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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".
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