Why Does the Real Estate Industry Tolerate Losing BillionS$$ Due to Credit Bureaus ?

[protectionist]

Note: Although this forum seems to be geared to macroeconomics, and this OP is more microeconomics, this seems to be the best fit of all the choices.

It happens every hour of every business day. A home buyer calls a real estate co. wanting to buy a house. The guy has owned houses and rented apartments, and has not missed (or even been late) on a single monthly housing payment in over 40 years.

Still, he's turned down by the seller, on the basis of "credit". Huh? Sounds like this guy's credit should be 100%, with no defect at all. Problem is (and here's where the seller is costing himself sales$$), the seller is relying upon credit BUREAUS to determine eligibility for the buyer. Wrong move, Mr. Seller.

There are a number of very stupid things that go on in the USA, and this is one of the dumbest and long-lasting of them. To allow a credit bureau to determine eligibility to buy your product is close to economic suicide. I wonder how much money businesses have lost, because of the naive practice of dealing with a credit bureau. How many perfectly good sales didn't get done, because some ding-dong credit bureau held up a red flag on a very good buyer ?

Let's cut to the chase. If you want to rent a house, and you want to get paid HOUSING RENTS every month, do you examine the record of a prospective buyer to pay for jewelry ? To pay for fishing equipment ? To pay for musical instruments ? Or to pay for HOUSING ? I would think that the only one needed would be the housing payment record. Once you have the buyer as your renter, if he continues his long-standing good record on housing payment, you're doing fine. And what payment he misses on some gold bracelets or guitars or fishing rods is HIS business, and frankly, none of yours.

Nevertheless, real estaters are losing Billions$$ in sales, over time, denying good housing buyers, only due to a number (credit score) given to them by an agency whose research goes far beyond their product, clearly invalidating the potential of the prospective buyer to pay for housing and buy a house.

Although I wasn't dealing with real estate, when I owned a business, if one of my branch managers would have been costing me sales by something as stupid as this, he would have been fired.

Another aspect of this is the integrity of credit bureaus (ALL of them) just from how they are constructed. It really is impossible to validate the work of a credit bureau. That's because credit bureaus are judges who make judgements. However, unlike legal courtroom judges (who are are generally impartial), credit bureaus are NEVER impartial. They are, by definition, partial to the alleged creditors who are PAYING them.

Now just for a moment, let's transfer this process over to the legal courtroom judge and see how that works out. The counterpart to the alleged creditor for the courtroom judge would be a prosecutor (in a criminal case), or a plaintiff (in a civil case). Can you imagine a court judge presiding over a case, with everyone knowing he was being PAID by the prosecutor, or plaintiff ? It actually makes you laugh just to think about it. That judge would be scorned, disbarred, and undoubtedly JAILED (for doing what credit bureaus do every hour of every day).

Perhaps, the real crux of his OP is one simple question >> How in hell do credit bureaus (in their current manner) still exist in America ? And why weren't they abolished (or undergo MAJOR reforms) decades ago ?

 

[EdwardBaiamonte]

Note: Although this forum seems to be geared to macroeconomics, and this OP is more microeconomics, this seems to be the best fit of all the choices.

It happens every hour of every business day. A home buyer calls a real estate co. wanting to buy a house. The guy has owned houses and rented apartments, and has not missed (or even been late) on a single monthly housing payment in over 40 years.

Still, he's turned down by the seller, on the basis of "credit". Huh? Sounds like this guy's credit should be 100%, with no defect at all. Problem is (and here's where the seller is costing himself sales$$), the seller is relying upon credit BUREAUS to determine eligibility for the buyer. Wrong move, Mr. Seller.

There are a number of very stupid things that go on in the USA, and this is one of the dumbest and long-lasting of them. To allow a credit bureau to determine eligibility to buy your product is close to economic suicide. I wonder how much money businesses have lost, because of the naive practice of dealing with a credit bureau. How many perfectly good sales didn't get done, because some ding-dong credit bureau held up a red flag on a very good buyer ?

Let's cut to the chase. If you want to rent a house, and you want to get paid HOUSING RENTS every month, do you examine the record of a prospective buyer to pay for jewelry ? To pay for fishing equipment ? To pay for musical instruments ? Or to pay for HOUSING ? I would think that the only one needed would be the housing payment record. Once you have the buyer as your renter, if he continues his long-standing good record on housing payment, you're doing fine. And what payment he misses on some gold bracelets or guitars or fishing rods is HIS business, and frankly, none of yours.

Nevertheless, real estaters are losing Billions$$ in sales, over time, denying good housing buyers, only due to a number (credit score) given to them by an agency whose research goes far beyond their product, clearly invalidating the potential of the prospective buyer to pay for housing and buy a house.

Although I wasn't dealing with real estate, when I owned a business, if one of my branch managers would have been costing me sales by something as stupid as this, he would have been fired.

Another aspect of this is the integrity of credit bureaus (ALL of them) just from how they are constructed. It really is impossible to validate the work of a credit bureau. That's because credit bureaus are judges who make judgements. However, unlike legal courtroom judges (who are are generally impartial), credit bureaus are NEVER impartial. They are, by definition, partial to the alleged creditors who are PAYING them.

Now just for a moment, let's transfer this process over to the legal courtroom judge and see how that works out. The counterpart to the alleged creditor for the courtroom judge would be a prosecutor (in a criminal case), or a plaintiff (in a civil case). Can you imagine a court judge presiding over a case, with everyone knowing he was being PAID by the prosecutor, or plaintiff ? It actually makes you laugh just to think about it. That judge would be scorned, disbarred, and undoubtedly JAILED (for doing what credit bureaus do every hour of every day).

Perhaps, the real crux of his OP is one simple question >> How in hell do credit bureaus (in their current manner) still exist in America ? And why weren't they abolished (or undergo MAJOR reforms) decades ago ?

trivial subject but it turns out that your credit score does predict the likliyhood of defaulting on your mortgage.

 

[Jomama]

I dont see how the "Real Estate Industry is Losing Billions$$". I dont see a huge dislocation in the market. If I'm denied for an apartment or house, it doesn't sit empty. Someone else rents/buys it. I dont see a pile of empty real estate on one hand and a pile of monied homeless people on the other.

There is not, that I know of, a better/cheaper option for credit scoring someone than the bureau. BUT, if you see a big market dislocation and opportunity, you should solve that problem which you see.

 

[Silent Warrior]

The OP shows a great lack of understanding of the credit system. Credit bureaus are not companies that somehow randomly assign credit ratings. They are simply places that accumulate and report individuals past performance. The user of the report makes up their own mind about whether the past performance is adequate for their needs. Blaming the credit bureaus for poor credit is like blaming your report card for failing English.

 

[Moonglow]

Ahem, they are denying credit to people that are on Social Security........One couple had 40% down, but income limitations negate the deal.....

 

[Silent Warrior]

Of course if you don't have the income to afford the payment your credit rating is immaterial. That also is not the credit bureau's fault.

 

[protectionist]

trivial subject but it turns out that your credit score does predict the likliyhood of defaulting on your mortgage.

Why would it ? When it contains dozens of things that have nothing to do with housing. Duh!

And there's nothing "trivial' about obtaining housing.

 

[protectionist]

I dont see how the "Real Estate Industry is Losing Billions$$". I dont see a huge dislocation in the market. If I'm denied for an apartment or house, it doesn't sit empty. Someone else rents/buys it. I dont see a pile of empty real estate on one hand and a pile of monied homeless people on the other.

There is not, that I know of, a better/cheaper option for credit scoring someone than the bureau. BUT, if you see a big market dislocation and opportunity, you should solve that problem which you see.

Keywords are <<you "don't see". Well, what you don't see are millions of vacant apartments.... many that could have been rented by people with good HOUSING payment history.

 

[protectionist]

The OP shows a great lack of understanding of the credit system. Credit bureaus are not companies that somehow randomly assign credit ratings. They are simply places that accumulate and report individuals past performance. The user of the report makes up their own mind about whether the past performance is adequate for their needs. Blaming the credit bureaus for poor credit is like blaming your report card for failing English.

Your post shows a great lack of understanding of the OP.

Try reading it again, maybe this time a bit slower.

 

[protectionist]

Ahem, they are denying credit to people that are on Social Security........One couple had 40% down, but income limitations negate the deal.....

That goes to another subject, which is another OP of mine. >>

 

[protectionist]

Ahem, they are denying credit to people that are on Social Security........One couple had 40% down, but income limitations negate the deal.....

This goes to another subject which is discussed (item # 1) in another OP of mine >>

7 HUGE ISSUES Almost Nobody s Talking About US Message Board - Political Discussion Forum

Apartment Complex Owners - Society s Biggest Fools US Message Board - Political Discussion Forum

 

[protectionist]

Of course if you don't have the income to afford the payment your credit rating is immaterial. That also is not the credit bureau's fault.

That is not the topic of this thread. That IS the topic of another one of my OPs.

Apartment Complex Owners - Society s Biggest Fools US Message Board - Political Discussion Forum

 

[protectionist]

Well, two cable TV bills that I thought were lowering my credit score a great deal, just got paid. And the result ? The score barely budged. The cable TV smears still remain, showing that they were late.

So, in calling the credit bureaus, and asking how does one got the score to go up, now that I no longer owe anything, I was told I need to open "revolving accounts" and pay them on time, over time.

This is ludicrous these fascists are dictating to us what we MUST do in order to obtain housing, and in the case of young people still in the workforce, to get hired to jobs. This ought to be a prime issue. What's more important than being denied housing, when you have the money to pay for it ?

 

[WinterBorn]

Note: Although this forum seems to be geared to macroeconomics, and this OP is more microeconomics, this seems to be the best fit of all the choices.

It happens every hour of every business day. A home buyer calls a real estate co. wanting to buy a house. The guy has owned houses and rented apartments, and has not missed (or even been late) on a single monthly housing payment in over 40 years.

Still, he's turned down by the seller, on the basis of "credit". Huh? Sounds like this guy's credit should be 100%, with no defect at all. Problem is (and here's where the seller is costing himself sales$$), the seller is relying upon credit BUREAUS to determine eligibility for the buyer. Wrong move, Mr. Seller.

There are a number of very stupid things that go on in the USA, and this is one of the dumbest and long-lasting of them. To allow a credit bureau to determine eligibility to buy your product is close to economic suicide. I wonder how much money businesses have lost, because of the naive practice of dealing with a credit bureau. How many perfectly good sales didn't get done, because some ding-dong credit bureau held up a red flag on a very good buyer ?

Let's cut to the chase. If you want to rent a house, and you want to get paid HOUSING RENTS every month, do you examine the record of a prospective buyer to pay for jewelry ? To pay for fishing equipment ? To pay for musical instruments ? Or to pay for HOUSING ? I would think that the only one needed would be the housing payment record. Once you have the buyer as your renter, if he continues his long-standing good record on housing payment, you're doing fine. And what payment he misses on some gold bracelets or guitars or fishing rods is HIS business, and frankly, none of yours.

Nevertheless, real estaters are losing Billions$$ in sales, over time, denying good housing buyers, only due to a number (credit score) given to them by an agency whose research goes far beyond their product, clearly invalidating the potential of the prospective buyer to pay for housing and buy a house.

Although I wasn't dealing with real estate, when I owned a business, if one of my branch managers would have been costing me sales by something as stupid as this, he would have been fired.

Another aspect of this is the integrity of credit bureaus (ALL of them) just from how they are constructed. It really is impossible to validate the work of a credit bureau. That's because credit bureaus are judges who make judgements. However, unlike legal courtroom judges (who are are generally impartial), credit bureaus are NEVER impartial. They are, by definition, partial to the alleged creditors who are PAYING them.

Now just for a moment, let's transfer this process over to the legal courtroom judge and see how that works out. The counterpart to the alleged creditor for the courtroom judge would be a prosecutor (in a criminal case), or a plaintiff (in a civil case). Can you imagine a court judge presiding over a case, with everyone knowing he was being PAID by the prosecutor, or plaintiff ? It actually makes you laugh just to think about it. That judge would be scorned, disbarred, and undoubtedly JAILED (for doing what credit bureaus do every hour of every day).

Perhaps, the real crux of his OP is one simple question >> How in hell do credit bureaus (in their current manner) still exist in America ? And why weren't they abolished (or undergo MAJOR reforms) decades ago ?

If a person cannot manage their money, allowing them a huge debt is not a good idea.

You want them to separate your credit issue into only housing and then everything else? If someone doesn't pay their debts, they do not get credit. That makes perfect sense.

 

[protectionist]

If a person cannot manage their money, allowing them a huge debt is not a good idea.

You want them to separate your credit issue into only housing and then everything else? If someone doesn't pay their debts, they do not get credit. That makes perfect sense.

That's like saying if a guy can't be a catcher, he can't be a pitcher, either.
They have ALREADY done the separating into only housing apart from everything else, by being in the business of "only" housing. Your post was refuted before you posted it, by the OP, in particular, this part >> "
"I would think that the only one needed would be the housing payment record. Once you have the buyer as your renter, if he continues his long-standing good record on housing payment, you're doing fine. And what payment he misses on some gold bracelets or guitars or fishing rods is HIS business, and frankly, none of the landlord.

 

[protectionist]

Landlords causing themselves very large losses (all unecessary)

 

[protectionist]

If a person cannot manage their money, allowing them a huge debt is not a good idea.

Point is to manage money for housing.

 

[protectionist]

Form follows function.

 

[WinterBorn]

If a person cannot manage their money, allowing them a huge debt is not a good idea.

You want them to separate your credit issue into only housing and then everything else? If someone doesn't pay their debts, they do not get credit. That makes perfect sense.

That's like saying if a guy can't be a catcher, he can't be a pitcher, either.
They have ALREADY done the separating into only housing apart from everything else, by being in the business of "only" housing. Your post was refuted before you posted it, by the OP, in particular, this part >> "
"I would think that the only one needed would be the housing payment record. Once you have the buyer as your renter, if he continues his long-standing good record on housing payment, you're doing fine. And what payment he misses on some gold bracelets or guitars or fishing rods is HIS business, and frankly, none of the landlord.

My post was certainly not refuted. YOur claims to the contrary, people with bad credit ratings are FAR more likely to default on home loans. That is a simple fact. That you choose to ignore it does not change that.

 

[WinterBorn]

If a person cannot manage their money, allowing them a huge debt is not a good idea.

Point is to manage money for housing.

The point is, people who cannot manage their money are far more likely to default on a loan.

You want the budgets to be separate, but they are not.