wait, which allowed my grandfather to make some other fixes to his house. She also sued a large solar-panel installation company because their installed panels didn't work after several months of techs coming over. This was only a partial success as the company liquidated. They had apparently done the same thing to a few other people, and got sued into oblivion. Lawsuits are a good thing for society sometimes. kube-system wrote 4 days ago: Any ad you see in the US for a lawyer is a lawyer that operates this way. (otherwise we wouldn't have ads on the side of bus stops for them) It's an arrangement called "contingency": [1] The downside is that a lawyer is likely not going to work with you unless they're sure they can get some decent money out of the case. URI [1]: https://www.legalmatch.com/law-library/article/conting... jrockway wrote 4 days ago: "Works on contingency? No, money down!" mikestew wrote 4 days ago: The downside isn't a downside. For no charge to you, a professional will tell you that it's a good thing there are contingency lawyers because otherwise you would have wasted a bunch of money to find out that you don't have a case. And even the "wasted money" part isn't true, because my limited understanding and experience says that just about any lawyer will give you a visit for free, even if they intend to charge for every 1/16th of an hour afterward. dixie_land wrote 4 days ago: Better Call Saul! itâs a fictional character but that really sums up the type. Maakuth wrote 4 days ago: Isn't that what class action suits are for? swat535 wrote 3 days ago: Right and how did it out ended up working in case of the Equifax breach? "Class actions" achieve very little; the only thing they do is make lawyers wealthier and if by some miracle the case succeeds, everyone else will get a 5$ coupon. Real change requires changing laws by the democratic process and that can only happen when the population unites to hold the government strongly accountable. I would argue that any other solution is a bandaid. Frost1x wrote 4 days ago: How do you class action "my specific credit report is false because of this specific information." There needs to be a third party regulatory agency with real teeth where you don't need a pile of money to refute claims, just a little time for the regulatory agency to pressure them on your behalf. The courts aren't it although they probably should be. The problem with our legal system is that in large part pointed out by GP, there's often a financial correlation in just how much you can utilize it which makes it ripe for exploitation by those with piles of capital laying around. dvtrn wrote 4 days ago: > There needs to be a third party regulatory agency with real teeth The CFPB could probably use sharper teeth zie wrote 4 days ago: You are right, in an individual case like that, it's hard to make it a class action, but I'm sure there are plenty of cases where they get some bad data from some vendor, and then promptly update 100k accounts with this bad data. Well that's 100k class action participants. :) smitty1e wrote 4 days ago: The fact that we have zero politicians of any stripe running on actual reform platforms is all one need know about politics. SpicyLemonZest wrote 4 days ago: Iâm not sure that sends any real lessons beyond the fact that credit scoring isnât a top political concern for many voters. There were bills introduced to reform the system in 2016 and 2021. smitty1e wrote 3 days ago: That Elizabeth Warren thing is the opposite of what's needed. Teaching budgeting in schools would be a good start. refurb wrote 4 days ago: Why not just sue them in small claims court for some small monetary damages right now? You can do that, people rarely do. tyingq wrote 4 days ago: Small claims court usually requires a very concrete definition of damages, things you can show in a receipt, invoice, estimate, etc. lisper wrote 4 days ago: It's complicated. The Fair Credit Reporting Act gives agencies very broad latitude to blame mistakes on the parties that furnished the information, and the resulting legal situation is a mess [1]. As a practical matter, you can bring such a suit, but your odds of prevailing on the merits are indistinguishable from zero. URI [1]: https://www.courthousenews.com/high-court-wont-review-immu... refurb wrote 4 days ago: Understood. But just like suing a large firm, when sending a $1000/hr corporate lawyer to small claims court, it makes more sense to just settle quickly. lisper wrote 4 days ago: Lawyers are not usually allowed in small claims court. But I'm pretty sure that all of the credit reporting agencies have a trained staff of non-lawyers who are nonetheless sufficiently well versed in this particular aspect of the law to destroy any prospective plaintiff. tssva wrote 4 days ago: Small claims courts are not intended to force defendants to give up their right to be represented by legal counsel; therefore, once served defendants usually can file to automatically have the case moved out of small claims where they can be represented by legal counsel. londons_explore wrote 3 days ago: They're also a good way to 'bluff' by moving the case to an expensive court with lengthy and expensive processes, that you know the court costs will massively outweigh any potential judgement. In that case, as claimant, it's usually in your best interests to give up when you're risking millions of dollars of legal fees to probably win $200. Tycho wrote 4 days ago: Iâm surprised that credit scores are even legal, to be honest. I wonder if thereâs been any class action lawsuits. jimmaswell wrote 4 days ago: What do you propose? Everyone gets a loan, no questions asked, no consequences for anything? Tycho wrote 3 days ago: I wasnât proposing anything, just expressing surprise that corporations are able to conspire against members of the public in this manner. That someone can just go and find out your personal history and sell it to parties youâre trying to transact with. whywhywhywhy wrote 4 days ago: Can't believe it's legal or that people happily participate in this complete scam. If I never borrow money and survive on my own terms my score should be perfect. Instead I'm marked down for never risking getting in to debt. seattle_spring wrote 3 days ago: "If I've never taken a math test, then it should be assumed that I'm great at math because I've never failed a math test." kube-system wrote 4 days ago: That's simply not logical. The absence of responsibility is not a demonstration of responsibility. pessimizer wrote 4 days ago: And we play superior to China and their "social credit" although the US/UK/Canada/Germany are the only places that allow something similar. kube-system wrote 4 days ago: Not true. The big "US" credit bureaus have operations all around the globe, and there are many regional players in this market too. [1] "Social credit" is an entirely different thing. URI [1]: https://en.wikipedia.org/wiki/Credit_bureau#List_of_credit... kube-system wrote 4 days ago: Credit scores are just math, applied to your credit history. What about that is surprisingly legal? Tycho wrote 4 days ago: If I wanted to start a business that would involve collating the private financial transactions/history of individuals and then sharing it (via a summary statistic) with clients in a context where there might be adverse consequences for the individual, without them granting permission, I would expect to get laughed out of the licensing office. kube-system wrote 4 days ago: Maybe you'd be surprised then. There are many consumer credit operations in the EU, operating under GDPR. maxerickson wrote 4 days ago: The US has extremely weak privacy rights. kube-system wrote 4 days ago: Credit reporting exists nearly everywhere. Regulations vary by region, but the general collecting and reporting of credit information is legal most places. Many of the places where people think they don't have a "credit score" are just places where credit worthiness is quantified differently, or local regulations don't have the same transparency requirements that exist in the US. tediousdemise wrote 4 days ago: As intended. There is no better way to influence someone's behavior than when they have the feeling of constantly being watched. It's about control. maxerickson wrote 4 days ago: Intended by who or what? Like if there is some entity that just gets what they want it doesn't really matter that you feel controlled, because you are. tediousdemise wrote 3 days ago: Intended by the US government. URI [1]: https://en.wikipedia.org/wiki/XKeyscore legalcorrection wrote 4 days ago: Credit scores from the major credit bureaus are such a big deal because handing out credit on an ad hoc basis is de facto illegal. You will be sued and accused of discriminating against black people. You will probably lose, or spend enough money on legal fees to have lost anyway. To defend against that, you have to make the process as rigid and impersonal as possible. The best approach is to use the government-blessed credit bureaus. solarkraft wrote 4 days ago: The joke behind that is that there's just as much discrimination, just hidden behind some intransparent algorithms. legalcorrection wrote 4 days ago: Making the process rigid and algorithmic helps make sure that you aren't using race itself as a variable in your analysis, but it doesn't change facts about the world. Black people have lower credit scores because as a group, they are less likely to pay their bills on time or at all. But because race isn't considered as a factor, a black person who is financially responsible is not dinged just because other black people aren't. javagram wrote 4 days ago: Itâs regulated and allowed by law. URI [1]: https://www.investopedia.com/terms/f/fair-credit-reporting-a... kkfx wrote 4 days ago: Neoliberals want a society of Ford-model obedient workers-subject-citizens to master them as a shepherd keeps his flock, since most humans actually obey but only "a certain bit" they invent ways to judge humans like a farmer who price his livestock as a way to reach such obedient flock they dream. The "class action" should be a public imposition against such scoring simply saying in Democracy People rules, we rule that no such things is allowed, you are a minority who can obey or being crushed. But since we are not in Democracies, they are just corporato-dictatorships dressed as formal, not substantial, democracies and most are not Citizens but just subjects... sokoloff wrote 4 days ago: For me, the pull quote about 40% of the way down the article is key. ("A credit score, at its most basic, is a predictive model of behaviour.") It seems fairly obvious that there's a lot of possible efficiency (read "cheaper and more accessible credit in aggregate" as the consumer benefit) to be had if implemented correctly. Lenders want to lend money to people who will pay it back as agreed. Lenders want to avoid lending money to people who will not (or want to charge an amount sufficient to cover their increased risk and costs). Borrowers want to borrow money at the cheapest possible terms. A system that correctly predicts who is likely to pay back borrowed funds as agreed serves both borrowers and lenders. That means it's unlikely that it should be made outright illegal. Regulations around data quality, challenging suspect data, removing erroneous data, how long correct-but-negative items can stay on the report, etc. are entirely appropriate of course. galoisscobi wrote 4 days ago: This is a really good explanation as to why my credit score dropped by ~30 points each time I finished paying off a student loan early. xeromal wrote 4 days ago: The drop is usually temporary anyways. Credit scores are best seen as an average similar to looking at your weight. If you weigh yourself every day, you're going to get a different weight every day. Same with a credit score. Best to look at the change over time. p49k wrote 4 days ago: > A system that correctly predicts who is likely to pay back borrowed funds as agreed serves both borrowers and lenders. Such a system can't be built without being unfairly biased against some people who don't fit a certain mold, and thus it should be illegal. Most of Europe has a much simpler system: Your ability to obtain credit is based on the past several years of income, with a penalty for instances over the past ~7 years in which you didn't pay back debts. That's it; no predictive modeling or scoring or other nonsense; everyone has an even chance at credit. SkyBelow wrote 4 days ago: >Such a system can't be built without being unfairly biased against some people who don't fit a certain mold, and thus it should be illegal. Where is the difference between this and any other time where a choice to offer a contract or not occurs? If you are hiring, no matter your interview process, you are looking for a certain mold and good workers who don't fit that mold will be discriminated against. When renting, same thing. When picking a contractor to do a job, same thing. >Your ability to obtain credit is based on the past several years of income, with a penalty for instances over the past ~7 years in which you didn't pay back debts. Which is still a certain mold predicting future performance based on past behavior. What about someone who has had poor income and many poor payments but who has just turned their life around and will have great income and be payable and willing to pay off any future debts. You are still discriminating against them because most people with a similar history won't have a similar positive outcome. gommm wrote 4 days ago: The European system is not the panacea you make it out to be. I'm French, I lived abroad for most of my professional life, when I came back to France after 14 years of living abroad, no banks would give me access to mortgages, I also wasn't able to rent most apartments because I had no history of working in France and I was a freelance contractor so I didn't have a fixed long term contract. In France at least, contract workers and entrepreneurs have poor access to mortgages compared to people who have a long term contract (CDI). Instead, I haven't really lived in the US besides a short stint as a student there a long time ago. But despite that, I have credit cards in the US and have a good enough credit score to be able to get a mortgage. I actually prefer the credit score in the US, it's relatively easy to manage, there's quick feedback as to how well you are doing (much less opaque than what's there in Europe) and it's more flexible for people not fitting the mold. zo1 wrote 4 days ago: Maybe I'm missing something, but you just described a credit score system. mortenlarsen wrote 4 days ago: Yes. But we don't have the stupid gaming aspect where people take on debt that they don't need in order to "build a credit" score. It is only a proof of income, outstanding debts (that you are required to reveal), and the hopefully lack of past non-payments that count. You can't "build your" score buy using a bunch of credit cards and paying every month. I live in Europe, and do not have a credit-card (only debit) have no need for credit, since I do not spend money that I do not have. If I was in the US, I would probably have a credit card to "build my credit". It is like if I asked my neighbor to lend me money every month and pay them back a second later to build their trust. It is just a stupid game, with no real meaning. leetcrew wrote 3 days ago: there is a performative aspect to "credit building", but it's not all a meaningless game. the fact that someone has access to a $5k credit line and doesn't go crazy with it is a positive signal itself. bombcar wrote 4 days ago: I suppose the difference is that the bank has to refuse you in the EU system, instead of pawning the refusal off to a third party that does the calculation. sokoloff wrote 4 days ago: In the US, the refusal is still from the lender, based on information from zero or more credit reporting agencies. bombcar wrote 4 days ago: Yeah, but they always word it as blaming the agency. sokoloff wrote 4 days ago: That is likely a consequence of a requirement of the Fair Credit Reporting Act under which you must be told when information in your credit file is used against you to deny your application for credit, employment or insurance. I havenât been denied in a long time, but my recollection was the refusal was from the lender and included âwe may have used information from ; hereâs how you can get a free copy of the information in your fileâ¦â MadeThisToReply wrote 4 days ago: > Your ability to obtain credit is based on the past several years of income, with a penalty for instances over the past ~7 years in which you didn't pay back debts. Okay, and using these inputs, what function is applied to determine whether or not to grant the loan? How does that system differ from a "credit scoring" system, apart from that your perceived ability to repay isn't explicitly mapped to a single variable? sokoloff wrote 4 days ago: âInstances over the past ~7 years in which you didnât pay back debtsâ is used precisely because of its value in predictive modeling your likelihood to pay back prospective new debt. usrn wrote 4 days ago: Racial stereotyping is, in it's most basic form, a predictive model of behavior. It's also illegal in nearly any financially meaningful situation. danuker wrote 4 days ago: > It took two years for her old credit score to be reestablished. Two years of faxing in detailed documentsâincluding Daveâs death certificateâonly for the mistake to reappear. During that period, her life was effectively stalled. She considered moving, as it was painful to stay in the house she had shared with her late husband, but having a credit score stuck at zero meant she couldnât get a new mortgage. Indeed, these glitches have the potential to ruin people's lives. Reminds me of Kafka's "The Trial". DIR <- back to front page