[Noisebridge-discuss] Bringing Down the Credit Bureaus

[Ben Kovitz]

Wow, I like this idea. I think a lot of people would like this idea.

Writing the software to do this sounds very feasible on a low budget.  
As you mentioned, the hard part will be building up a network of  
lenders.

All that's needed, really, is one lender to get started. Does anyone  
have any contacts in the banking world?

Or maybe something like Kiva?

Sent from my iPhone

On Jan 6, 2010, at 8:13 PM, Brian Molnar <brian.molnar at gmail.com> wrote:

> 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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