@Croselx wrote:I think that the score system needs to be overhauled and be a one size fits all kind of thing. I know that the score is the result of an analysis and the 'owner' of the analysis is the one analyzing the information, but this is something that affects us in the long run and can mean thousands of dollars wasted.
If it were up to me I would consolidate all the credit bureaus under 1 company. I would then make a standard score and report system that could be made available for free once per year or pull anytime access (with monitoring) for a small fee (the company collecting/analyzing your information needs money to run so..) banks and other lenders would pay a fee to access this analysis or they could make an analysis of their own with your credit report (a smaller fee to access report only?). This way a lender has freedom to choose which category is more important for them and base their decision on that. An extra option stating likelyhood of mortgage approval, auto loan, CC, etc could be made and the company could charge a separate fee for their analysis and recommendation (such as waiting a few more months to get into the next tier or to better chances of a lower interest rate).
One can hope..
I think this is a horrible idea. You want the government to basically create a single monopoly score provider? And then what, regulate it like a utility? Every couple weeks these threads pop back up. I never understand it. Most people would never support the same kind of regulation in other areas of private enterprise that they advocate for in these threads. If you would, then at least that is consistent, but usually it seems to be a as a result of a gross misunderstanding of what a credit score is. Moreover, there's often a lack of perspective. Sure, the system isn't perfect, but it's not exactly broken beyond understanding. Pay your bills on time. If you do that, the rest mostly takes care of itself. When my credit was horrible, it was no real surprise to me.
Starting Score: ~500 (12/01/2008)
@RobertEG wrote:As a bit of history, it is only fairly recent that consumers even obtained the right to receive a copy of their own credit report.
Businesses that produce credit reports are commercial businesses who sell products. It is rare for congress to prescribe who a business must sell their products to, let alone to make their product free once a year. They chose to limit that requirement only to credit reports, not scores.
Credit scores were not created for consumers, they were created for creditors and businesses to assist in their business decisions. They are not consumer property that must be provided at consumer request.
In enacting legislation, congress carefully and intentionally limited requirement to extend their prescription to credit scores.
Section 609(a)(1) provides the consumer the right to obtain any information in their credit file by formal request to the CRA, subject to providing proof of their identity and payment of a fee to the CRA.
Section 609(a)(1)(B) specifically clarifies that this right does not extend to requiring a CRA to disclose to a consumer any information "concerning credit scores or any other risk scores or predictors relating to the consumer."
Disclosure of credit scores is, under FCRA 609(g), imposed on certain mortgage lendors if they use a score in their decision-maling. They must discose to the consumer any score they procured from a CRA that was used in connection with a loan application, as well as the key factors they used from that score. That requirement is upon the lendor, not the CRA.
Good points Robert. When I said you have a right to the information, I should have been clearer that you have a statutory right to the information. Which, in my opinion, is as it should be. If CRAs are sending out what purports to be factual informtion about you, you should have a right to check it for accuracy. I've never looked into the history behind the act, but it would seem like inaccuracies in credit reports would basically be libel.
@Croselx wrote:I didn't mention the government taking control in anyway. What I meant to say was that if a single entity would make everything (data collection, analyzing, etc) then the scores wouldn't have to vary from lender to lender (ex. lender 1 pulls TU, lender 2 pulls EX).
I guess what I should of said was: to make an universal scoring model that we can access (paying or not, but we should have access to it..) so we can better plan when attempting to do a big purchase. This model could vary for different applications (car, mortgage, CC, installment loan, etc.) like it does now. What I want is just to have access to the score and it not varying between lenders (as long as the category is the same). Other than having some items weigh more than others (ex. having a late payment weigh more than age of the account on one report and vice versa on the other) I see no reason for the score to vary if it is the same information.
OR you could keep it the same as it is now, but give access to all 3 scores (including different versions if any), paying or not, (FICOs used for loan decision making, not FAKOs) that are actually used and make the lender/creditor reveal which version they are using or push just one official version. Basically make it constant across the board.
How are you going to do that? The CRAs are separate, private, competing companies. They charge lenders to submit information, and then sell that information back to lenders. A lot of large entities choose to report to all three, but smaller entities sometimes report to only one, or not at all. This is why you have different information on your three reports. To make the information consistent, you'd have to eliminate two of the CRAs, force each lender to report to all three, or force the CRAs to allow submission of information without charging for reporting (there would still be some administrative cost with reporting to all three so some small lenders might not choose to do so). I doubt EX and EQ are just going to decide to close shop so that TU can make all the money in the credit reporting business, and none of them are going to voluntarily choose to kill a revenue stream and allow reporting for free. Similarly, there are smaller companies that don't have the resources or choose not to spend them on reporting. So I don't see how you are going to change the whole system unless your are proposing enacting laws that force one of these things to happen.
And there are actually good reasons for scores to vary based on the same information. FICO isn't infallible. It just happens to be what is most widely used. But just because FICO says that you have a 15% chance of default doesn't mean they are right. Vantage might score the same report at an 8% default rate. Maybe they are closer to the truth. A competitor could come along with a model that more accurately predicts risk, thereby saving lenders money, and displace FICO. It's not likely to happen anytime soon, but I'm sure that's what Vantage wants to do.
We're actually very lucky that there is, for all intents and purposes, one basic score model that dominates. And that there's so much information out there about it. There could easily be more score models used by lenders. While that would make it a little more difficult for consumers, this product really isn't targeted at us. It's a product for lenders.