[Noisebridge-discuss] Bringing Down the Credit Bureaus

[Brian Molnar]

*Problem:*
I hate the big three US credit bureaus (Experian, TransUnion and Equifax).
While the service they offer is useful for lenders, these companies go about
providing that service in a very unscrupulous way. They're all for-profit
companies that try to squeeze every dime they can out of the data they
possess. This usually means they are selling your information to potential
creditors (without your consent) or trying to get you to sign up for premium
"credit protection" services that automatically notify you when someone
dings your credit. Also, they cater to the lending institutions (since
that's their primary source of revenue), so borrowers/debtors often meet a
lot of resistance when disputing inaccurate claims or otherwise trying to
repair tarnished credit histories.

My hatred of this system has boiled over to the point that I would like to
try to render them obsolete.

*Solution:*
Create a free online community that offers the same service, but without any
kind of preferential treatment toward lenders or borrowers. That is, a
web-based credit-reporting solution with equal accessibility by all parties.

The system I envision would act a little like Facebook, in that individuals
and lenders would have accounts, and when a potential lender (or even an
individual, like a potential landlord) wishes to get access to your account,
he/she submits to you a request for approval. Once access is granted, the
organization can view your credit history and submit additional records,
either positive or negative, to your profile. Anytime a change is submitted,
a notification is immediately sent to you (via email, SMS, or whatever
contact method you set). Furthermore, changes have a mandatory grace period
allowing you a certain amount of time (maybe 10 business days) to contact
the creditor and settle the claim before it posts to your profile.

Imagine the following scenario:

*You apply for a credit card, and with the information you provide in the
application, the bank finds your online profile and sends you a request to
view (read-only) it. You get the request, approve it, and soon the bank uses
that information to figure out your credit limit. Once they decide to issue
you a card, they send another request to gain access that allows them to
make claims against your account, which is a pre-requisite for them to issue
you a card.

Then, say, after a couple months you fall behind on payments and they decide
to try to ding your credit, then they would issue a claim ith the service
and you'd immediately get a notification telling you that you have 10 days
to settle the claim with the bank before it posts to your profile. You call
them up, arrange a sufficient payment and they cancel the claim before it
posts.*


I think the biggest hurdle to overcome with this is adoption. In order to
take the business away from the existing credit bureaus, one would need to
find their biggest source of revenue and find ways to convert them over. I
don't know whether it is enough to offer this as a free service or whether
additional incentive would be needed.

Secondly, while it is conceivable that the service could use ads to pay for
operating expenses, there is a problem that when claims are disputed, some
mechanism is needed to arbitrate the claim and determine the outcome. This
mechanism would likely be humans tasked to investigate the claims, which
would cost money. I don't know whether this would be feasable with only ad
revenue or whether you'd need to charge one or both parties for claims
disputes. Ideally I'd like it to be as free as possible.

Anyway, just a rough sketch of what I'm going for. Figured I shoot it out
here and see if anyone felt as strongly about this as I do and get some
opinons on how likely this thing is to happen. Also, if anyone is
interested, please let me know. I'd love to get a lot of motivation behind
this and create a working group out of it. As you can tell the idea is still
a bit inchoate, so we'd all be building it from the ground-up.

Cheers,
Brian
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