topic Re: HP on... IRS? in Credit in the News

HP on... IRS?

Anonymous — Sun, 31 Dec 2017 10:48:04 GMT

A bill was introduced in Congress to allow a creditor to pull your tax history the same way they pull any CRA.

https://techcrunch.com/2017/12/30/how-a-simple-tech-upgrade-at-the-irs-could-transform-the-economy/

While I do see advantages to this for loans such as mortgages which very often require a 4506-T anyway, I fear that some lenders such as Amex and Synchrony will start doing wayyyyyy more income verification FR's if they can process them automatically. At some point in the future, lenders would probably require this instead of, or in addition to, asking for your income on CC apps. Not good.

Re: HP on... IRS?

Anonymous — Sun, 31 Dec 2017 11:57:22 GMT

agreed not good if it comes to pass

Re: HP on... IRS?

Revelate — Sun, 31 Dec 2017 13:11:21 GMT

Hrm.

Mixed bag; privacy, yes please.

Reducing loan fraud, default, and generally reducing lending costs which in a competitive market should be passed on to the consumer in some fashion, also yes please.

Getting to the point where we can process a mortgage application on a cocktail napkin, you guessed it, yes please (that whole process needs to be fixed).

It's not so easy to pull your credit report if you are anyone other than, well, you; if they limit it similarly I'm not so certain this is a bad idea, and might actually do a lot of beneficial things for the market.

Disclaimer: there's been a lot of talk regarding Amex FR's in CC's over time of the would I or would I not furnish the 4506-T form if requested variety... I've always been in the camp of absolutely I'd give it to them.

ETA: Just thought of another thing, Chase basically has a pretty darned good idea of what my taxes are anyway: it's not hard to napkin math for any lender that is the clearing house for your deposits. Chase has been exceptionally good to me presumably cause their algorithms have figured out I make way more than I spend, and I have assets and they could probably even come close to estimating what level I have too even without the fact that I got my mortgage through them a few years ago.

This change would potentially put most other lenders on a similar playing field minus the transaction record, again promoting a more competitive market. Better information, better decisions.

The more I think of it the more I think this might be a good idea... if we can solve the whole security thing.

Re: HP on... IRS?

Moneyklutz — Mon, 01 Jan 2018 02:47:42 GMT

@Revelate wrote:
Hrm...

...The more I think of it the more I think this might be a good idea... if we can solve the whole security thing.

I've spent a day thinking about this. Went and read the proposed bill, searched the net for other news about it and any posts by peeps afterwards.

...and after all that, I agree with you Revelate. The potential good outweighs the perceived bad.

If lenders had less defaulting of loans due to better initial vetting I think we'd all benefit. Every time someone games the system, the rest of us end up paying for it.

Re: HP on... IRS?

Anonymous — Wed, 03 Jan 2018 12:51:32 GMT

Considering this further as well, I think it does have its merits, but there needs to be multiple levels of pulls.

For example, a CC app does not need to know (nor do I want them to know) all the information that's on my 1040. I don't mind if they see the sum of my W2's and 1099's (since that's the number I'm providing anyway), but they don't need to know how much I contributed to my IRA.

Re: HP on... IRS?

Dave4fun — Wed, 03 Jan 2018 19:20:19 GMT

Agreed with Grasshopper as it relates to credit card applications. I think it is unnecessary for credit card issuers ie.(Amex) to delve into your tax returns. I do see benefit of a streamlined approach as it relates to mortgage applications, business credit applications or other commerical enterprises requiring credit or financing.

Re: HP on... IRS?

Revelate — Wed, 03 Jan 2018 20:19:52 GMT

@Anonymous wrote:
Considering this further as well, I think it does have its merits, but there needs to be multiple levels of pulls.

For example, a CC app does not need to know (nor do I want them to know) all the information that's on my 1040. I don't mind if they see the sum of my W2's and 1099's (since that's the number I'm providing anyway), but they don't need to know how much I contributed to my IRA.

Why don't they? Better information reduces lending mistakes (fraud or otherwise) which reduces their costs, which will get passed to us likely in either rewards or lower AF's over time?

I guess I'm just not seeing the problem here... if it's just a privacy thing, I get that, but outside of that case I'm a bit confused.

Re: HP on... IRS?

Moneyklutz — Thu, 04 Jan 2018 03:18:47 GMT

@Revelate wrote:

...I guess I'm just not seeing the problem here... if it's just a privacy thing, I get that, but outside of that case I'm a bit confused.

The irony is that we already allow Wells Fargo to literally know what color of undies we're wearing when applying for a home loan, but balk at the thought that Walmart (where we bought those undies on credit) might question if we could actually pay for them.

Less chance of a loss to the creditor eventually equals less cost to me as a borrower.

Re: HP on... IRS?

Anonymous — Thu, 04 Jan 2018 19:27:54 GMT

@Anonymous wrote:
Considering this further as well, I think it does have its merits, but there needs to be multiple levels of pulls.

For example, a CC app does not need to know (nor do I want them to know) all the information that's on my 1040. I don't mind if they see the sum of my W2's and 1099's (since that's the number I'm providing anyway), but they don't need to know how much I contributed to my IRA.

I don't see why it would matter if they do/don't know what your IRA contributions were. But I also recently had a similar discussion with some coworkers about how I also don't see why income is seen as such a "private" matter/discussion to the general public. For example, if you and I are working at the same place but you are ahead of me in terms of rank/position, why would I be offended to know you make more than me? Or even if we had equal "on-paper" qualifications but I find out you get paid more than me, I'm sure there would be a (somewhat) reasonable explanation as to why our employer is paying you more than me.

Why are people so extremely private about disclosing their income/financial standing? I'm not asking this to come off as aggressive, rather just genuinely curious. If Joe-Shmo on the side of the street asks me how much I make, I'd gladly tell him and move on. What difference would it make it somebody knows what your income is like? We all have different incomes/expenses/ways of life anyways.... Right?

Sorry, again not trying to come off aggressive or snotty. I definitely don't make a substantially large income (or even a modest income in some peoples' eyes), but don't mind disclosing it.

Re: HP on... IRS?

Anonymous — Fri, 05 Jan 2018 04:17:01 GMT

Tax returns don't show the whole picture. 1) DW and mine house is paid for so if you pulled our tax return no home interest deduct. Does that mean we rent? 2) It takes over 5 tax returns personal and business to piece together our income. Some of these biz we only own an interest in not the whole thing. 3) Our largest asset is a block of stock in a public company that has never paid and probably never will pay any dividends. it never shows up on any tax tax return. So you see why I say tax returns can be misleading.

Re: HP on... IRS?

Anonymous — Wed, 10 Jan 2018 14:46:50 GMT

People are ENTIRELY too quick to give up their rights to privacy these days. Once personal information is out in the public sphere and readily available, it can be used and twisted in all sorts of ways we never even imagined. Too much info about us is floating around already, why would anyone want to give corporations easy access to even more of it... blows my mind.

Re: HP on... IRS?

BurgeoningHope — Wed, 17 Jan 2018 21:32:53 GMT

Child support (and soon, alimony) doesn't show up in tax returns. It's seldom the sole source of income, but it is not infrequently a material portion of it.

Re: HP on... IRS?

stellar — Mon, 29 Jan 2018 03:53:29 GMT

MoneyKlutz wrote:

Revelate wrote:

...I guess I'm just not seeing the problem here... if it's just a privacy thing, I get that, but outside of that case I'm a bit confused.

Ah, the old home loan vs undies debate. lol

Re: HP on... IRS?

Moneyklutz — Tue, 30 Jan 2018 01:54:17 GMT

@stellar wrote:

Ah, the old home loan vs undies debate. lol

Well...maybe I was stretching it a little bit but I thought it was quite revealing. I'll skid to a stop eventually.