|Received:||3/12/2005 7:19:39 PM|
|Agency:||Federal Trade Commission|
|Rule:||Notice of Proposed Study on the Effects of Credit Scores and Credit-based Insurance Scores on the Availability and Affordability of Financial Products|
Comments:It is my opinion that credit scores in no way accurately predict default rates on consumer credit. A person with a recent bankrupcy much of the time has a far better credit score than someone who had some difficulty 5 or 6 years in the past, have improved their situation, paid off old debt and currently pay everything on time. Many, many creditors break the law by intentionally reporting incorrect information.The scores are arbitrary, unfair, and far too often inaccurate. Research has shown that 90% of consumers have at least 1 incorrect entry in their credit report. Though they can be disputed by the consumer, correcting an error is much more difficult than it should be, and weighted heavily in favor of the furnishers of the the incorrect information. No coincidence that the furnishers are paying subscribers of the credit reporting agencies. With the growing rise every day in identity theft this problem will only get worse. A consumer with incorrect information on their credit report is guilty until they can prove they are innocent. A person cannot prove in a vacuum...if the debt does not belong to them, there can be no documentation to prove it doesn't belong to them. These incorrect and unfair reporting practices cost the consumer thousands of dollars each year, and line the pockets of the legal loan sharks, also known as sub-prime lenders. The link between auto insurance and credit scores is completely ludicrous. A credit score can give no indication at all whether or not a driver is likely to be in an accident, or to file any sort of claim. If the insurance company feels that the insured is likely to default on payment, they can and do require pre-payment of premium. But insurance companies want to charge a higher overall rate as well, or deny the coverage altogether. Here we have the legal extortionists...Insurance is required in most states to drive, many people need to drive to be able to work. Again, a system weighted toward business, at the expense of the public.The risk of a claim is the only basis an insurance company should have to deny coverage or charge a higher premium. Higher interest rates on credit, and more difficulty obtaining credit is fair, when a consumer is a high risk for default. However, with the innacurate credit scoring system in place in this country, everyone loses. Business cannot obtain new customers who WILL pay their bills, because their credit scores are not high enough. Consumers can not obtain fair and affordable credit, and are spending the dollars on excessive interest that could be spent on goods and services that would stimulate our economy. The only winners are the predatory and dishonest businesses. Consumers already have precious little protection, and our laws need to stop protecting these business at the expense of the public.