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Ask HN: After repeated data leaks, why does US trust Experian with credit data?

7 points by scrum-treats ↗ HN
Recall credit scores are quite new, first appearing in 1989[1]. Since its inception, credit reporting functions as a means of maintaining socio-economic hierarchies.

Companies such as Experian have made billions of dollars harvesting and leveraging our data to essentially decide our "worth" (i.e., our "credit score"). We have little insight into the data they gather, little power to proactively curate that data, and no power to properly secure that data. After repeated data leaks (e.g., [2][3]), our identities are forever under attack[4].

Questions:

- Why are we still trusting companies like Experian with our credit-based data?

- What options does US have to move beyond the credit score?

- Do non-US countries suffer this same level of incompetence related to obtaining and maintaining "credit"?

[1]https://time.com/3961676/history-credit-scores/

[2]https://krebsonsecurity.com/2021/04/experian-api-exposed-credit-scores-of-most-americans/

[3]https://www.techradar.com/news/identity-thieves-crack-major-experian-security-flaw-access-customer-credit-reports

[4]https://www.theregister.com/2023/06/06/mercer/

5 comments

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dingosity
Because that's the purpose of Experian, to spread your identifying information as far and wide as possible so they can later charge you money to repair your bad credit.

It's sort of like the US Courts are there to demonstrate how rich people need never fear the outcomes of their actions. And secondarily something about crime and tort.

Your local county elections department is there to reinforce the narrative that "democracy" means voting every four years. (Every two years if you're especially committed.)

TheMagicHorsey
What a silly and cynical view.

Rich people are never forced to face responsibility for their actions? A cursory Google search will turn up thousands of cases where rich people, including celebrities, are punished by courts. Its happening every day.

The reason Experian is in the position it is in is because we don't have any national digital database run by the govt. that stores the information needed by banks, etc., to provide us credit. There are countries (like India) where the govt. runs the services, but there are civil rights reasons why that also might not be a good choice in the long run.

The better question to ask is why hasn't Experian been displaced by a better competitor. What are the barriers to entry that prevent better companies from taking on its role?

I think you will find there are both coordination problems and regulatory problems at fault for why Experian is still around fucking up year after year.

scrum-treats
> Rich people are never forced to face responsibility for their actions? A cursory Google search will turn up thousands of cases where rich people, including celebrities, are punished by courts. Its happening every day.

Minor pushback. When the punishment is money (i.e., fines), the rich are not penalized. It is a reflection of the fact that there exists income inequality. Can't afford to pay a ticket on a minor violation, e.g., jaywalking? You go to jail. Guess who can afford to pay those tickets? Not poor people[1]. Further, rich people get to trade their money for things like leniency, e.g., Jeff Epstein[2]. A PR team is always waiting for the call to contrive an effective spin (which only rich people can afford).

> The better question to ask is why hasn't Experian been displaced by a better competitor. What are the barriers to entry that prevent better companies from taking on its role?

IMO, this is due to the "rich get richer" mentality, whereby the system is unchanging unless an "act of God" happening takes place (e.g., the government decides no more and shuts it down). Usually it's catalyzed by the people rising up and doing things like setting things like data centers on fire, and exposing senior leadership for heinous crimes (e.g., murder, money laundering, human trafficking). It'd be great if it didn't come to this. If instead it was due to poor performance, which Experian definitely exudes.

[1]https://www.rsfjournal.org/content/8/2/118

[2]https://www.reuters.com/article/us-people-jeffrey-epstein-la...

youainti
Because you can't opt out.

Lenders want to know about bad financial behaviors (indicators someone might not be trustworthy) to avoid a "market for lemons"[1] problem. So, they contract with these rating agencies to provide extra information about potential borrowers. Where do these agencies get their data? Lenders in turn must report the credit lines they issue, usage, defaults, etc. So, when you are borrowing, the bank can know how you use (or abuse) credit, in addition to things that you provide such as earnings and savings.

A couple of things to note. There is a difference between credit scores and credit reports[2]. Different types of credit lines may focus on different aspects of your credit report or use a different credit report [Only source I have for this was a forum I attended where a local bank had a loan officer talk about their side of issuing credit].

[1] https://en.wikipedia.org/wiki/The_Market_for_Lemons [2] https://www.consumerfinance.gov/ask-cfpb/what-is-the-differe...