Credit reports have always defied common sense regarding how people's credit is scored. For instance, if you are shopping for credit and allow a creditor to check your credit then your score will decline. In practice, this means that responsible borrowers who shop for good interest rates are punished for not diving into the first loan they are offered. Rules like this cynically favor creditors because they know that once they run your credit it is highly unlikely that you will keep shopping for better interest rates because you are scared your score will decrease by continuing to shop around. That is why creditors, like banks and car dealers pressure you into giving consent to pull your credit. Once pulled you are stuck.
Another area that doesn't make any sense is the lack of reporting of monthly rent payments. The largest and arguable most important monthly payment most families make doesn't factor in at all to your credit score. How does that make any sense? Once might think that examples like this show a clear bias in the credit reporting system designed to artificially reduce credit scores for middle and working class families. Now, with the changing circumstances in the current housing market where investment firms are buying up so much prime housing and pushing more and more Americans into becoming life long renters it seems as if the majority of Americans are being pushed into a corner where home ownership and low interest rates might never be an option.
However, maybe some good news is on the horizon with Fannie Mae, announcing that they plan on tracking people's on time rent payments by tracking those payments directly from their bank accounts. The idea of tracking rent payment history to factor in to credit scoring is long overdue, however, allowing Fannie Mae to look directly into your bank account is troubling. Do Americans have to trade their financial privacy for a chance to get a loan? To a certain degree the answer has always been yes, but now allowing creditors to look directly into your bank account on a month to month basis seems like a bad idea on a number of levels. What else will that information be used for? Does it even matter sense most transactions are done electronically and already tracked by the processing companies and major vendors? It is hard to say but it will be important to closely track Fannie Mae's new credit scoring program to see if on-time rental payments help 1st time home buyers, minority applicants, and working class Americans qualify for mortgages with good interest rates.
