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Comment by deckard1 | Hacker News Reader

We're all supposed to take it as just a fact of life now that we need a monitoring service for a service none of us opted in to.

And who runs these monitoring services? Why of course, it's the credit reporting companies! Who else would it be. So not only do they know when fraud is happening to you, but they will happily ruin your life while knowing and charge you for the privilege of knowing this is happening to you. And maybe, if you're lucky and the tiny font legalese text is in your favor, you can stop the flow of awful things happening to you at any given moment in time. Events which may just have all been started because Equifax didn't give a damn in the first place about the security of your private information.

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In France we don’t have credit scores and credit monitoring companies, but everytime you take a loan you are asked for a ton of proof of solvability, and basically give your full bank statements to the credit lender so that they can check your incomes vs spendings (and see what you spend on btw). Don’t know what’s worse.

This is a great 99% Invisible episode about how credit cards came about, and what it was like beforehand, where you would be interviewed at length by a store before being given credit to buy, for example, a piece of furniture. Credit cards were designed to outsource checking of credit-worthiness, stop intrusive interviews with stores and avoid embarrassment of being rejected in-store. Lax digital storage of information and consolidation in the credit rating industry seems to be the problem here, not credit ratings per se.

https://99percentinvisible.org/episode/the-fresno-drop/

Everyone seems to like the idea of friendly local stores these days, but I also remember reading an interview with someone who was around when large chain supermarkets were starting. They loved the fact that they were relatively anonymous so people weren't able to gossip about you buying, for example, condoms.

There's clearly a balance to be struck here, and it's well away from a sensible middle ground at the moment.

Coming from Europe, it would never occur to me to buy furniture on credit, is this something common in the US ?

I'm also European, but buying furniture on credit is perfectly normal in my country - indeed, it would be quite unusual to buy any big-ticket item and not be offered credit terms, usually with an interest-free option.

Being offered whether actually planning to buy on credit are different things. I'm German and would never buy furniture for which I don't have the money (exception maybe if the oven breaks and I don't have enough at hand) - but I'd never buy a sofa paying as instalments.

Culturally, Germany seems to have a strong aversion to personal debt. In the UK and Ireland, consumer behavior is very much in line with the US.

This is absolutely the case for Germany yeah. We only take credits out for cars and houses mostly. Taking out a credit for common or ordinary items is very uncommon and looked down upon. It "shows" that the person can't handle money well or lives above their means.

Each time I've got a sofa I've done it on credit. It's always been 0% interest and it seems sensible to keep money liquid if someone wants to give me credit for free.

I'm also European and I know, within my own country, one group of people who would fin it completely normal to buy TVs and furniture on credit and another group that wouldn't. The former is low income and the latter is high income.

People in low income communities find it very normal to buy on credit, often allowing you to buy now, pay in a year. My friends from higher income communities think this is a strange thing to do.

What I'm trying to say is that some of these customs might not depend on country, but even on groups within countries.

On a related note, I've personally noticed that here in the Netherlands, there's a pretty clear split between low income and high income, very tightly connected with education. In 'High School', lower and higher education are split in different classes and often different schools. So friendships are often formed within these groups and not across them (sports begin the exception). Because of this, a lot of people think something is normal in the Netherlands, but it's actually normal in their environment.

I'm also a human being from planet earth, and if I'm ok with paying X in cash to buy something, and the other persons offers me paying it in interest-free rates, it would be stupid for me not to.

Worst case, I move the cash to a 2% interest rate bank account and let it sit there. Best case, there are other investments I can make now with that capital, and end up paying less overall for whatever I was buying because having the money has made me money in some other way. Lucky case, the company bankrupts and I don't end up having to completely pay for the thing at all.

Being also European, it is rare to be offered interest-free financing, and when you are, is because you are already paying a premium and could find the stuff cheaper somewhere else. But occasionally, some shops do have the cheapest price and still offer interest-free rates. I always take it, and have no idea why I wouldn't do that.

> if I'm ok with paying X in cash to buy something, and the other persons offers me paying it in interest-free rates, it would be stupid for me not to.

Disagree. This severely complicates my economy.

Instead just having X funds less available, I still have the same funds at disposal, but have to remember I owe X to Y which must be paid by Z.

Even just once this makes the simple question “How much disposable funds do I have?” hard to answer.

More than once and I will need a system to manage my own personal economy. That’s horrible!

When asked for credit I always answer no, because the small savings of delayed payment does in no way make up for the extreme complexity it adds to day-to-day economics.

This is not a hard problem to solve... Personally I use YNAB[1], but there are plenty of other options out there.

[1]: https://www.youneedabudget.com/

What I do has worked great for >10 years: - Direct deposit paycheck into checking account 1(the main account) - automatically transfer spending money to checking account 2 (I call it the Petty Cash account) - auto transfer $x for the large recurring or known but infrequent bills into savings account 3 (I call it the Escrow account) - Only issue bill payments from the main account - Only walk around with debit card for petty cash account. I also use this for online purchases, Amazon etc - As needed, transfer from escrow to main to pay off something big, like property tax or car insurance.

Play with the transfer amounts to suit your budget. This helps you not have to think about spending money, or if you have enough to pay rent that month.

Back to the furniture example from grandparent comment, I simply ensure that main has enough in it each month to cover the monthly expenses. HTH

> Disagree. This severely complicates my economy.

Some online banks have virtual subaccounts, which let you 'hide' money from your main account, if that's the way you are tracking funds available.

> More than once and I will need a system to manage my own personal economy. That’s horrible!

You already have a system, and it sounds like it's 'ask the bank how much money I have'. In the not too distant past, checking accounts came with a checkbook that included a register for you to track your expenses, but I guess humanity has declined.

You're going to need a "system" to manage your finances no matter if you buy furniture on credit or not.

In fact, if you aren't buying on credit your finances are more complicated because you have to plan ahead make sure you've got future major expenses covered.

> a 2% interest rate bank account

I'm fascinated by this. Where do you find these sky-high interest rates in banks?

https://www.doctorofcredit.com/high-interest-savings-to-get/

There are several floating around right now.

Ally Bank, wealthfront etc.

The key is to make sure they're FDIC insured.

https://www.bankrate.com/

Make sure you go past the "featured" ones :-)

In this case they make they money with people that forget about it, or do it late and pay huge premiums. I don't want to encourage this business model, that's why I don't do it.

No, they offer the credit to incentivize you to make the purchase right now, don't think about how to pay it now, because ... you can just pay it over a year.

And it's perfectly okay for example if you just bought a new flat and you're broke as fuck, because you spent all your cash on must-repair stuff, like getting the plumbing in order, but you also fancy a new bed, because you have none, so interest free bed it is!

Of course if you barely make enough to live month-to-month, then it's unlikely you'll be able to pay the monthly installments of the loan. (And usually you'll be declined even the in store zero-interest loan too.)

But why do the banks do it if they don't get any interest? It seems they are just loosing money here.

Have you seen eg. Germany's bond yields? They are negative. People love safe money parking, they don't want to take risks, manage investments, oversee companies, fiddle with product development, bet on innovation, think about market fit. So they do the next best thing, try to come up with minimal risk minimal profit financial products, and that's what these furniture/fridge/oven loans are.

Furthermore the shop pays some service fee to the loan provider, and thus they scrape by.

Would you possibly be in the top 20% household income percentile? For such households, it's generally not required to buy furniture in credit in most markets. Credit for these sortse of things generally is for people with lower income

In my country lower income people usually save money first (even if they need to save for a long time, like a year or two), then buy expensive items, like furniture.

Typically it works like this: people simply try not to spend their whole income, and save at least some part of it. Then, when they arrive at a significant amount of it they sit down and think: what can we do with those money? buy a new car? redecorate our living room? And if they decide to redecorate they buy furniture or whatever is needed with cash. Buying stuff on credit is pretty much unheard of.

What's the difference between saving money for a year and buying on interest free credit, with the "saved" money going to payments for that year?

Furniture can often be sold on credit or with payments, because it can be a pretty big investment (e.g. a good bed). Mind you, can be - chains like ikea offer products at a price that should be payable from savings.

But it's also pretty common for cars and houses and the like.

>it would never occur to me to buy furniture on credit

Ikea, and nearly any reasonably sized furniture store, has a financing arm. So I assume it's common (and a money maker).

Thing is, often these places offer 6 months interest free and what not, so as long as you pay off your debt in the allotted time, it's smarter than paying cash.

Those loans can be a profit center as they make it really easy to miss a payment, and then instantly jack up the rates to ~20% APR. Think short window to make a payment and no automatic payments available. It’s probably not worth it for effectively a sub 1% discount.

>It’s probably not worth it for effectively a sub 1% discount.

The discount is small, I agree. But it's always worth it. It's riskless if you have the cash anyway.

It’s up to you how many hoops you want to jump through for ~10$. Just be aware some companies do things like destroying mail without opening it.

It's worth it until you miss a payment and run in the absurdly high interest rates. Which makes it not riskless, because your risk of missing a payment is non-zero, even if you think it is zero.

And regarding having cash: if you set aside the full amount in cash at time of purchase in order to reduce the risk of not being able to pay the rates, then you did win absolutely nothing. Opportunity cost of not having that cash available for profitable investments in case of paying in cash is what could possibly be the reason for the credit variant being cheaper in the end, but that of course depends on you investing the cash and divesting just when it is necessary to pay a rate.

It's not always worth it. If you have to spend 1 hour to set it up initially, sign the paperwork and then an extra 15mins per month paying it, it might already be very much not worth it.

The fact that these constructs exist and only make money when people make mistakes should tell you that enough people make mistakes to make it profitable. This makes it not riskless at all. It makes it predatory.

These constructs also helps people buy more expensive items than what they could afford without credit. I wouldn't jump to that conclusion just because it exists. Credit companies also take small fraction of the transaction. The store is willing to pay that fees because it increases their revenue.

If they can't afford it without credit, they can't afford it with. And vice-versa. There is no credit construction that will make this different, except if it has a negative interest rate. To me this is obvious because if they can afford the credit, they can afford to save.

Many places offer interest-free deferred payment. For example, Design Within Reach, through Synchrony Bank, lets you pay in equal installments over 24 months (or less, if you want) [1]. APR around 20% kicks in if you go past the time limit.

[1] https://www.mysynchrony.com/mysyf/paymentestimator.html?intc...

Back when I was younger I bought about $1500 in furniture from Art Van on credit, and did not pay it all off within the 18 or 24 months

Then I got smashed with a HUGE interest charge, they charge you ALL of the interest from the 18/24 months at the end of that time if you have a blance

I buy $300 couches from the clearance center now, in cash.

If you have the $300 in cash, why would you not put it on a credit card that earns you cash back or points?

I had the exact same thought. Making credit easier to obtain is taken as 'good' but I only see that as beneficial for something major like a house or car but the idea of going into debt for disposable items seems really weird

For low income families, furniture is something major.

Low income families need to buy furniture at the goodwill, not taking out loans for a leather sofa.

I find this to be an interesting quip.

I do agree with you, since I've done it myself. I've also taken furniture friends were going to trash. But I refinished and cleaned them. However I know not everyone has those skill sets.

But, is it right to say someone can't have something moderately nice? I couldn't afford to in the past and lived like that. I didn't like it, obviously. But I also had an "exit strategy" to that situation, which has decently worked out.

I'm just curious how I'd feel if it didn't work out. Even though I agree with you, that comment kind of stung oddly... I don't know...

> is it right to say someone can't have something moderately nice

If they can't reasonably pay for it, I don't see what other option there is for a responsible adult. Perhaps that is my cultural background speaking.

And people who can't afford to pay cash for cars should buy used cars.

Sometimes cash flow is more important than final price. I haven't experienced it myself, but I heard that this is especially true for low income people who live paycheck to paycheck. The $300 couch you can get on a credit for 24 easy payments of 30 dollars is easier to afford than the $100 used couch.

They often rent it at Aarons or Rent A Center

Unfortunately, it’s deeply ingrained in US culture to rely too much on credit. It’s just one of many barriers that separates the wealthy from the poor.

Payday lenders don’t have limits on the amount of interest that they can charge for a given payday loan. Worse yet, loan applicants don’t have to demonstrate ability to pay the loan during the application process.

Legislation was recently passed to require payday lenders to loan only to those who could demonstrate ability to pay, but this was recently reversed after intense lobbying by the payday lenders.

Credit access is vastly predatory in the US, and feeds into our consumerist culture that believes in nice phones, watches, cars, whatever, and has created generations of debt slaves owing interest in excess of 20-30% that they’ll likely never be able to repay.

A former coworker once said to me: “those who understand compound interest earn it, and those who don’t understand compound interest pay it.” And generally, I’ve found this to be very true.

Yes. There are even large chains where you can rent things like furniture and TVs.

I haven't financed furniture but my impression is that if your credit is decent that the cost of financing it is basically the same as paying cash.

Furniture is high margin, low volume so furniture retailers have an incentive to spread out cash-flow and get consumers to buy more expensive furniture than they would if paying all at once.

That said, I suspect if your rand the numbers you'd find that the overwhelming majority of furniture (by units sold) is bought cash from Walmart, Ikea and the like by people paying cash.

Why was that interview so lengthy? Usually, in Europe, if you can show a bank statement for the last ~3 months that shows you get regular payments from a company, and/or a statement from your employer that you're a regular employee (not just started, not already halfway out of the door) then you're good to go.

The interviews sucks, but do you think those credit bureaus (+ your bank + your credit card operator) don't have that exact same information?

I might add it's one thing to buy a car or house on credit, another, very different is to gouge on credit cards and have them topped up beyond your repayment capacity.

In the UK at least the Credit Reference Agencies don't have any information except debts and re-payments.

The best of them (Experian) can see that I have a credit card and I pay it off every month. They can see I don't have any unsecured loans from major banks, and that I'm registered to vote (information available for personal inspection to anybody but supplied in bulk only to CRAs)

None of them has any idea that I own property, or that I have a large amount of savings, or that my salary is many times more than my expenditures. That's invisible. I could prove it if I needed to do so for some reason, but it isn't passively collected (in the UK at least).

In the US you still have to provide the same amount of paper work for large loans like mortgages or for renting an apartment even though they already have all the information they need.

I wouldn't compare the paperwork involved in a mortgage to the fairly simple rental applications I've seen.

Hm, here (Hungary) landlords just ask for a deposit (usually ~2 month in advance), no credit is involved.

Unfortunately, most of us did opt in. If you look at the credit agreements we sign when we buy cars, open credit accounts, enter into a mortgage, we give the lender the privilege to share our data with these credit reporting companies.

I read or heard a phrase for this recently and it's "consent theater".

See also, "manufacturing consent"

That’s more of a term for propaganda as a tool of modern society, based on Chomsky’s work.

Free to make any choice, as long as its the choice already made for you.

I'm aware this is legally the case, but I think this is yet another sign that default opt-in isn't a legitimate agreement, society has become pretty litigious and I think some of the understanding around default opt-ins during enrollment for other services and third party data sales need to be revisited.

I find them to be highly unethical and to generally result in a contract negotiated without compensation and any communication in good faith.

> society has become pretty litigious and I think some of the understanding around default opt-ins during enrollment for other services and third party data sales need to be revisited

Are you saying these two ideas are related? If so, I don't quite see the connection -- can you expand a bit?

Credit reporting companies should burn.

Not that poster, but I believe what they're saying is that because we heavily use the law to structure society, it's time to use the law to remove an undesired aspect: default opt-ins.

There is certainly no meeting-of-the-minds when it comes to EULAs, car loan applications and other such contracts.

This is not "default opt-in", like having the "Subscribe to our email newsletter" checked on an online order form. The sharing of credit worthiness information is the cornerstone of your ability to get credit. It's not a hidden extra, it's not something you can choose not to get, there's no "opt out". It's a condition of doing business with the credit grantor. It's like opting out of having a driver's license. If you want to drive, you have to have one.

It's a recent thing, in the last 30/40 years and I also thought that I read it's efficacy was quite questionable, but could be wrong.

> The sharing of credit worthiness information is the cornerstone of your ability to get credit. It's not a hidden extra, it's not something you can choose not to get, there's no "opt out". It's a condition of doing business with the credit grantor.

No, this is only true because the law does not meaningfully restrict abusive contracts. Sure, a credit card issuer should [0] be able to ask some agency for information on your credit risk. It does not follow at all that the issuer should have permission to give information back to the agency.

[0] Even this is debatable. One might reasonably argue that the use of inscrutable conditions for the issuance of credit cards is discriminatory and should, as a matter of public policy, be disallowed. As a simple example of how this could work, all credit card issuers could be required to instead issue prepaid cards with identical terms, benefits, and usage from a merchant’s perspective, and credit could be an opt-in extra feature.

> It does not follow at all that the issuer should have permission to give information back to the agency.

The agreements you sign when requesting and getting credit explicitly grant that right.

Nothing is really “explicit” when it’s buried in pages of small print legalese. If everyone just read (forget understood, just read) everything they ever signed or agreed to thoroughly, life would slow down significantly.

Many CC contracts I have signed (not US or EU banks) have explicit section and additional (mandatory) signature specifically for sharing data with credit reporting company.

Take a look at a CC application and see where the information on going to a CRA is. I just went to a random online store and started a CC application. Down in the legal section, right in the first couple of sections, clearly visible:

"Credit Reports: You agree that we have a right to obtain a credit report in connection with our review of your application and after we establish an account, to administer the account. You agree that we may report to others our credit experience with you. At your request we will provide the name and address of each consumer-reporting agency from which we obtained a report about you."

Was it plastered across the very top of the form in bold type? No. Was it "buried in pages of small print legalese"? No.

At the individual level nothing stops me from maintaining a list of people I think are trustworthy or noting prior acts for evidence of such.

There’s no opt-in required because you’re not the one providing anything. The customer of the credit agency, the company extending you credit, is opting in to share what they know about you.

> At the individual level nothing stops me from maintaining a list of people I think are trustworthy or noting prior acts for evidence of such.

> There’s no opt-in required because you’re not the one providing anything. The customer of the credit agency, the company extending you credit, is opting in to share what they know about you.

Until you get too large, powerful, and rich, then the government regulates you. This is the purpose of regulation, to control the abusive use of power.

How would 'some agency' have anything to say about your credit risk if issuers of credit weren't feeding them information about your credit performance?

What's more bothersome to me is that these companies are scooping up every bit of information they can about me and selling it to anyone. Did I consent to TheWorkNumber? I definitely did not with the first few employers / payroll processors who have sold out my payroll data.

I Google my full name and the first hit is some background check site that shows my birthday, most of addresses I've had since the mid-90s, every family member I've shared an address with since 1999, information on two vehicles I presently own and one former, and that's just the bait to get someone to pay for whatever else they know about me...

'Credit' information is the tip of the iceberg.

> my birthday, most of addresses I've had since the mid-90s, every family member I've shared an address with since 1999, information on two vehicles I presently own and one former,

Your existence in the world isn't a secret. Every scrap of that is public information. You have a postal address to get mail, you register your car with your state to pay taxes on it, etc.

But it really doesn't need to be.

Maaaaaybe birth certificates should be public, but why should who owns what car be public? Or who lives at what address?

Well, your point overlooks the points I was aiming for.

1. Any of those scraps of data have negligible value by themselves, but when they're aggregated and traded their value is vastly increased.

2. I don't have any choice in how those scraps of data were originally gathered and shared. Should I not to have an address? Pay my taxes? Register my vehicles?

1. Yes, that's true. The value increases, in that the more data that's available, the better the decisions that can be made.

2. So? Why should you have a choice in it? Those things are classified as public records, available to anyone.

It is, in a word, extortion.

Yes and no.

Yes because it is. No because you want something that someone else has (£€¥$) and that someone needs some kind of assurance that they could ever get their money back.

Saying "I'm not going to loan you money if I can't be sure you'll pay it back" is not extortion.

They are saying “nobody is going to loan you money if you don’t play our games”. There is no other party you can go to if you don’t like their behavior.

A loan is shared risk. If it wasn’t there should be no interest payments above inflation and labor.

Where is the line for invasiveness? I mean, if I knew a couple was having issues and they were in counseling, but they didn’t start until eight years in, that’s a bad sign and any therapist will probably tell you so. If a bank is allowed to know everything about you they will say no to a loan, probably killing the relationship once and for all. Similarly if they know he has a doctor appointment to look at the lump on his testicle. Predicting people’s lives are about to get very difficult and then forcing it to happen by rejecting or calling a loan is movie villain cruel.

If I were their friend and knew about the marital strife, and they wanted to borrow money from me to do something expensive, my reaction would be no. It was always going to be no because I don’t loan money to friends unless I don’t want that friend. But what I’m going to say is, “besides, those two aren’t gonna be together in three years so how would I get my money back?”

You want banks in your bedroom? Because by their logic this is useful information and if it’s available it would increase their profit margins...

Just because you can do something doesn’t mean you should.

>They are saying “nobody is going to loan you money if you don’t play our games”.

Completely untrue. But if you want good loan terms, yes you will need to participate in the system of sharing credit terms, because reputable banks don't want to deal with bad debt.

That's not strictly true. You just can't get reasonable terms unless you participate.

Credit used to be much, much harder to get, and more expensive. You got loans from friends. You shopped at a particular store for years and built up your reputation before they would offer you credit. You pawned something. Or you just saved your money and paid cash.

I'd prefer if we, as a society, could just establish better and more reliable legal consequences for delinquency - potentially with a system for a pooled assurance fund to pay out on bad debts that can't be collected while punishing those who took on such risks in bad faith.

Credit checks are often required in job applications and almost always when renting a home; it’s not like you can opt out of those.

They check all kinds of things, not just credit. Criminal record, job history, salary history, education, etc. How much of that should a prospective employer be "allowed" to check before deciding to hire you? Or a renter check before letting you live in their house? In both cases, they are taking on real risk. How else can they reduce that risk, without doing checks?

That’s beside the point of my post, which was to counter the claim that essentially stated, “you are only opted in to credit bureau tracking because you made the choice to take advantage of a product that is not essential in life”

But the requirement for the credit check is from the bank, renter, employer, etc. They aren't being forced to do that, other than the economics of risk.

The tenant pool in lower income areas tend to have more issues. This is why landlords require background checks, pay stubs, credit score, references etc. Even start all of this, you can still get horrible tenants, but it certainly decreases the likelihood by a huge margin.

i have been renting in several countries, including the US and i have never been asked for a credit check, i have never seen or heard about that for jobs either. why would a job need a credit check? all i care is that you can do the work.

> why would a job need a credit check?

So they can weed applicants out. This is very common in the fire service. Applications can be 40 pages long and they want you to list each financial account, balances, limits, etc. It's ridiculous. But I know just why they're doing it. I also think such requirements are weeding out minority applicants.

sounds like a very shady and likely illegal thing to do

you'd think so but it's really quite common.

at least most agencies have stopped asking you to write down all of your social media accounts & passwords. or requiring you to add HR managers/etc as friends.

Of course.

But do you want to live without a house, a job, running water, electricity, internet, a cell phone, a car, etc.?

Point a gun to my head and I'd still feel like I had a better chance of getting out of that situation than opting out of credit reporting.

Actually, that's an interesting thought - in areas where hookups to utilities are required by laws (usually described as "Grid Defection") for a residence to be legally occupied... if all that is true then is this opt-in really an opt-in even in an abstract legal sense - it would be illegal to reside in a detached house in the state without opting in to such a service.

So I'm consenting by needing electricity? Water? a bank account?

I though consent required option.

Think of the other use of the word, generally reserved for sexual intercourse. Imagine that 'consent' having strings attached.

Want to go to college? Consent. Want electricity? Consent.

I think we can all agree this would be ludicrous. That Consent would not be real. It would be viewed for what it is: taking by force.

It's why we don't even allow many actions when power is involved (subordinates). We view the power imbalance as so extreme, that invisible strings can form, thereby removing the ability for the subordinate to truly freely consent.

As an American society, I think this is understood. We value consent in many places. Yet for some reason, the financial institutions can redefine consent as they see fit, blatantly attaching strings to basic survival needs.

Yeah, I guess you could take it further and say we all opted-in to be screwed over in various ways throughout life when we were born too. Doesn't mean we shouldn't fight back against it.

> you could take it further and say we all opted-in to be screwed over in various ways throughout life when we were born too

This is already a widely accepted theory usually called the "Social Contract".

It seems to me that social contract theory is only valid if one can choose which society to live in or opt out of living in society. However, neither of those are the case in the modern world since there is no unclaimed land and immigration laws prevent people from changing societies.

The credit score is a form of behavior modification tool. Some unseen force defined it, and then imposed it upon us. Comply, ideally excel, or be a social outcast (read: screwed).

We had no say. We certinly had no vote. Yet it's a simply ubiquitous tool that cleanly defines the behaviour of some man.

A relentless normalized nudge. The Man and his System FTW.

> We had no say. We certinly had no vote.

Why should you? It's the credit grantors who use it. They say "when I grant credit to someone with a score of 800, I'm much less likely to lose money. If they have a score of 600, I'm far more likely to lose money." It's their money, your only say is whether you accept their terms or not.

Take a moment to re-read what I said. Give it some thought. It will make more sense when you step back and think broader, and pay less attention to conventional wisdom

No, it still doesn't make much sense.

Are you saying that you should be able to borrow someone else's money, even when they deem you risky? Credit score is a proxy for a lender to determine your credit worthiness. You don't need one if you don't plan to take on credit.

I'm saying there is a difference between lending/borrowing money and a perversion of the Surveillance State.

They current "credit tracking" systen has massive over-reach. So much so that if there's a breach/hack thousands if not millions are subjected to those mistakes. __And__ we have no choice but to say "Thank you sir. Can I have another?" We have __zero__ alternatives. Normalized or not, that's unacceptable.

There is a differnce between evaluating my credit worthiness and mitigating your risk, and imposing a monopolistic over-reach program that controls the fate of so many.

> They current "credit tracking" systen has massive over-reach. So much so that if there's a breach/hack thousands if not millions are subjected to those mistakes.

Why are you singling out "credit tracking" here? There have been other, much worse breaches from companies unrelated to the credit industry. Where's the $125 from Marriot? Or Yahoo!?

Because clearly the borrowers are not the only ones capable of being untrustworthy and yet the trustworthiness of neither the lender nor the credit bureau is held to account in this system.

And this is related to the reality that individuals are at a distinct disadvantage for being largely unorganized and unable to bargain collectively, or else they probably would blackball bad lenders and credit bureaus for a history of untrustworthiness.

But they can't; their only tool is the democratic process. We ought to ruin Equifax to the same degree any one of us would be ruined if we had been so careless.

> their only tool is the democratic process

That's why we have the FTC, GBLA, FCRA and all of the regulation associated with both credit industry, CRAs, banks, etc.

Do you have an example? I don’t think they need this language legally, and I have not seen it in these agreements. Further, companies that buy debt make reports to credit agencies without having a contract with the individual.

Granted, I could just not understand what’s in the contract.

Is a Standard Car Dealership or Mortgage Lender going to support you redlining an agreement, crossing out the sections you don't like (which include oversharing every and all morsel of data they can fetch from you)? No. The salesperson/CSR is going to be confused, and not even know how to proceed.

In none of these cases did I opt in. And I decidedly couldn't opt-out.

Yes, if you want to borrow money, the person loaning you money is generally going to insist that you opt into the system that helps them understand if you are a good credit risk or not.

That's not an unfair request on their part.

Don't want to participate? Then don't ask for a loan.

Just be rich!

Rich people depend on credit more than anyone. They call it 'leverage.'

We're told from an early age that we need to be college educated to be economically viable in the world of today and tomorrow. This may or may not be true, but public schools put a non-trivial amount of effort into convincing us it is. Most of us need loans to go to college. To me, this feels like a form of coercion to enter the credit system, either by way of economic realities, or heavy marketing to young people who are not equipped to defend against it.

A genuine alternative is to be able take your custom to one of the MANY other providers who aren't forcing you agree to conditions that are ridiculous. As soon as there is no alternative it's an industry cartel and we need to look at regulating. What is appropriate to determine credit worthiness? How about a blood sample? How much melanin do you have? Who did you vote for and we'll need that verified with a photo of your ballot. There's a million more totally unreasonable ways of determining your credit worthiness, some legal, some not but should be and you would choose not to submit if you could.

You have agree to pay interest, on time and pay the loan back. -- ok that's not something you can reasonably opt out of and hope to get a loan.

You have to agree to to have your life ruined on a whim or by incompetence because you borrowed $1k and paid it back in full with the interest? -- no, definitely not ok.

In between the extremes are all the cases that need looking at. This is a standard case of market failure where you as a consumer have zero market power to effect your preference and your preference is more than reasonable. The GFC was one occasion where such a market failure really came home to roost. There are others, some are trivial, some are huge, most in between. Where it can ruin your life, utterly needlessly and the lives of others, possibly systemically across the whole economy, we tend to want to regulate it so that doesn't happen. There are many such examples in finance which is why we have regulated it in so many ways for so long. Sometimes the regulation will be effective, sometimes not, sometimes it will be fair, sometimes not, sometimes it will be captured by the powerful, hopefully mostly not. Without it, eh, we head for some big trouble, at worst class and civil warfare.

(Separate but somewhat related note: "You need to agree to all future changes to this contract by your counter-party in all circumstances" - OH HELL NO that's not ok and should not be considered remotely legal, yet there it is in every single click through you've ever bothered to read and fail to understand on the internet because the click throughs (not contracts for mine) are simply not capable of being understood without the assistance of layers of courts, lawyers and judges - the law on them is not settled anywhere on earth as far as I'm aware. Unconscionable conduct in such things is the norm, pretending otherwise is silly no matter how libertarian I want to be about it and life in general.)

it's an industry cartel and we need to look at regulating

There are ALL KINDS of regulations around banking and credit reporting. All of the wacky things you mention are already not allowed.

no, not all things that are wacky are disallowed and that's the point. I chose examples that are hard to disagree with to show why regulation is already used and is necessary in the presence of market failure. This is market failure, clearly.

You can't take your business elsewhere if you don't like the provisions on account of the fact that they ARE wacky. You can't renegotiate wacky contract provisions. Market failure.

There aren't any other options though. No one is going to set you red-line their contracts. No one.

I have personally walked away from work agreements for jobs when they wouldn't remove non-compete clauses, but not everyone has that option.

There is no "meeting of the minds" here in any real sense.

You wouldn't expect to be able to redline the part of a loan contract where you have to pay the money back. This is similar to that.

Just because you don't have options to cut essential parts of the contract out doesn't mean there is no "meeting of the minds."

> Yes, if you want to borrow money, the person loaning you money is generally going to insist that you opt into the system that helps them understand if you are a good credit risk or not.

That's not really what they care about. They don't even get to choose whether you previously borrowed money only from people who agreed not to report anything to Equifax et al.

What they really want is to be able to inform on you to their competitors as leverage in getting you to do what they want, like pay false charges instead of disputing them because then you refusing to pay them allows them to ding your credit score. Which in turn raises the interest rates on all your existing variable rate debt and can put your whole life into a downward spiral.

Whereas without it, lenders would be more wary to lend money, but that would be true universally. So the result would be that things like housing and education would be more affordable because it wouldn't be so easy for everyone to borrow money and bid up the prices, and people wouldn't be paying such a high percentage of their salary for loan interest.

Which leads to the conclusion that the whole system is corrosive and we would be better off without it.

> Don't want to participate? Then don't ask for a loan.

It's a collective action problem. Everyone is better off if nobody takes a loan to buy a house and then the same people get the same houses but everybody pays less, but if you refuse the loan and the competing buyer doesn't, who gets the house?

Existing land owners, home builders, and mortgage lenders are most certainly not better off if people only buy houses with cash.

I also think that whatever the lowest rung on the economic ladder who could plausibly buy property may also be made less well off by shutting them out of the housing ownership market entirely.

> Existing land owners, home builders, and mortgage lenders are most certainly not better off if people only buy houses with cash.

The existing land owners are probably the biggest real opposition now, though they wouldn't be any worse off if we had done the right thing to begin with, because then they'd have paid less from the start too. It could be worth a one-time cost of paying them off in some way.

It's debatable whether the home builders would actually be worse off, because most of what people are really bidding up is the land, since construction has a lot more supply elasticity than land. They may even get more work in the long term as people aren't paying loan interest as much, so they ultimately end up with more money that can be used for home improvement projects.

And I don't think people have a lot of sympathy for the plight of the mortgage lenders.

> I also think that whatever the lowest rung on the economic ladder who could plausibly buy property may also be made less well off by shutting them out of the housing ownership market entirely.

Why would it do that? There would still be the same amount of land, so approximately the same people would have it. If it costs less by the same amount as the credit which is no longer available, the main difference is the interest you're no longer paying to the bank. If anything that should benefit people at the bottom of the ladder, who would have had to take loans with higher than average interest rates.

People who are buying houses with 3% down payments are unlikely to be able to buy a house for cash for 3% of current prices. That's the sense in which they may be shut out of home ownership.

One of the most consistent and reliable means to lift oneself from the low end of middle class to squarely middle class has been the leveraged purchasing of property in a city that continues to grow. Taking a 3% or 5% downpayment and having housing appreciate at inflation or slightly higher than inflation is a tremendous wealth creator when that equity is created with leverage.

People buying houses with 3% down payments are generally paying such high interest rates that they don't get to enjoy the home price appreciation because they're paying it all in interest to the bank. Meanwhile they're taking the risk that the house doesn't appreciate faster than inflation, or at all, as was the case for people who bought homes in cities like Detroit. And the bank will want enough interest to cover the risk that the home value declines and they default on the loan, which means many such people are paying more to own than they would to rent, even after including the accumulation of equity.

Homes appreciating faster than inflation is also an unsustainable trend in general. The result has been for housing costs in those areas to increase as a percent of wages, which obviously can't continue indefinitely because the result would be housing costs that don't leave enough for other necessities like food, or that exceed wages outright.

It's true prices probably wouldn't fall to only 3% of what they are now and so the same people couldn't purchase the same house immediately, but rents would fall along with housing costs. The combination of lower housing costs and less paid in interest on huge high-risk loans would allow the same people to own the same house outright in less time, even if it meant renting it for some period of time first. And of course the money they intend to use to buy the house could in the be earning interest before they reach the threshold to buy the house without a loan, which (if the efficient market hypothesis is correct) would give the same risk-adjusted returns in the meantime as investing the same amount in home ownership.

Houses don't have to appreciate at higher than inflation in order for them to create wealth; they just have been in many areas due to the overall economic expansion. They can appreciate more slowly than inflation and the effect of leverage can still give them cash-on-cash returns higher than inflation or alternative investments.

On a conventional mortgage with 20% down, if the house appreciates at 1% per year in a 2% per year inflation environment, a $100K house goes up by $1K each year. Someone who bought that house with $20K down sees a $1K gain on their $20K cash investment, for a 5% cash on cash return. They also have a place to live typically substantially cheaper than they were paying in rent. Obviously, where they increase even faster than inflation, this is wildly beneficial and if they decline much at all, it's terrible.

3% down mortgages seem to cost around 1.25% more than 20% down mortgages. It's about 1/8-1/4% on the base interest rate and 0.5%-1% for PMI. With a base interest rate on a 30-fixed around 4%, paying 5.25% on a 3% down mortgage is still a good deal IMO.

If landlords had to pay cash for rental properties, I'm not convinced that you'd see such a surplus of rental properties such that it would drive rents down significantly. Rents are driven by ability and willingness to pay. Many small landlords would be forced out of the supplying housing to others work. If landlords could borrow money to buy houses but owner occupants couldn't, I think you'd see a massive defection of the housing economy in favor of landlords.

Obviously, anyone could borrow on unsecured terms. It seems likely that medium and large landlords could exploit that (borrowing against the projected cash flows, but without using real estate as collateral for the loans) and that would also result in a large shift of power away from owner-occupants and small landlords.

> Don't want to participate? Then don't ask for a loan.

This is not pragmatic advice. I needed to take out loans to go to college. My phone company did a credit check before they'd let me sign up for a plan. So did my landlord before they offered me a lease. When I buy a car or apply for a mortgage on a house, they'll also check my credit. This system is deeply ingrained in our society; there's not really a way to opt out and still have a relatively normal life.

> This system is deeply ingrained in our society; there's not really a way to opt out and still have a relatively normal life.

And this is what needs to change. I’ve known many successful people that moved to the US and then had problems getting services because they had no “credit history”.

What's unfair is the pretense that this is a market transaction between two equal parties. The "person" loaning the money is quite frequently a large corporation with access to resources allowing them to leverage the credit bureau system and the legal system to achieve an outcome in their favor. Most consumer borrowers don't have the resources to retain counsel or sue.

> Then don't ask for a loan.

Translation: Don't participate in the economy unless you're independently wealthy.

Conveniently left out: Don't ever apply to rent a house or an apartment. Instead, buy a home. In cash, of course, because you're independently wealthy.

Oh, and also: Don't apply for a job. Because, you know, independently wealthy and all that.

The idea that non-participation in the credit racket is anything but an exercise in extreme economic privilege is laughable.

Er... this is exactly how it works in developing / third-world countries.

My parents managed to obtain a loan for their first apartment thanks to my grandparents offering their house as colllateral. This is how pretty much everyone from my parents' generation got their first apartment.

Credit pretty much didn't exist in my parents' generation - loans were generally reserved for houses and cars, because of the strict conditions. Everyone saved up lump sums and paid cash. It's ineffficient, but far from "not participating in the economy".

It may be possible to negotiate different conditions on receiving credit, but I don't know if you can demand a modern economy without any drawbacks.

It's difficult to participate in an economy like the US where the prices of home purchases (and, by extension, rents), are driven up by competing buyers who have access to copious amounts of cheap credit.

That is hardly relevant to this discussion about modern United States economy and society. Your story even involves needing grandparents who own property to use as collateral.

I think it's a good argument that you shouldn't need to do this but like everyone my age got their first car loan and apartment with their parents cosigning. It's super relevant to the the US economy today.

It's possible to get credit without someone else but you'll get an absolutely terrible interest rate -- if you have someone in your life with good credit that trusts you (like family) you're leaving money on the table by not 'borrowing' their good credit.

Don't want to participate? Then don't ask for a loan.

The Bible tells us that Jesus drove the money-lenders out of the temple. Which means that loans predate credit reference agencies by thousands of years. Therefore we have historical record that they are superfluous.

Actually it was money changers not lenders. The temple in Jerusalem had its own currency separate from the local and Roman currencies and all purchases around the temple required its use. It was essentially a a mix of extortion and racketeering, where if the people wanted to fallow their religion and fulfil their religious obligations they had to buy sacrifices (sheep, oxen or doves depending) from the temple in temple money which had a horrible exchange rate. Technically the people could bring their own but if they did that it had to be inspected approved to be healthy clean etc, and if it didn't meet standards it could not be used as a sacrifice. However The temple would buy it off at a cut rate as it has obviously inferior...

It's even worse: On several occasions I didn't sign a contract or an addendum because I had questions about it and the other party didn't even check whether I actually signed it. So, even if you don't sign the agreement there's a good chance that your data is sent anyway because nobody checks for that.

Of course that could be grounds for a litigation, but at that point the data is already gone and, other than being a PITA, suing wouldn't really be worthwhile as that hardly counts as damages.

A car dealership or mortgage lender is not going to write you a loan with no information on your creditworthiness, or no deterrent to nonpayment. If they do, it will be at a rate that reflects the enormously elevated risk. Information about creditworthiness is essential to credit’s wide availability.

What is more unfortunate is that we're just okay with these practices.

There's no much of choice, really. You can opt out by basically choosing to not partake in modern society.

In general, I would say that this consent isn't informed and it's coerced, because you have to consent to do all those things and more which, in sum total, cannot realistically be avoided.

Of course the courts are unlikely to fall on my side because the consequences for contract law would be apocalyptic but I believe it is true in my heart, and that's what really counts.

But did you have the option to remove these onerous parts from the credit agreement? If not, you did not "opt in", you were coerced.

The problem isn’t credit but the companies issuing loans without doing their due diligence. If they were routinely required to meet the normal levels of legal proof that you signed a contract or were liable for false claims, the entire system would change overnight. The awareness campaigns about identity theft, monitoring, etc. are all a distraction from the companies originating loans trying to shift the cost of their lax practices to everyone else.

The entire model of consumer loans is predicated on everyone else paying extra money to cover defaulters.

It's one thing to price default into the risk of a note (this is cost of business as a lending institution). It's entirely another thing to price in egregious, arguably fraudulent business practices such as not properly verifying who you're lending to.

It's perfectly reasonable if you know there's no downside risk because the government not only will not punish you, but taxpayers will bail you out. Welcome to what they call capitalism these days.

One should not be surprised when their economically rational but morally reprehensible business practice is regulated away.

They also refer to it as a “breach of customer data”. That’d only be true if there was a breach of their actual customers (i.e. the companies to which they sell your financial data).

The best part? The "monitoring service" isn't protecting your money for the most part. You aren't responsible if someone defrauds a bank or credit card company with your information. If my credit card company thinks a service like this is valuable they should pay for it, I'll take whatever cash is on offer.

Monitoring services should be baked into any online system that stores personally identifiable information. The GDPR requirements are a good example of what should be required by law.

Any system you are required to provide information to should also allow you to see when your information is accessed and by whom. In most cases you should also have the option to deny access unless specifically granted.

Unfortunately not providing access could result in not getting credit, insurance, or work as no company will take on the risk - but you have the choice to opt-out.

Credit reporting services provided by the likes of Equifax and Experian particularily commercial rather than personal credit are critical to the current speed of the economy. Shutting them down would have a devestating effect on the economy.

>We're all supposed to take it as just a fact of life now that we need a monitoring service

Yes. You do. Until China (in this case) and other nations stop hacking US companies.

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