Credit Bureaus don't need to collect that much information anymore. People bring it to them, because reporting an account to the credit bureau is how you make people pay their bills.
The guys who do the scary data harvesting these days are "data furnishers" like Lexis Nexis.
I dunno about Lexis Nexis. I've had occasion to use LN to look up information about some people, both Academic and full commercial versions, and while it was useful and worthwhile spending those hours digging through all its hits, I was not that impressed by what they had. Ultimately, usually I wound up with less new information than I had gotten from simply closely examining their social media activity and writings.
The ability to verify trust and impose consequences on those who abuse it is imperative to society; Or, at the very least, societies where the repeated prisoner's dilemma has any bearing, which I'll argue ours is. The fact that we are willing to go to great lengths and invasions of privacy to do that is a tradeoff that we often make poorly, but is nonetheless a tradeoff we have to make for continued stability.
After living in both China and Canada for extended period of time, I've always wondered why China's society has such low trust compared to Canada's, and came up with a few possible contributing factors.
One of them, I believe, is the lack of history-tracking entities like credit bureaus, meaning that people who abuse trust are not remembered.
Lack of a proper justice system is another major contributor, meaning that people who abused trust can get away more easily.
Take a few concrete examples, when buying a used car in Canada, you can check vehicle history, which will bring up any major damages to the car (except in some exceptionally elaborate scandal cases); when renting to a tenant, you check his/her credit history; after a car accident, you only have to exchange insurance information; if you ate something bad in a restaurant or a food truck, you report it to the health services and they'll get inspected, potentially closing it down costing the owner dearly.
In China, those things are either non-existent or not very well run, making private commerce a risky venture, heck, even eating out is a risky adventure.
You have to look at these things in terms of the alternatives. You're welcome to not participate in the credit system, I didn't for some 8-9 years in my twenties. I simply didn't get any loans, credit cards, nothing that required a credit check. Now I'm happy to have access to credit because it makes my life easier and opens doors for me.
Once I was ready to start, I found all of my old debts and things had fallen off my report. The agencies knew nothing about me. It took about a year with a Capital One card to rebuild, now I have three cards and a new car, for a while I was shopping for a condo. (ultimately decided against it)
You can't have these things without a consumer credit industry, nobody's going to entrust financial instruments like mortgages and credit cards to random blokes coming in off the street. The alternative isn't a world in which credit reporting doesn't exist, the alternative is a world in which none of the things credit reporting gives you access to exist either.
You can live in that world today. Stop paying your bills, let your credit cards go to collections, ignore the phone calls until you can change your number and move away. That's exactly what I did when I was 21. My only regret really is that I didn't run up bigger credit card balances or buy a nicer car.
Credit reporting exists because lots of people are like I was when I was 21.
> the alternative is a world in which none of the things credit reporting gives you access to exist either ... you can live in that world today
No, you cannot. The availability of easy credit (based on pervasive surveillance) inflates the prices to the point where saving up and buying outright is no longer option for most people (see: housing and college).
"Insurance" blew the fuck out of that "market" long ago. The finance machine has moved on to pet care.
Healthcare reform would be making HMOs illegal, requiring any insurance to be provider and procedure agnostic, and mandating the exact same price schedule for all payers. Only the last is strictly necessary for sanity, but the cancer is so entrenched by now that invasive methods are required to kill it.
Percentage-based copays would arise naturally from this, leading to some semblance of transparency and market competition.
I disagree that it's credit that's inflated prices. I think this might be true for certain segments like for-profit colleges. Supply and demand still works.
Housing is still relatively cheap in the US, where population density is so low that the amount of land available to buy and build on is stupendously large compared to denser nations like the UK. Sure, certain markets have inflated prices, but that's just normal supply and demand at work. If you want to buy property to live on, you can move out to the sticks and do that for pretty darned cheap.
The level of that "demand" is essentially driven by the availability of money - people have an unwavering need to live around concentrations of economic activity, because that is where income is made. People budget for the real estate they can afford in terms of monthly payments. If you doubled interest rates, prices would essentially halve for any land not in "the sticks".
Surely you'd agree that if we doubled the money supply by converting USD to USD' at a rate of 1:2, prices would double. So why not expect similar behavior from an individual sector, especially since it has both a direct connection to money generation and is also recursively self-appraising?
"You're welcome to not participate in the credit system,"
Allow me to posit that this isn't true, and give an example of my reasoning. I will lead this by saying one thing to keep in mind is that debt is inversely proportional to freedom in my mind.
The credit system has encouraged debt in society as a whole, which definitely can't be avoided just by removing your particular self from the system. For a more concrete example of this, straight from the video I linked: before 2008 property wasn't worth anything, so they encouraged everyone to over-leverage, buy more property with the money you borrow, then buy more and more property, until everyone was completely over-leveraged and there wasn't any money left.
The 08 crash was quantifiably tied to the fucked up nature of the credit system.
Not only that, but you are speaking about abusing the system by moving away, but what I consider it an abuse of the people to encourage people into debt and away from fiscally sound policy. You could be wealthy, pay things in cash, and owe no one anything, but ask for a loan and get told no, because you are exactly the kind of customer the credit agencies (and banks) don't want.
What the banks want is people with crappy credit scores so they can charge usurious interests rates and encumber and fiscally rape people the rest of their lives. That's not a system that is just about being "welcome to not participate in", it's a system that fucks up our society for the worse and it's effects are unavoidable even if you do remove yourself from it.
On the matter of mortages and cars, etc, I would say the over-avilability of credit has inflated prices in a way that makes this a self-fulfilling prophecy. If prices were closer to actual costs, it would be much more doable.
Never said there weren't costs to it. You're essentially opting out of a middle class lifestyle. That didn't bother me 10 years ago. Now I want those things, and I'm finding that consumer credit is practically the only way to get them on a reasonable time frame. They simply cost too much to save up for.
Consumer credit is the parent that loves you no matter what and will always take you back no matter what you say to them or how badly you fuck up. Being a market industry, naturally that love is predicated on them making money off of you, but still, it adds to modern life more than it takes away. And I find it a mark of maturity to recognize that fact.
Well, it's not _things_, plural, that consumer credit is required to obtain. Just one thing singular, since really the only thing you _need_ consumer credit for is home ownership.
(Pretty much anything else, you can save up for and/or get a cheaper yet comparable used/etc option simply by being shrewd. It just doesn't make a lot of financial sense to use credit for a car, furniture, etc, when you can get them affordably by just not being dumb enough to want brand new crap)
But that one thing, home ownership, is totally a biggie. I rent, and it sucks to have to worry every June about whether this is going to be the year we have to move because the landlord doesn't feel like renewing our lease this time
The inputs to FICO are far from secret; just the specifics of mapping them to scores are. If you've got bureau data on a wide population, it's trivial to nearly perfectly replicate them with standard machine learning models.
The guys who do the scary data harvesting these days are "data furnishers" like Lexis Nexis.