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They already are audited. Credit risk is highly regulated. It can take a lot of work and verification just to make a small change to a risk algorithm. Giving loans to those who won't pay back does not just hurt the banks. It damages all of us. We saw the consequences in 2008.
Barely. Trump effectively neutered Dodd Frank and the CFPB. His administration was not interested in regulation. Mulvaney certainly wasn't going to enforce penalties.
2008 was nothing but a dress rehearsal. We learned nothing.
That is something I have heard that I believe - credit score does a nice job estimating the probability of an auto claim being made.
Matters not, though. The CFPB will be auditing bank's to ensure fairness in lending decisions, and there is nothing the Trump admirers can do about it. It's net positive.
Driving record is a better measure, along with miles driven and type of car, not credit score. Your credit score can be killed through a bankruptcy from medical debt, but that doesn't mean you are likely to have a claim on your auto insurance.
It's obvious to any thinking person that the Democrats (and many Republicans) are deliberately trying to destroy our economy.
Trump's "magic wand" wasn't supposed to exist, and they're going to do everything they can to make you forget about just how FANTASTIC the economy was under Trump, despite the best efforts of his opposition.
They can't use race in the US (anymore), but they can identify variables that are highly correlated with race and use those instead - that is perfectly okay to do. Fwiw, race is still a permitted attribute in Europe. This is only being discussed because the CFPB nominee is a big advocate of enforcing rules on disparate impact. Banks don't like that because it forces them to spend more time studying variables that are uncorrelated with race.
Are the banks lazy or racist?
In other words, are racial proxies used because the banks want to improve the creditworthiness of their pool of borrowers, or because they want to deny money to black people?
Or put even more bluntly, if race is a variable correlated with other variables that, together as a bundle, are negatively correlated with ability to repay, why shouldn't any number of these factors be considered?
Why should you be prevented from using analytical tools to make a rational decision?
My 2¢: the banks wouldn't turn down the ability to make money because they want to spite black people. They are using race and race-adjacent factors because those factors have a meaningful impact on ability to repay.
You can frame it however you want, but in the end you are trying to require banks to lose money on loans to people who are not creditworthy.
No regulation or institutional restructuring will change that certain racial groups are less creditworthy than others.
It's this sort of stupidity that led to the lax lending standards of the housing crisis.
In other words, are racial proxies used because the banks want to improve the creditworthiness of their pool of borrowers, or because they want to deny money to black people?
Or put even more bluntly, if race is a variable correlated with other variables that, together as a bundle, are negatively correlated with ability to repay, why shouldn't any number of these factors be considered?
Why should you be prevented from using analytical tools to make a rational decision?
My 2¢: the banks wouldn't turn down the ability to make money because they want to spite black people. They are using race and race-adjacent factors because those factors have a meaningful impact on ability to repay.
You can frame it however you want, but in the end you are trying to require banks to lose money on loans to people who are not creditworthy.
No regulation or institutional restructuring will change that certain racial groups are less creditworthy than others.
It's this sort of stupidity that led to the lax lending standards of the housing crisis.
Absolutely. I worked for a bank in my 20s. They only cared about making money and thus were more willing to lend money to those who were likely to pay it back. They considered creditworthiness, as revealed via credit reports and scores, and could care less about color.
The three primary reporting agencies analyze consumer borrowing and repayment patterns. They assign scores that are then used to assess a person’s creditworthiness. This can affect their access to an apartment and their ability to hold certain jobs in addition to the amount they can borrow and the interest rates that they are charged. It’s big business — enough to support three public companies (although they have other businesses as well).
This is fake news.
Reportedly there is some evidence of racial bias within the existing private credit systems. It is not clear what the bias is.
Biden and Bernie created a very high level intention during the campaign to create an alternate scoring system, using a broader set of data The intent is NOT to replace the private systems. The thinking was that government backed mortgages could use the alternative system to determine the credit worthiness of a potential buyer.
No details exist beyond maybe using rental and utility payment history in addition to traditional consumer debt.
Landlords and property managers are not viewed as creditors so they are not required to report payments, delinquencies, evictions, bounced checks, broken leases or property damage.
At least one credit agency, Experian, has a rental payment portal that is rarely used by landlords or property managers. Unlike most consumer debt reporting, rental payments would most likely to be reported by hand and more likely to only report data that would not favorably impact the consumer.
Au contraire. You would pay subsidized rates on everything to pay for the irresponsible people.
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Originally Posted by Texas Minded
This is insidious.
Equal outcome guaranteed regardless of track record. "Wipe the slate clean".
Yikes... what could go wrong?
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Originally Posted by AtHome4Ever
Encouraging banks to loan money to people who can't or won't pay it back. What could go wrong with that? Another epic Biden failure.
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Originally Posted by Grlzrl
So the government takes over the credit reporting?
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Originally Posted by Tigger84Ag
Our country has gone insane
Opinions are not facts.
No intent to put the private credit bureaus out of business.
This is nothing more than Bernie and Biden, during the campaign, looking at creating a government alternative that would use data not typically reported to credit bureaus, like rent history and utility payments.
I am going to go out on a limb here and say that if a potential borrower had no credit history beyond rent payments, it more likely that if and when landlords/ property managers were required to report rent payments, bounced checks, evictions, property damage etc,it more likely would hurt the borrower.
Any 18 year old walking the campus of a community college can get a credit card. Use it. Pay your balance on time and taaa- daaa one has a credit score.
I got my start in this industry and saw it grow to where it is today.
For anyone who reviews a credit report, it gives the lender, the apartment complex, the auto dealer, it's a snapshot of how the consumer performs as far as credit.
This information is invaluable and has evolved over the years and many industries would be affected.
When I was in the industry, I often had the idea how medical records could have been set up the same way as to every medical appointment you went to, every prescription and how it help a future provider to look at the history.
That is what the reader of the credit report would be doing - looking at the information and making a determination. Everyone is treated equally with the data. I honestly don't know why this industry would be picked on but it's a history and valuable.
By the way, the bureaus do allow non-traditional credit such as utilties and rental payments to be reported. Also, there are ways you can get a loan without credit. (As a mortgage broker, I know this). I would, however, fight for the credit industry to stay alive.
This is just another insidious plot to redistribute wealth.
When I mean wealth, I’m talking about the middle class and their modest accumulation, which would flow down to the lower classes until there is no distinction. Everyone would be made poor.
Of course, the wealthy elites will be largely exempt from the negative consequences of a decision like this.
Biden (his handlers) think we are all stupid out here. We may be helpless to stop it, but we know exactly what they are doing.
well, it's very true that the top 2-3% don't depend on their credit rating.
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Credit agencies have their place!
