It does make sense for lenders to cartelize and force each other to report the creditworthiness-affecting information about their borrowers to one another.
It doesn't make much sense for borrowers, though. But since, by definition, the lenders have the money and the borrowers do not, the borrowers have no real ability to negotiate when lenders get together and do things like that.
But borrowers can vote just as much as lenders can, which is why such behavior is governed by law. So let's not pretend that borrowers somehow agreed to this system in any way. It was forced upon them, and the best they could do about it is pass laws to ensure that lenders at least had to be accurate when reporting, and had to respond reasonably to disputes. Since lenders can lobby and vote, too, borrowers were not able to mandate that the lenders would have much in the way of legal liability when they inevitably get lazy, screw up, and cause real damages to real people.
The law isn't fair; it's just the best compromise that adversarial parties with differing amounts of money, power, and motivation could reach a threshold level of agreement on. It just so happens that a savvy and motivated borrower can completely whitewash their own credit reports for the cost of a few stamps, and maybe some small claims suits, while an ignorant borrower, or one who lacks the time and energy to ride herd on the CRAs, can get completely screwed. It's a numbers game, and the lenders and CRAs can make more money from the latter category than they lose from the former.
It doesn't make much sense for borrowers, though. But since, by definition, the lenders have the money and the borrowers do not, the borrowers have no real ability to negotiate when lenders get together and do things like that.
But borrowers can vote just as much as lenders can, which is why such behavior is governed by law. So let's not pretend that borrowers somehow agreed to this system in any way. It was forced upon them, and the best they could do about it is pass laws to ensure that lenders at least had to be accurate when reporting, and had to respond reasonably to disputes. Since lenders can lobby and vote, too, borrowers were not able to mandate that the lenders would have much in the way of legal liability when they inevitably get lazy, screw up, and cause real damages to real people.
The law isn't fair; it's just the best compromise that adversarial parties with differing amounts of money, power, and motivation could reach a threshold level of agreement on. It just so happens that a savvy and motivated borrower can completely whitewash their own credit reports for the cost of a few stamps, and maybe some small claims suits, while an ignorant borrower, or one who lacks the time and energy to ride herd on the CRAs, can get completely screwed. It's a numbers game, and the lenders and CRAs can make more money from the latter category than they lose from the former.