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

Discussion in 'Economy' started by protectionist, Jun 9, 2015.

  1. protectionist
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    protectionist Gold Member

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    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 ? [​IMG][​IMG][​IMG]
     
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  2. EdwardBaiamonte
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    EdwardBaiamonte Platinum Member

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

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    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.
     
  4. Silent Warrior
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    Silent Warrior Gold Member

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    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.
     
  5. Moonglow
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    Moonglow BANNED

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

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    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.
     
  7. protectionist
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    protectionist Gold Member

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    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.
     
  8. protectionist
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    protectionist Gold Member

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    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.
     
  9. protectionist
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    protectionist Gold Member

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

    Try reading it again, maybe this time a bit slower. :laugh:
     
  10. protectionist
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    protectionist Gold Member

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

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