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Transparency breeds trust
Mar. 14th, 2005 01:45 pmLast year, we received a most unwelcome visitor, an increase in both our auto and home insurance premiums. I called the carrier all filled with piss and vinegar, ready to tear new holes to whoever by lot answered. Hooboy, did they ever have theirs covered.
It goes like this: Let's say you get a fantastic credit card offer (and accept), or the opportunity to lower your mortgage payment through refinancing (which you do), or update your kitchen with new, energy-efficient appliances AND get the chance to save 10% on said purchases by opening a line of credit with the selling store (which you accept). Chances are good that you will both save money and get screwed when private companies, beholden to few rules of disclosure, lower your credit score.
That score is used by all -- and I do mean all -- to judge you. Are you a good person? Probably not, if the score falls below 600. The window is incredibly narrow.
So I call up the insuring bastards who decide a bad credit risk is worth an extra $40/month in payments. They can do nothing, they day, until I remedy my score.
Okay, say I, what about my spending/money management did you find objectionable?
Oh, we don't care about specifics: that would be an invasion of privacy.
Well, you judged me based on my spending habits. . . .
No, on your score. And we didn't raise your rates --
But they went up.
No they didn't. We removed your good score discount.
What's the difference?
Most companies just cancel your insurance.
Okay, who do I talk to about my score?
(This company).
So this company I write, asking for a credit report AND -- this is very important -- the algorhythm used to calculate the score. I receive the pertainant history, but not a peep about the algorhythm.
That was last year. Yesterday, I open the mail to find our good credit discount restored. We did do some things recommended, like canceling old accounts, consolidations, reducing balances; but, and here's the kicker, we don't know what we did, if anything, that had any effect. Without the algorhythm, it's all guess work.
The wife and I got a bit testy with each other. I am still pissed that I am denied the rules of engagement, the specific algorhythm. Why? I like games. I like law. I like them because once you understand either, you can start to innovate, and gain advantage. A move in any given (really fun) game might seem counterproductive to casual observers; but to good players, it might be seen as stategic. Same with law. Do one thing, and you are a borderline criminal; another, a business person. The difference depends upon the letter, not the spirit, of the law.
Taking the sum of our ecomonic debt burden and scoring it, therefore, requires that we know how we are being scored. Otherwise, we, though we are the object of the game, find ourselves at a profound disadvantage in the game itself. Was it cancelling a 9 year old credit card account, paying off another account, or the simple lapse of time in checks and penalties that had the most profound effect? Should we have done -- or could we have done -- anything to affect the numbers, or was the damage already too far gone for us to have effected any change? As the law stands now, we have no way to know. We are powerless to affect any future to which we are forbidden the rules of engagement -- even our own futures.
One can make the analogy, lamely, that financial scoring might be similar to health. Watch what you eat, excerise, and you should be good to go. Except that medicine is a growing body of knowledge, with great gaps being filled only slowly by a compiling body of knowledge. The credit scoring algorhythm is a proprietary system to predict financial health that can be altered by the company whenever they wish. Medical science, unlike Equifax, is neither arbitrary nor capricious.
Some people call it "gaming the system", when one can excercise seemingly identical actions with drasticly different results. I guess that is apt; but still, I reject the negative connotations and insist the process is necessary. Those that understand the differences in their actions understand more about the world around them. Everyone should be able to excersise such control, especially over their own lives. Especially when it can save you $520 a year.
Y'know, I just thought of something with more impact than the above argument. Without knowing the algorhythm, how do we know if those companies aren't engaging in illegal activity? What is to prevent Equifax from downgrading the scores of those that deal with banks people primarily by Jews or Blacks? I'm serious. This lack of transparency could be a cabalistic attack on diversity, especialy since two of the three companies that compile these scores are based in Texas, home to such secure-thought provoking companies as Halburton, Enron, Worldcom and, of course, Georgie-boy and Delay, the Tomster.
These scoring companies may deny such racial or idealogical targeting, but without knowing the formula, it is not only safe but necessary to assume the worst.
It goes like this: Let's say you get a fantastic credit card offer (and accept), or the opportunity to lower your mortgage payment through refinancing (which you do), or update your kitchen with new, energy-efficient appliances AND get the chance to save 10% on said purchases by opening a line of credit with the selling store (which you accept). Chances are good that you will both save money and get screwed when private companies, beholden to few rules of disclosure, lower your credit score.
That score is used by all -- and I do mean all -- to judge you. Are you a good person? Probably not, if the score falls below 600. The window is incredibly narrow.
So I call up the insuring bastards who decide a bad credit risk is worth an extra $40/month in payments. They can do nothing, they day, until I remedy my score.
Okay, say I, what about my spending/money management did you find objectionable?
Oh, we don't care about specifics: that would be an invasion of privacy.
Well, you judged me based on my spending habits. . . .
No, on your score. And we didn't raise your rates --
But they went up.
No they didn't. We removed your good score discount.
What's the difference?
Most companies just cancel your insurance.
Okay, who do I talk to about my score?
(This company).
So this company I write, asking for a credit report AND -- this is very important -- the algorhythm used to calculate the score. I receive the pertainant history, but not a peep about the algorhythm.
That was last year. Yesterday, I open the mail to find our good credit discount restored. We did do some things recommended, like canceling old accounts, consolidations, reducing balances; but, and here's the kicker, we don't know what we did, if anything, that had any effect. Without the algorhythm, it's all guess work.
The wife and I got a bit testy with each other. I am still pissed that I am denied the rules of engagement, the specific algorhythm. Why? I like games. I like law. I like them because once you understand either, you can start to innovate, and gain advantage. A move in any given (really fun) game might seem counterproductive to casual observers; but to good players, it might be seen as stategic. Same with law. Do one thing, and you are a borderline criminal; another, a business person. The difference depends upon the letter, not the spirit, of the law.
Taking the sum of our ecomonic debt burden and scoring it, therefore, requires that we know how we are being scored. Otherwise, we, though we are the object of the game, find ourselves at a profound disadvantage in the game itself. Was it cancelling a 9 year old credit card account, paying off another account, or the simple lapse of time in checks and penalties that had the most profound effect? Should we have done -- or could we have done -- anything to affect the numbers, or was the damage already too far gone for us to have effected any change? As the law stands now, we have no way to know. We are powerless to affect any future to which we are forbidden the rules of engagement -- even our own futures.
One can make the analogy, lamely, that financial scoring might be similar to health. Watch what you eat, excerise, and you should be good to go. Except that medicine is a growing body of knowledge, with great gaps being filled only slowly by a compiling body of knowledge. The credit scoring algorhythm is a proprietary system to predict financial health that can be altered by the company whenever they wish. Medical science, unlike Equifax, is neither arbitrary nor capricious.
Some people call it "gaming the system", when one can excercise seemingly identical actions with drasticly different results. I guess that is apt; but still, I reject the negative connotations and insist the process is necessary. Those that understand the differences in their actions understand more about the world around them. Everyone should be able to excersise such control, especially over their own lives. Especially when it can save you $520 a year.
Y'know, I just thought of something with more impact than the above argument. Without knowing the algorhythm, how do we know if those companies aren't engaging in illegal activity? What is to prevent Equifax from downgrading the scores of those that deal with banks people primarily by Jews or Blacks? I'm serious. This lack of transparency could be a cabalistic attack on diversity, especialy since two of the three companies that compile these scores are based in Texas, home to such secure-thought provoking companies as Halburton, Enron, Worldcom and, of course, Georgie-boy and Delay, the Tomster.
These scoring companies may deny such racial or idealogical targeting, but without knowing the formula, it is not only safe but necessary to assume the worst.