The credit reporting triopoly in the US really needs to be looked at, and likely restructured in some fashion. Three private enterprises should not have this much control over a consumer’s ability to interact with the economy.
In this person’s case, they should’ve reported Chase’s actions to their state’s attorney general, their state’s financial services regulatory body, the CFPB, the OCC, and the Federal Reserve, in order to generate a robust and and comprehensive paper trail. Sometimes, this resolves an issue when compliance becomes aware a paper trail has been started. Failing that, it’s easier to hand over reference and case tracking numbers to legislators to reference and obtain documentation directly versus your own complaint package.
Also, just don’t use Chase. They’re a garbage too big to fail institution. Lots of better banks out there, but also don’t report security vulnerabilities yourself for your banking relationships. Provide them to an arms length third party to report them who can’t be impacted by retaliatory behavior.
(advice provided from personal experiences)
Yes, there are 3 companies that aggregate your credit information. However, the scores used by lenders are generated by 1 company, FICO. All TransUnion, Equifax, and Experian do is receive your credit information from lenders (lenders can choose which bureaus they report to) and make FICO scores available for lenders to purchase. As some else mentioned the lenders chose this. Lenders decided that they wanted to know what people’s lending history was with other lenders before they would be willing to lend. Obviously if a lender looks at your full credit report they get more info but plenty of lenders have decided to set internal rules were if your score doesn’t meet a certain threshold they don’t bother looking at the rest of your report. There are states that have started proposing legislation limiting what credit checks can be used for (such as not being able to use them as a requirement for renting an apartment). But honestly unless lenders either stop caring about your credit history or they are told they can’t check it there isn’t really anything to be done.
There is one alternative that might help from a credit score standpoint in Canada the CreditVision scoring algorithm is used instead of the FICO score. From what I understand CreditVision is a more sophisticated algorithm that weights trending data more so it helps people who are improving their credit have a higher score sooner. From what I understand Canada moved to it because it is supposed to be more fair than what they were using previously.
I’m pretty sure all the big financial institutions also calculate their own scores. I can see it when I login to BoA, Chase, Citi, etc.
https://www.consumerfinance.gov/ask-cfpb/what-is-a-credit-sc...
> Keep in mind there is no “one” credit score. It is important to know that you do not have just “one” credit score and there are many credit scores available to you as well as to lenders. Any credit score depends on the data used to calculate it, and may differ depending on the scoring model, the source of your credit history, the type of loan product, and even the day when it was calculated.
Edit: It looks like the government might mandate FICO scores for taxpayer funded home mortgages:
https://www.experian.com/blogs/ask-experian/which-credit-sco...
> When you apply for a mortgage, lenders will generally request all three of your credit reports (one from each credit bureau) and a FICO® Score based on each report. However, the type of FICO® Scores they request are often older versions, due to guidelines set by government-backed mortgage companies Fannie Mae or Freddie Mac.
> There are exceptions, though. Mortgage lenders could use different credit scoring models for loans that aren't secured or bought by Fannie Mae or Freddie Mac. You might even be able to get a mortgage if you don't have a credit history or score at all.
The scores you see when you log into those institutions is whatever is written into the contract with whichever bureau they pay to provide consumer credit monitoring. For Mint, Amex, CapitalOne and others it is a VantageScore 3 score provided by TransUnion. I thought I had previously seen a warning on a site that provided VantageScore 3 scores that they were just for educational purposes, but currently I’m just seeing disclosures similar to the one you quoted above. So yes you are right there are other scoring algorithms, but I believe FICO is still the one used by most lenders. Even if large financial institutions don’t generate their own scores they still have a copy of your credit report to use to make more detailed decisions. That is how you can have an incredibly high credit score and have a bank or a car dealership tell you that you don’t have enough lines of credit to qualify for the loan you want.
When I log into my Wells Fargo account, I get a FICO 9 Score from Experian data. When I log into my Citibank account, I get a FICO Bankcard 8 Score from Equifax data. When I log into my PenFed account I get a FICO 9 Score from Equifax data.
The single common denominator is FICO.
I was for the first half of my adult life a renter and never once had a problem getting a lease; I bought a condo in Chicago, then later a house in Ann Arbor, and then a house in Chicagoland where I am now; again, no credit-score-related problems. I've been able to rent cars. Buying things on credit has been the only sticking point --- and I don't understand why people do that.
Not even a secured card?
That the consumer bureaus get to decide who gets access to these benefits is something we all should be concerned with.
I'm not litigating whether unequal access to financial products is a bad thing. Inequity is a bad thing. We're on the same page there.
But when discussions like this come up and people imply that a bad credit score is somehow life-changing --- that just doesn't connect with my life experience? Like I definitely didn't come up rough or anything, but I feel like to the extent that there's value in access to these particular financial products, I'm well within the cohort of people who would perceive that value. And... I just don't get it? Like: a debit card from a good bank has actually pretty solid fraud protection? And lack of access to 2% rewards doesn't seem life changing?
I have never understood credit cards.
I don't support paying interest on credit card bills either, but some cards come with a "0% on balances for ~12 months" welcome offer [1], which might help a little if cash flow is tight, but the borrower knows that some income will be guaranteed in the coming months.
[1] https://www.cnbc.com/select/best-zero-interest-credit-cards/
I used to lend on Prosper specifically to help people avoid this system - but it's important to remember that the whole thing is opt-in.
Per my understanding, these sort of rewards program dont really exist in other countries though.
Obviously, if you’re a lender and someone comes up to you and you know nothing about their history of repaying debts, you would ascribe them a higher risk than someone who does have a history of repaying debts.
There are a few other factors that could cause you to look riskier, so it also makes sense to not go out and get an auto loan and sign up for a few credit cards before applying for a home loan, since now that you just borrowed a bunch of money, you’re a higher risk, and hence will pay a higher interest rate.
at my level of income, I am not really concerned, I have enough buffer that all my transactions can shake out no problem. At lower incomes, consumers are very sensitive to transactions settling too fast or too slow. A bill is due on the same day as payroll? Probably a 50% chance to collect either an overdraft fee or a late bill fee and you have no control over it. Get enough of those and your only resort will be fee-laden prepaid cards or cash-only.
Almost 2/3rds of Americans are 'paycheck to paycheck'. Do not scoff at this. Access to simple electronic payments needs to be equitable.
I don't see how having more of them really helps; nor how having (say) the government operate the service would help.