
The careless errors of credit reporting agencies - jackgavigan
https://www.washingtonpost.com/posteverything/wp/2016/09/08/how-the-careless-errors-of-credit-reporting-agencies-are-ruining-peoples-lives/
======
ThomPete
The US is as far as I know the only country in the world who have a positive
creditscore system.

At least in Europe it's mostly based on a negative creditscore i.e. you are
trusted by definition but if you don't pay your bills you end up not being
allowed access to credit.

In the US they don't trust you per definition and instead you have to prove
that you are good with money by basically creating debt and then paying it
off.

This is obviously to say the least absurdly backwards, but I believe there is
a rational explanation and that is that the US is a country of immigration and
so you had to find a way to allow foreign people without any history and no
reason to trust them.

~~~
superuser2
>you are trusted by definition

I felt pretty "trusted by definition." Citi gave me a credit card with a
$3,000 limit as a college freshmen. A few years later I had an $8,000 limit
card and a $10,000 limit card.

I bought my car certified-pre-owned under a program that writes favorable low-
cost loans to recent college graduates with no or limited credit history (with
an offer letter or paystubs).

You just aren't trusted with housing-sized amounts of money until you
demonstrate responsibility with smaller dollar values first.

>basically creating debt and then paying it off

This depends on your definitions a little bit. You don't need to carry a
balance and you certainly don't need to pay interest. You just need to create
low but nonzero utilization on a credit card, pay it off every month, and not
do anything else that might screw up your credit. I suppose you have debt in
the interim between making the charge and paying it off, but most people don't
consider it to be "credit card debt" if it goes away between statement cycles.

~~~
popmystack
>Citi gave me a credit card with a $3,000 limit as a college freshmen.

How old are you? Just a few years ago, despite making a very decent amount of
money and having no marks on my credit, it took an entire year for me to get a
credit card. Reason: lack of credit history. A lot of people have similar
stories.

>This depends on your definitions a little bit.

The part where you spend money that isn't yours and then pay it off later.
That's debt.

Personally, I've learned the game so to speak and now continually get out
outrageously good offers for cars, credit cards, home loans, you name it. I
have a about $90k~ worth of available credit to me on my CC's alone. But
despite having an incorrect black mark for a medical bill that's reported by
_ONE_ CRA (the others removed it after I gave them proof that the debt wasn't
valid, Experian refuses to listen and because it got reviewed once they won't
review it again), I get better offers now than I did when I had a squeaky
clean record.

It's an absurdly backwards system. Get debt to get more debt. Hope CRA's don't
fuck anything up. Credit card management has no indication how I'll manage a
loan (whether a house or car) due to the nature of spending and utilization,
but financial institutions treat it as such.

Quite frankly we need "stricter" credit laws across the board.

1\. Start out with a "default" score at the very least.

2\. Cap interest rates on CC's (20% APR is stupid). No reason a CC should have
an interest rate of above 12%.

3\. Don't allow medical debts to be displayed in pulls from CRA's. If the
institution really wants to see "everything", make them pay a decently high
fee for it. They must also explicitly state that in their loan consideration
for you, they took into account medical debt. Craft laws around whether or not
financial institutions should be able to consider these debts, depending on
the loan being offered.

4\. Prevent employers from pulling credit history. Your finances are not their
business.

5\. Prevent landlords from pulling credit history. They are not loaning you
money. If they want to pull your credit history, then they need to also
contribute to it positively (i.e. report payment history during the length of
your lease, accurately).

~~~
chipperyman573
>Prevent landlords from pulling credit history. Your finances are not their
business.

I disagree, if you have a terrible credit history, leasing to you may be very
risky. They aren't loaning you money, but they are trusting that you will have
the money every month to pay them with.

~~~
sithadmin
>They aren't loaning you money, but they are trusting that you will have the
money every month to pay them with.

Even more importantly than that: the lessor gives the lessee custody and
(limited) care-taking responsibilities over what, in most cases, represents a
significant investment of capital.

~~~
doug1001
i agree. In fact, when i signed the lease, i handed over a check for first and
last month's rent plus a security deposit equal to another month's rent.

it's me, the tenant, who is loaning money to my landlord.

~~~
nommm-nommm
It cost a fortune to evict tenants who don't pay their rent.

------
kartan
How much is this connected to not having a real id card?

For me is always weird when you see things like "no flight lists" and it is
just a list of names. In Spain or Sweden your ID will be listed and the rest
of people named like you spared of being harassed.

Another concept that I don't understand is that USA's social security number
has to be kept secret or otherwise your identity can be stolen. How that is
even possible? Doesn't your employer needs it?

An ID card is not perfect. 40 years ago Spain issued some duplicated numbers,
before computers were so prevalent, causing problems. But it solves a lot of
problems.

It always seems that private and public bureaucracy in the States is worst
that it needs to be.

~~~
ourmandave
So how does a real ID work?

Here, places verify you over the phone by the last 4 digits of your social
security number, so you have to keep it secret.

If I'm evil and know your ID what can I get away with without a card? And what
can I do with a decent fake card?

~~~
marcosdumay
You need your card to do anything. You don't use it to authenticate over the
phone, but lesser levels of authentication are available by other means.

You can impersonate somebody with a decent fake card, but just having one is
enough to go to jail.

~~~
ghaff
>You need your card to do anything.

I have not had a physical social security card in many decades. I think it was
in a wallet that got stolen in the 1970s and I've never gotten a new one and
never needed one (or even been asked for one that I can remember).

------
ufmace
Speaking of credit annoyances, I've seen a lot of "dark patterns" appearing on
the credit agency websites for ordering your Federally-mandated free annual
credit report. Their workflow for getting the credit report is structured to
push you towards signing up for some kind of monthly subscription to some
monitoring service, to the point where it's very difficult to find the buttons
to just get the free credit report. And if you do accidentally sign up for
their monthly service, of course you can only cancel over the phone during
business hours. Just waiting for them to start understaffing these call
centers so that the waits extend past an hour...

~~~
Karunamon
The trick there is to stay far away from the individual sites and only use
annualcreditreport.com

~~~
justinlardinois
annualcreditreport.com takes you to the credit bureaus' websites, which
themselves have the problem he's talking about.

------
sschueller
The whole credit reporting system is a money making racket and there is zero
interest in keeping the information in it accurate. No one is held responsible
for mistakes and the suffering people go thought because of it.

~~~
tn13
Most things in this world are about making money.

Credit reporting system works pretty well and it is evident by the fact that
we have seen mortgage bubble burst (where government forced banks to ignore
credit ratings) and student loan bubble building up (ditto as housing loans).

The marginal gain in making it more accurate is not very much so I am pretty
sure banks will not put efforts in that direction. Also, banks don't care if 1
in 10000 get screwed up because of their mistake because there is plenty of
more fish in the pond. But that is how the world works.

~~~
sidlls
> Credit reporting system works pretty well

Citation needed.

> (where government forced banks to ignore credit ratings)

This is simply not true. The mortgage bubble burst when big investment and
gambling/speculation institutions could no longer cover the shorts against
mortgage bond derivatives and the incentive for packaging questionable
mortgages into the underlyings disappeared. These mortgages weren't all (or
even mostly) to poor people with no ability to pay, and the government didn't
force anybody to do anything.

These same banks paid ratings agencies to ignore the bad mortgages in these
securities specifically so they could increase the volume of mortgage bond
sales. So your example is actually one that shows that ratings agencies'
products are not necessarily accurate (some might call them fraudulent, even).

------
necessity
More effective than any regulation would be a legal system that actually made
it possible for the small guy to sue the big guy for damages.

~~~
thechao
For instance: Time Warner Cable screwed up my cable package, charging me 220$
(a la carte) rather than 90$ (bundle). I contacted them, they admitted the
mistake, and fixed the next month---I still ended up out 65$. I'd really like
that money (moral imperative), but there's no legal way for me to seek relief
for that small amount. If TWC messes up 1/50 accounts, once a year, for 50$,
then they stand to make 500k--1mm$ a year just in my area. There's literally
profit to be had between the legal cracks.

~~~
asddddd
File a complaint with the FCC or BBB and (at least with Comcast) they'll
suddenly be _very_ eager to fix the problem. Ran into a similar issue where I
was told one thing and billed for another, a few days after a BBB complaint
they had someone from "executive customer relations" calling/emailing me to
get it resolved ASAP.

~~~
awqrre
FCC yes... I did that when I had an issue with AT&T not wanting to unlock a
phone that I just bought (pre-paid) and I got a call from AT&T the next day.

------
Meegul
When I turned 18, I decided that it would be a good idea to get a credit
report from all three agencies just to check what was on there. I found that
there were multiple accounts tied to my credit score from before I was born.
Two of the credit agencies removed them fairly easily, but to this day, one of
them has refused to remove the accounts. Why? Because I can't prove that I did
not live in the area the account was opened in. Not being born yet has so far
not been good enough. It's just been a process of me mailing them, waiting 6
months for them to respond with some request for some more information,
repeat.

~~~
aboonaboo
You should sue them

~~~
Meegul
The only reason why I haven't done that, is that the accounts actually have a
positive impact on my credit. They're fraudulent, so I am taking action to
remove them, but there have been no damages as a result. So, I don't really
have a reason to sue other than to save me future hassle.

------
MrFoof
My father and I have the same first name and middle initial (but different
middle names).

As a result, I've spent at least 1 entire calendar month in the past decade to
"disentangle" our credit reports. With Equifax it wasn't finally resolved
until I showed up unannounced at a regional office in a suit.

Yet again, we're entangled with TransUnion (after last resolving it 18 months
ago), with me having to enter security questions as if I were my father in
order to confirm my identity.

The most maddening part is it is extremely difficult to talk to someone in the
US if you have a problem with any of the large three bureaus.

------
bluedino
The credit reporting system probably wouldn't work if you had to have the
account holder's 'permission' to add events to it - you have to do it in this
automated way.

Although it can be a pain, the responsibility of if your credit report is
accurate falls on you, the consumer. You should many of the free services to
check your credit and then dispute any events that aren't correct. Most people
don't have issues but you can have companies that don't report payoffs (they
should be fined or something), companies that assign accounts to the wrong
person/SSN, etc.

~~~
dhimes
_Although it can be a pain, the responsibility of if your credit report is
accurate falls on you, the consumer._

I can only be responsible for the things I do. If some shithead wants to give
third-party information about me it better be accurate, and if its inaccuracy
causes me harm it should be actionable.

~~~
TheCoelacanth
Exactly. If I spread false information about someone to their detriment, that
is slander. How do credit reporting agencies get away with it?

~~~
HarryHirsch
Probably with carefully written laws, same as why we are seeing bogus DMCA
requests all the time. Most crime has to be committed "knowingly", but if you
automate your DMCA takedowns they can't catch you for perjury because you
don't know what your system does.

------
MiguelVieira
PSA: If, like me, you sign up on www.transunion.com to view your account, be
aware that the sign-up process uses dark patterns to stealthily sign you up
for a $19.95 / month subscription.

The 'Cancel Membership' page is hard to find, but here it is:

[https://membership.tui.transunion.com/tucm/cancelMembership....](https://membership.tui.transunion.com/tucm/cancelMembership.page)

------
MichaelBurge
'And 5 percent had errors that could be devastating, potentially denying lines
of credit to them and making things like auto insurance prohibitively
expensive. “To have that error level, it’s akin to 5 percent of automobiles
spontaneously accelerating and having an accident, or 5 percent of planes
falling from the sky,” Wu says. “We wouldn’t accept that error rate in other
areas.”'

This is a dishonest statement. Having your insurance be slightly higher isn't
nearly as serious as having your plane fall out of the sky. And if only 5% of
software had bugs, we'd call it one of mankind's greatest triumphs.

The only thing in this article that concerns me is this statement:

"Those two states denied his application after he failed a credit check[...]"

The government shouldn't be allowed to depend on private companies to approve
or reject you in this manner, because then a company like Experian is - in a
small way - deciding the law. And Experian in particular is a foreign
corporation(headquartered in Ireland), so it's doubly-problematic.

~~~
waterphone
Multiple government systems rely on Experian for identity verification. If you
don't have credit, you don't exist in the system according to the government.
I've run into this personally with healthcare.gov and state medicaid
applications, as well as commercial uses like Amazon Payments.

~~~
xanderstrike
Same. I complained about the rates I was given by my auto insurance company
and they said it was because I had no credit. I told them I could easily pay
12 months up front, didn't matter. I told them I could prove my income was
more than enough, didn't matter. They told me I should get a credit card.

In order to get a service I'm required to have by the government, I had to
have my name in a system run by private, for profit companies.

~~~
kmonsen
You don't actually need car insurance (I know, this mostly a technicality):
[http://www.dmv.org/insurance/alternatives-to-auto-
insurance....](http://www.dmv.org/insurance/alternatives-to-auto-
insurance.php)

------
PythonicAlpha
In Germany, it was long years the custom, that when somebody asked the agency
about his score, they in turn dropped his score.

This is not legal anymore, as much I know, but still also in Germany, your
fate is sometimes bound to the street, in which you live, instead of your own
behavior.

------
sdenton4
Class-action defamation suits to provide some incentive to protect consumers?

------
Asooka
Here's something I've wanted to know for a while: How is a foreigner
emigrating to the USA (or Canada I guess) supposed to function? We don't use
credit cards in my country (we use direct debit cards) and I've never had any
debt to my name. On the other hand, I've always paid all my bills on time. Do
you get some sort of crappy default credit score given based on estimated
factors, or are you SOL until you've lived long enough to establish a credit
history?

~~~
smnrchrds
Some credit card companies issue secured credit cards: they basically request
a payment of e.g. 1000$ called security deposit and keep it in escrow (I
think. IANAL) and in return they give you a credit card with a credit limit of
1000$. If you don't pay your credit card bills, they will cancel the credit
card and use the security deposit to pay off the remaining balance. If you do
pay all your bills on time, they release the security deposit after 6 months
to 2 years based on the issuer. At this point you will have a credit report
showing several months of prompt payment and a reasonable score.

It is not perfect, but it is not that bad. It sucks having to have your money
blocked in an account for a year though.

------
jwatte
If only every person could have a unique identifier that could be used
everywhere as a primary key, so "name matches" weren't needed...

Social security number as globally unique ID would actually improve security
and accuracy in most areas of life!

But numbers. Scary! What if I actually have something to hide?

------
swayvil
This a good argument for legally changing your name to a unique id.

------
codegeek
Some steps to monitor your credit (USA):

1\. Signup for [https://www.creditkarma.com](https://www.creditkarma.com).
Yes, you can argue about giving your credentials to a 3rd party company and
they show you ads but credit karma sends me real time activity on my credit
report FOR FREE. I get offers etc but I am happy since I can keep an eye on my
credit report from all agencies. (except Experian who want you to pay them for
report).

2\. Get a free credit report once a year from
[https://https://www.annualcreditreport.com](https://https://www.annualcreditreport.com)

3\. Get your FICO score from discover [0] for free OR Open a credit card with
Citi cards [1] and I think for $95/Year fee, they give you free FICO score
which is the score that majority of lenders use. There are many other
companies that offer FICO score for a fee but this was a good way for me since
I needed that type of card anyway.

[0] [https://www.discover.com/free-credit-
score/](https://www.discover.com/free-credit-score/)

[1] [https://www.cardbenefits.citi.com/Products/FICO-
Score](https://www.cardbenefits.citi.com/Products/FICO-Score)

4\. Check your credit card and bank statements every few days. I do it once a
week. It is a good habit. For this step, do it manually. Don't rely on mint or
tools like that. Check the transactions manually.

5\. Setup alerts with your bank/credit card for transactions with a certain
threshold. For example, I have alerts for anything over $10. For under $10,
see Step 4. This is another step in case you do have a fraud.

5\. Don't give out your SSN or credit information to anyone unless absolutely
sure. Never give these on a phone call with any company unless you know that
you called that company and they need the info (example: health insurance
etc).

6\. If you ever get a call from a Collection Agency, do not give them your
information right away. Lot of collection calls are plain fraud or incorrect.
Ask them to send a letter with details (genuine ones will do anyway). Read
this from FTC about debt collection to educate yourself

[https://www.consumer.ftc.gov/articles/0149-debt-
collection](https://www.consumer.ftc.gov/articles/0149-debt-collection)

These steps will keep you safe for the most part.

Fun fact about credit reports: See this video by John Oliver.

[https://www.youtube.com/watch?v=aRrDsbUdY_k](https://www.youtube.com/watch?v=aRrDsbUdY_k)

~~~
sschueller
All this to just keep your record clean and not have your bank misplace your
money?

These are things you should not have to worry about in life.

They are expected and in most modern countries are not something you need to
worry about.

When I tell my friends about this in the US at first they don't believe me.
The can't believe that the banks make so many mistakes (such as credit/debit
the wrong person for a check) and that there is this thing called a credit
score which you have very little control over and can ruin you without you
doing anything wrong.

The amount of time I have wasted in fixing credit scores and dealing with
overdraft fees because someone else's check was pulled on the wrong account is
staggering.

~~~
Kluny
_should_ isn't a useful word when you're deciding what to actually do. If you
want to change the status quo, start working to change it. But in the meantime
you have to pay attention and look after your properties.

------
puppetmaster3
You have to take them to small claims each and every time.

------
DenisM
I would think big data and machine learning could disrupt this industry
completely, allowing much more accurate trustworthiness scores.

Is anyone working on it? Seems like a lot of money just sitting on the table.

~~~
trolla
There already are some companies in that space that are using big data and
machine learning for credit scoring. A few that come to mind:
[http://hellosoda.com/](http://hellosoda.com/)
[http://bigdatascoring.com/](http://bigdatascoring.com/)

In case of Hello Soda they are using social media data for credit scoring.

PS I'm not associated with any of these companies.

------
benmarks
If a credit reporting agency has incorrectly linked my profile with unsavory
data, I do believe I'd skip straight past FCRA violation and go straight to a
defamation lawsuit. This is libel.

