@LynetteM wrote:
@Anonymous wrote:
I read this article and find it very concerning. Yes, I agree that the right intention was in play when it started, but I fear that it can potentially open a can of worms if indeed what this article states is true.
If I am in the process of establishing business with a lender (cc, car loan, mortgage, etc), then I have no problem providing proof of my income to that lender as part of its decision process. I say that with the expectation that any documentation that I provide will be considered confidential between me and that lender for the purpose of conducting business and that it can't be given to 3rd parties for marketing purposes. And yes providing my confidential income information for collection in Experian's database is considered a marketing purpose as they sell access into the database.
With that said, the #1 concern I have with this "database" used to collect information regarding incomes that is available to any lender with or without my consent. When I look at my "soft pulls" today, the majority of softpulls that I see are from companies I have never heard of, or done business with. I don't want my private income information to be available to companies that i do not do business with. I keep hoping that someone speaks up and shows that there is an opt-out option on being including in such a database.
My #2 concern is this "estimation" business. I realize it was put there to appease the retail CCC that like the instant credit marketing at the cash register. But to everyone's point, I guarantee that if you look at my credit report, you will never guess how much money I report to the IRS each year. I joke that if you asked three of my closest friends, they don't have a clue how much money I make. Yes, supposedly the CCC can't use the estimate solely to make their decision. But how enforceable is that really? The article states the CCC's can use this estimator to make decisions on adjustments to your credit limit. Yet this article also glosses over that during test runs of the model, it determined individuals to have an income of $35k when in actuality they made $50k. So it isn't perfect.
I am shocked that there is not an opt-out option here. I would not be as much up in arms over this portion if there was the ability for an individual to not be included in any estimator or database. An individual should be allowed to choose between privacy and convenience. I personally would choose privacy even if it meant that I had to give up the ability to apply for credit at check-out and had to manually provide proof of income to a lender.
The issue is not providing proof of income to a lender to help them decide whether to do business with me, or how much credit I can afford. The issue boils down to accuracy, privacy, and security concerns of these "databases" and estimator systems.
I agree. It's the "estimating" that bothers me. After all, just how accurate have all of us found the FICO Simulator to be? Huh?
Here is what I believe might be forgotten: Lenders want to lend money. No, let me restate that: lenders have to lend. This is why you get the promo mailings and offerings.
I hear people state they are concerned they may get passed up due to an innaccurate estimation. On the one hand there is concern that income is private. But then on the other hand concern that estimations may be innaccurate. Either we want the estimations accurate or we want the privacy meaning not accurate, correct?
If one is concerned the estimation is innaccurate, then verification of real information is necessary with the lender. If one is concerned with privacy, then estimation is preferred where sufficient and if the lender feels inclined to lend based solely on estimation.
But we must remember that lenders are in the business to lend. If they do not lend, they don't stay in business. So if you are qualified or potentially qualified, there may be a little more involved in the application or credit process, but in the end you will be able to get the credit or loans you want AND are qualified for.
I understand the privacy issues. But on the other hand, when you apply, except for very few exceptions, you must disclose your income. And the terms of application give the lender the right to verify your employment, income and credit references. So once you apply, you are no longer entitled to privacy in relationship to that lender.
This is more red tape and regs the lenders must comply with. But in the end, they will figure out how to lend as long as we have free market capitalism.
Also, CR's used to contain income information. When I was 20 I had my employer provide me a statement of income on company letterhead. I gave that to the local credit bureau (EQ affiliate now) and they updated as "verified" who my employer was, what my salary was and when this was submitted/verified.
This made my application for credit much easier at that time, because most lenders would allow that as income verification, until the date verified seemed to old.
