We Don't a Have Cashless Society Yet - After Reading This, You Probably Wont Want One!

chrystaldawn (47)in #money • 7 years ago (edited)

As we are sadly, yet undoubtedly moving towards a cashless society and of course this will lead to all of us individuals having less and less control over even our of finances, not only do we have to worry about that, we also have to worry about false credit reporting. Namely, there are two out of the three major credit reporting agencies (Equifax and Transunion) who, back in January of 2017, were investigated, found guilty and held liable for 23 million dollars in fines and restitution for false reporting antics. Sadly enough this transition into the cashless society, the weight that our reports will have will be ever more important than it is today. Credit reports no doubt have a dramatic footing as to how one could manage and lead ones life.

Unfortunately soon our financial information and all resources will be placed in the hands of the small few yet, powerful corporations that already try to suck the living life and good out of us all. The Atlantic.com reported back in January that "In their investigation, the Bureau found that the two agencies had been misrepresenting the scores provided to consumers, telling them that the score reports they received were the same reports that lenders and businesses received, when, in fact, they were not." This investigation also found several issues with the way the agencies advertised products and how they used their promotions that suggested that their credit reports were either free or cost only $1.

According to the CFPB the agencies did not properly disclose that after a trial of seven to 30 days, individuals would be enrolled in a full-price subscription, which could total $16 or more per month. The Bureau also found Equifax to be in violation of the Fair Credit Reporting Act, which states that the agencies must provide one free report every 12 months made available at a central site. Before viewing their free report, consumers were forced to view advertisements for Equifax, which is prohibited by law.

Furthermore, the Atlantic states that "much of an individual’s ability to improve his or her finances is predicated on his or her ability to maintain a high credit score. To do that, he or she needs to be able to see accurate credit reports that reflect the information that lenders see when they assess them." The actions of Equifax and Transunion prevented that. This is especially troubling because the American credit system is a reinforcing cycle. Good credit often comes from having enough money to pay bills off in a timely manner, which raises one’s score and provides access to more credit at better interest rates. That can amount to tens of thousands of dollars in savings on mortgages, business loans, and credit- card interest. Having good credit entails that an individual's score can sustain decline that comes with various lender inquiries for new credit cards and/or loans, that in turn, gives them access to more credit—and further raises their score.

Back in 2010, the CFPB found that 26 million Americans had no credit history, and another 19 million had such limited credit history that they were considered "unscorable." These groups were primarily made up of low-income and minority households.

Credit scores and the agencies that provide them have long been a point of contention among consumer advocates, not only because the system further marginalizes those who are already struggling, but also because it offers very limited opportunities to improve one’s financial standing. Even obtaining, understanding, and correcting official credit reports can be tricky, time-consuming, and, in some cases, costly. As a result, consumer advocates have called for greater accessibility and pushed alternative credit indicators. That two major providers of score data have been intentionally deceiving Americans confirms what those advocates have been saying all along: This is a deeply dysfunctional system that is hurting the Americans who can least afford it.

Some businesses are taking matters into their own hands, reaching entirely untapped segments of the loan market through innovative new methods to determine creditworthiness. For instance:

The Mission Asset Fund is helping thousands of people – particularly Latino immigrants – build a credit history through their participation in informal lending circles. Based on the tanda model, these groups collect regular payments from members, and then distribute the combined amount to each member in turn. Besides helping members accumulate savings, the system opens a path to formal finance: members’ payments are reported to credit bureaus, leading to a credit score for 90% of participants.

Lenddo developed an algorithm that determines people’s creditworthiness based on their social media presence – their interests, their friends, etc. – and their performance with Lenddo loans. It initially had its own loan portfolio lending mainly to the emerging middle class in developing countries, with a bad loans ratio that was better than the microfinance industry’s average. But as its algorithm improved, Lenddo recently stopped lending to focus on helping banks, e-commerce sites and other clients evaluate their customers’ trustworthiness. Meanwhile, the practice of using social media and other online activity for credit scoring has spread to other companies.

Also focused on U.S. Latinos, Progreso Financiero bases its credit scoring model on an analysis of the financial patterns of Hispanic households, which often include extended families. Since multiple individuals contribute to bill payments in many of these homes, the company takes each individual’s contributions to rent and living expenses into account when considering them for loans. And it reports to the major credit rating agencies, helping its borrowers broaden their access to credit.

Earnest uses big data – 80,000 to 100,000 data points per applicant – to assess everything from applicants’ educational background and earnings potential to the timeliness of their rent payments. It’s one of a number of companies geared toward young people, whose sparse credit histories and significant student debt make them appear risky to ratings agencies that don’t take their considerable career prospects into account.

I will be releasing a write-up report that details how to score well and will be out soon! Thank you for reading - Good vibes to all. XOXO

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