Every financial institution has its own credit file on you. They don’t need the third party services at all. Credit profiles can be created easily from any number of public data sources. These companies exist because we wrote laws requiring them to exist, and for no other reason.
If you don't like the terms with your current bank, how would you apply for a loan with a different one [that doesn't know you]? People need the ability to shop around.
a) I take out a credit card at a new bank, spend the balance, and never make a payment.
b) I bounced a check, don't remedy, and owe money to a furniture store.
c) I move a random amount of money each month to a separate account and make loan payments from there.
d) How far back does someone need to account for their spending in order to get a loan? People complain about mortgage applications, but this is a whole new level.
Access to credit gets more expensive without a 3rd party aggregator.
I feel like at some point we just have to accept that the only system of credit that is actually fair is the one that is explicitly run in the interests of society by said society (i.e. in practice, its government). It's not that private banks shouldn't exist; but there should be a bank that anyone can go to and get a loan on conditions that actually reflect their credit risk, and take into account their life situation etc.
Yes, it does mean that there will be a certain amount of defaults that we will all be paying for. I'd rather pay for that than for another yacht of some rich finance bro.
The reach of a per financial institution credit file is different. I’m also not sure how much that is true or practical without a Pre-existing relationship with that particular institution but when your credit is polled for things that aren’t about even obtaining credit (renting/employment) what matters is the FICO Scorsese from the big 3. They have an outsized importance in functioning in society and deserve extra scrutiny.
I don’t have an inherent problem with having a broadly accepted and comprehensive credit-risk profile, but the way we do it and the institutions who profit off of it are disgusting.
I don’t think government should do it at all. That would be same broken thing.
I just don’t want a selected (not by me) set of companies collect information about me without my consent.
I would rather have an opt-in system where I can select a vendor to make a report on me to provide to lender. Only when I want it.
I'd want a non-profit to handle it. I'd want full public disclosure of internal processes, data sources and data buyers. I'd want strong, unhindered oversight provided by a fully independent public board along with separate oversight provided by the FTC - with oversight entities able to exhort meaningful influence over methods, sources and customers.
Similar to why cookie accept/deny interfaces are atrocious. They're intended to be!
I think a solution will require more creativity than "have the government do it", but the current system is clearly broken.