So, CRAs come up every now and then, and lots of people have lots of hate for them. A recent post in the Revolut chat led me to want to write about them, but I didn’t want to take that thread further off topic, so here it goes:
I know lots of people hate them. And I feel uneasy about the amount of stuff they know about many people who don’t even know of their existence and have never dealt with them.
But, I feel we as consumers still need them: A while back a relative of mine bought a flat, and needed a mortgage. That’s a fairly normal thing, you’d say, but he did that in a country where credit referencing agencies don’t exist. It was a major nightmare to do, and took him months to find a mortgage, as banks couldn’t appropriately asses his ability to pay back. Mortgages are only available with a life time of 3-5 years (in a market where the average flat costs about 5 times the annual gross salary). And even then it came down to him having to figure out whom he knows that knows someone at a given bank’s management or mortgage department. Any other type of credit is really hard to get over there as well.
So, yes, credit referencing agencies are a pain and privacy nightmare. They often don’t deal with our data responsibly (see the Equifax breach), they may hinder our ability to get credit for nonsensical reasons, but are there better options? I’d love to know!