I suppose "the company be dissolved, its records thoroughly purged, and its ability to legally operate revoked" is a bit too much... though it shouldn't be.
How could the result have been any different or better? I don't see where anyone's claiming the government was unhappy with the final result. Rotten firms like this need to die.
The thing is that when the reasonable solution is "Stop the company doing its core competency" you need to realise that almost everything else the company does is going to be "exploit whatever it has left". So forcibly shutting down the company is far more reasonable than just stopping it from collecting credit information.
> > "Good credit is for poor people" - words of a wealthy friend.
By "poor" he likely means anyone who has to borrow for anything, including a home (60% of homeowners) or auto purchase (44% of individuals). So basically just about anyone who has to work for a living.
He probably also means "worrying about credit", vs "using credit as a financial optimization tool"
EDIT: changed "households" to "homeowners". 65% of Americans are homeowners, which means 65% * 60% = 39% of Americans have mortgage debt. Note that credit score matters a lot for those who rent also, since many of them are saving for a down payment for a mortgage, and most landlords require a credit report if you hope to rent their properties.
There's no way that only 60% of households borrow for a home. It might be that only 60% are borrowing against their home right now, but in that case you're probably talking about 99% of the people not borrowing against their home being pensioners. Those aren't particularly rich people, they're just in a different part of their life. (It also wouldn't matter if they were credit worthy because no one is going to give a mortgage to an 83 year old)
Rich people mightn't have a stellar credit score, but they're still creditworthy.
Your credit report is really a way of automating what a bank manager would have done at some point for every customer, i.e examine your finances, references, legal history, etc.
It's really just a model for consumer creditworthiness of someone earning under the 95% percentile of wealth. As it's needlessly laborious for a bank manager to examine you in depth for a $5'000 dollar credit card.
Credit scores are not a factor in nearly any big loan. One might be utilising most of their available credit (as their limit is low), or have failed a few hard searches. In the case of a big loan like a mortgage, it's not so automated and is worth digging deeper.
When you're rich, every loan is a big loan - and it's worth the bank's time determining how much they should lend to you on a case by case basis.
Wealthy people don't need credit cards, car loans, and mortgages, and most other kinds of loans that would show up on a credit history. They may use them, and if they do they should have a really good score unless they're bad with money. But if they choose not to (as they'd be able to, more easily than others at least), there score would drop until their credit history was blank.
I would bet the vast majority of wealthy people have substantial debt. I mean, if you're going to buy a $10M home, why would you use your own money when the bank will load it to you for next to nothing?
You can but few do. Credit Reference Agencies monitor your use of credit. They do so imperfectly but they don't see any non-credit transactions at all.
So for example I wouldn't describe myself as wealthy but I'm comfortable. I don't like debt. So, CRAs see only the faintest shadow of me. For you I've just logged into an account to see the Equifax data for myself.
Equifax scores me 459/700. It knows I exist (because I have registered to vote and I pay tax) and it knows I have a mobile telephone contract. It has no idea I have a credit card (I do, though it automatically pays off the balance every month) and of course it has no idea I own a home, since I did not take out debt to purchase it, nor does it have any idea that I don't currently have a job.
459 isn't terrible, but it's not great even though I'd actually be a completely safe risk for even a relatively large credit purchase such as a yacht or small house. It has no insight into that, so it can't judge.
Extremely wealthy people have a tax-shell liability-shielded offshore trust operating company buy things for their benefit using leveraged debt secured on junk assets.
In the rare case where for some compliance reason they must have a more direct link to the asset, they’ll transfer the item to a holding entity (in which they have indirect but controlling interest) and then lease it back.
If the unthinkable occurs and a very wealthy person commits to actually buying something directly themselves by mistake, they (or rather, their staff) will demand delivery before payment and then either stiff you on the bill or pay at most 70% of it, six to eighteen months later.
These are practices established centuries ago by the British aristocracy and remain alive today.
Extremely wealthy people (i.e. 9-digit+ net worth) have teams of lawyers and accountants that figure out the optimal way to allocate the client's cash to achieve their goals. That may or may not include incurring debt, etc. Rich people borrow money too (not because they need to, but because it ultimately can make more financial sense to do so).
(there are of course exceptions to this, there are rich people bad with money or who want to look like they're richer than they actually are, but in general rich people stay rich by being smart about their money)
Wealthy people don't leave money on the table. If they can earn "free money" with a credit card point game, then why not?
Some of the cheapest people I know are wealthy. Cheap as in, they negotiate the hardest for the lowest price, even though it is meaningless to them. I have been told out right on more than one occasion that it's not about trying to make something affordable, but more of the shear enjoyment of making someone else take less just because they can.
Second this. When my extremely wealthy CEO overheard I was in the market for a new vehicle, he happily volunteered to get on the phone and pit 3 local Ford dealerships against each other in a bidding war for my business. I ended up saving an additional 12% off what I thought was already a discounted price. I think a majority of us regular people don't know how to tap into that ruthless negotiation when buying cars, houses, mattresses, etc.
They indeed tend to not by thinks on rates, so not to much "uplift" in your scores.
People which are wealthy tend to also try to get higher credits (for it to be worth it) and buy more
expensive thinks so if they messup it's often much more expensive for banks.
Not all people can handle money so there are a bunch of people which will never stay wealthy. Combined with the point above => higher rise.
Some care less for penalties when paying late and might "optimize" payments in ways which are not always mean on time/good for the score.
Lastly there are a bunch of wealthy people which optimized there business so that they only earn as much money as they need. They can always increase it but the banks can't trust this so the only see a person which might have problems paying back. (Note that not all of this people do illegal or unmoralic practices, some just only work as much as they need and not any bit more).
Lastly there is a simple question:
What does it mean if a rich/wealthy person _needs_ a credit?
(Btw. it's a different matter if it's not a private credit but for a company.)
I assumed it meant wealthy people continually get a clean slate when they mess up. So there is no concept of maintaining credit when allotted unlimited "redo's".
If it’s anything like the British aristocracy then “wealthy” people are deeply in debt all the time anyway and leveraged to the hilt and one crisis away from bankruptcy (bad credit) but keep getting loans because of their status. Is that what they meant?
I assume it means: You don't care about your credit score once you have a certain amount of money, because the limits of a bad score do not really impact you:
- Not approved for a car/house/boat loan? Sell some investments and pay cash.
- Turned down for a credit card? Get a secured card, or even a pre-paid card. Or carry cash.
- Turned down for a cell phone plan? Buy prepaid.
no, it means you dangle boatloads of potential fees and illusions of assets under management in front of the banker's eyes, like trump did with deutsche bank, and then watch the loans spew forth unencumbered by a silly third-party "score".
Is there a reason the triopoly (with Experian and Transunion) persists? I know the bond raters have some government granted status. If it’s the same situation for Experian, maybe they could lose that status to some other company?
Inertia, I assume. You can't get any kind of serious loan without a report from all three, and other things like background checks and rentals usually have one or two they prefer.
Everyone has to stop using services from financial institutions who use Equifax (i.e. almost all of them) until they cut ties with Equifax. If millions of people cancel close their BoA account in a single day, I imagine BoA would dump Equifax.
Of course, like most vote with your wallet schemes, this would never work in the real world. Anything that requires collective action of millions or billions of individuals, will either die with a whimper or make its way to history books as a once-in-a-century event. We cannot solve climate change by boycotting polluting companies; there is no way enough people join the boycott to make a difference. This is the same.
Like climate change, the only realistic path of success is political pressure. Equifax will remain as is as long as the legislature leaves them alone. If you want this to change, get involved in politics, write to your politicians, run for office.
Vote. Vote in the primaries. Vote in local elections. Vote in federal elections. Vote for people who will make their business model, in the manner they practice it, illegal.
If you don't want to vote, you can get even better ROI if you convince other people to vote instead.
As a consumer you can't do anything. You are not their customer. They are not accountable to you. As a citizen, you have power. They require your permission to operate.
