

Ask HN: Are there any startups targeting the credit reporting market? - davismwfl

I know there are a few places like Credit Karma that work to help you get access to the existing big 3 credit agencies in the US.  But is anyone actually tackling the reporting and scoring itself?<p>I know some of the micro-lenders themselves score people based on their social media and other factors, but is anyone trying this on the larger scale to disrupt not so much the lending but the reporting side?<p>I am also thinking about those that move to another country and don&#x27;t have established credit and sometimes struggle to get themselves established.  I think in some cases this is easier than others, but would love to understand it better.
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shopinterest
As you said there has been a few tries but usually tied to the lender. Lenders
like 'Prosper' and others use other criteria to make the credit decision
(social contacts, other bill payments, etc...) There are several FICO scores
for many financial products (e.g. your car FICO score, credit card FICO score)
and the main one. I guess one way to disrupt would be a way to collect the
data not usually compiled (payment history for utilities bills, rent payments,
micro loan payment, medical bills) However, in any case your customers are not
the people, but the institutions who check for credit, so find a need where
someone needs to make a credit decision but doesn't want to use existing
credit reports and scores.

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davismwfl
Your last point is probably the biggest issue in some ways. The true customers
of reporting and scoring are lending institutions and you need to provide them
with accurate data. But at the same time you have legal and IMO moral
obligations to make sure you are reporting accurate and complete (as possible)
data to make sure the lender gets a true risk profile and consumers aren't
left screwed.

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halotrope
Thats actually a very good idea. Here in Germany credit-reporting is done from
one central institution called the Schufa and their methods of scoring as well
as their practices are completely intransparent and can sometimes have quite a
big impact on peoples lives (about even the most basic things like being able
to have a cell phone contract or renting a flat) without any alternative for
both creditors and debitors. This area could really benefit from some
innovation.

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davismwfl
That is similar to how it is here in the states but there are 3 main agencies
today. There is one primary scoring system called FICO that is not very
transparent either. They give rough ideas as to the weight things have on your
score but that is about it. There are some alternative scoring systems too but
not as widely used.

In the US banks are the primary funding source for most credit reporting
agencies, so it seems to me that CRA's interests are more in line with the
bank then in being neutral with their reporting. Meaning they would rather
report something that is negative and maybe not accurate then not report it
because it protects their client and raises consumer rates. Many stories exist
around these types of issues. Is the funding source for Schufa similar in
Germany, primarily banks?

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tixocloud
While not credit related, a startup here in Canada is trying to tackle
identity verification at a global scale:
[https://www.trulioo.com/](https://www.trulioo.com/)

Your last point about moving from another country to one where you don't have
established credit is interesting. If there's a service where you can verify
credit cross-borders, I think there might be something there.

Credit scores are great but the real problem is not the score itself. It's
about knowing how likely the person is who they are claiming to be and how
likely will they pay their bills on time - we use it as a proxy to score the
quality of the customer. If there are alternative data points that can tell us
the difference between a good customer and a bad customer, we would use it.

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davismwfl
That's a great point, and thank you for the information and the link. I will
research it and see what comes back. I am thinking your point about identity
verification is really the true problem. The credit scoring is what it is, the
fact that errant records are linked because of poor identity discrimination is
really a core issue. Cool! Thanks again.

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tixocloud
You're most welcome. Happy to help. If you need more insight, feel free to
send me an email (in my HN profile). Would love to hear what's to come of it.

