#it’s no different than gambling odds or medical survival odds or financial models or market predictions

[we-re-always-alright]

okay the misinformation on the original reddit post AND in the reblogs is driving me bonkers I have to correct some things. (thank you @froginakettle for inspiring me to bring this out of the tags.)

I work in this industry. I’ve worked in this industry for almost a decade in a variety of departments. this whole post is bunk. (obligatory disclaimer: these comments are my own and not representative of my employer whom I also will not name)

to start: credit karma is not a credit bureau. it’s basically an advertising site masquerading as a credit website. sure some of its tips and tricks are identical to the big 3 bureaus but with a sole goal of a: collecting your data (not private data) and b: sending you offers. it’s how credit karma makes money. what is an offer? it’s an ad (or email or pop up or WHATEVER) that is dependent on your credit score offering you a great rate on whatever (or credit monitoring or identity protection, it’s truly dependent on your score and the goal of the offer). the ads you see on the sidebar and as part of marketing emails from credit karma are there because you’re using the site and authorizing the data to be shown. they eat the cost of providing you a free score so they can advertise and/or sell marketing data. (not necessarily bad, just want to offer perspective).

which brings me to the next point: there are thousands of credit scores. probably tens of thousands. what do I mean? each bureau has their own set of scores (ex. TransUnion and Equifax have VantageScore 3.0) then there’s FICO scores (FICO 5-9 iirc), and then each of those scores has flavors. are you getting a car loan? check your credit karma Vantage Score and it says one thing. maybe Toyota will pull your FICO 8 Auto score. is your loan being serviced by the bank instead? then Bank of America will probably use their FICO 7 Auto score, or Experian’s FICO 7 Auto score. decide to go to your local First Community Bank for a loan instead? they give you their Equifax Auto Vantage Score. each of these scores has variations on it. different applied factors, alternative data, trending etc. think of it as different levers that amplify and nullify certain factors. (I’m not here to debate if this is good or bad. there’s arguments to be made for both, especially around underserved populations. I’m just explaining how it works.). this is also how the bureaus make their money. by offering different best fit scores for the dozens of different credit scenarios, they sell their ability to score and model more consumers, more accurately, as well as verify identities for critical transactions and prevent fraud based on previous patterns.

next: not every job requires a ‘hard pull’ on your credit (hard pulls/hard inquiries can sometimes affect your credit score (sometimes) because it’s what you do when you’re actively gaining credit. soft pulls do not affect. the bureaus have more info on this). typically, though not the same in every state and/or country, a hard inquiry generally is for government jobs OR highly regulated jobs. why? well. who caught the mob??? the IRS and the Postal Service. a good way to do a sniff test on someone who might be handling money in large quantities, handling PII (personally identifiable information), handling HPII (health PII), or be responsible for acting ethically might be to see if they have huge amounts of debt from gambling, mysterious payday loans, dozens of credit cards, etc. if you have a lot of debts, mysterious payments, funky stuff, you might not be the safest choice. (again, not saying it’s good or bad. just presenting the industry logic.)

next: some of the info about disputes IS correct. the bureaus are required to respond within 30 days. HOWEVER, they are only required to correct something if it is FACTUALLY incorrect.

example of a bad dispute: I don’t like that I have a high interest credit card. I missed some payments but generally pay on time. I file a dispute because that reddit post said I should. conclusion: they don’t drop it off. what the bank is reporting matches the credit report. there is nothing to correct.

example of a good dispute: it says my car loan is for 40,000 but it’s actually for 38,500. this post inspires me to review my full credit report (free annually for each bureau at annualcreditreport.com) and check for inaccuracies so I file a dispute. conclusion: they correct the information in the report, provide notice of the correction, and make sure any time your report is pulled (and the debt is on your report) the correction is mentioned.

additionally, you’re also required to be involved in this process. you’ll need to provide documentation, follow up calls, emails, etc. that the bureau needs from you to investigate your dispute. then multiply that by 3 if the item is on all 3 reports. a dispute is not a magic wand. also if there’s an error with the banks data, (ex. your balance is wrong) disputing it at the bureau will not do anything since the data in the report and the data at the bank matches. you’ll have to get the bank to fix it before you can dispute it with the bureaus.

next: volume. oh my god this one gave me a laugh. do you know how much data these companies ingest and spit out??? we’re talking a few petabytes for each bureau, every year. it’s not just you make a payment and they add it to their list. it’s everything, it’s addresses and name changes and driver’s licenses and payments across thousands of sources for everyone in the country (hundreds of millions, not to mention if they’re international). times 3. I’ve been in the NOC (network operations center) for one of the big three and it looks like fucking nasa. dozens of people on 12 hour, rotating shifts making sure the data flows at 99.99% uptime. they don’t have a ‘slow’ period. even if everyone on this post sent in a dispute, which would also be extremely hard considering the amount of thin files, they wouldn’t bat an eye. this is their every day. their sole purpose is a: making sure the data is safe and correct. and b: making sure if they get a dispute they resolve it quickly. plus, the more you use their services, the better they look, because they’re doing what they’re supposed to.

side bar: thin files. a lot of people are thin files, more than you think. basically it means the bureaus have info on who you are but next to no info for which they can score you with accuracy/best fit score. basically you don’t use credit, you don’t have debt, but you also don’t have a high score because there’s nothing TO score. weirdly, the ultra wealthy have this problem, since they pay in full vs on loan. it’s good and bad. bad if the company doesn’t use alternative data and you really need credit to survive (alternative data like renting history, cellphone payments, soon to be added BNPL, etc can turn a thin file into a better score) and good because you want to stick it to the industry and don’t use credit at all.

secondary sidebar: your small local credit union gets all their stuff from the big three. it’s expensive, data intensive and time consuming to do what they do (update, aggregate, collate, verify, etc etc). way easier to just supply small local credit union’s data to the big three and get specialized info back.

addendum: this is US focused. other countries have similar but NOT identical systems. think cousins but not twins. they have their own systems, bureaus, regulations, the whole nine yards.

second addendum: you can work with debt collectors to get them to forgive/drop debt. doing it at a busy time might help, I have never worked with collections. but it won’t affect your credit score necessarily. debt collectors are not legally required to report a collection to the bureaus. however, the bureaus are legally required to report accurate information supplied to them from debtors (banks, dealerships, etc including debt collectors). debt collectors choose to do so so you are incentivized to pay back the debt. paying it back does not mean your credit score will change, and definitely not immediately. (Experian has a great article explaining this. again, not making a good/bad statement on this. it’s how it is. if you want it to change, talk to your congressperson.)

last: some general tips:

freeze your credit if you’re not using it (actively applying for credit, loan, job, rental, etc). this prevents people (manipulative family, strangers, criminals) from being able to use your credit. a freeze can last for up to 10 years and you can temporarily lift (and re-freeze) for specific dates. if you have kids, this is great for fighting synthetic fraud or in response to data breachs

do you actually NEED credit monitoring? it’s truly up to you. in my experience, freezing is usually good enough for most people. if you’ve had your identity stolen OR you have malicious family members, it’s probably worth it to be proactive rather than reactive.

just go look at the bureau’s websites. they tell you how to improve your score. they explain the stuff I said but with more stock photos. I will warn you: it’s not as fun or sexy as trying to ‘pull one over on the establishment.’ it’s mostly low debt to income ratio and low revolving debt and making payments on time

don’t want to use an evil bureau’s website? go look at the CFPB (Consumer Financial Protection Bureau) website. it’s the same info but with a .gov and different stock photos.

Queuing this for January too.