Credit Bureaus: A Cautionary Tale Redux

> Posted by Center Staff

The New York Times recently reminded us of the imperfections of credit bureaus, and in doing so, recalled a post on this blog.
The Times piece, “Credit Error? It Pays to Be on V.I.P. List,” leads with the point that US credit rating bureaus, “whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors — one for the rich, the well-connected, the well-known and the powerful, and the other for everyone else.”
The May 14 report by Tara Siegel Bernard also notes that “Estimates of credit reports with serious errors vary widely, anywhere from 3 to 25 percent.”
All of which jars loose the memory of “A Cautionary Tale About Credit Bureaus.”
In that post from last September 28, the Center for Financial Inclusion’s own “Mr. Provocative” reflected on the significance that a Times article by Joe Nocera  had for MFIs:
“With the credit bureaus in the United States quite prey to error after years of presumably perfecting their methodology, what makes us think that establishing credit bureaus in the developing world will produce superior results?” wrote Mr. Provocative, aka Principal Director for Economic Citizenship & Disability Inclusion Josh Goldstein.
“It behooves all of us in the microfinance industry to make sure that these bureaus in the developing world don’t follow the example of their giant (presumably far more sophisticated) counterparts in the United States.  Or the poor clients of MFIs will grievously suffer and their trust in the banking sector will erode,” added Goldstein.
Click here to read the entire Cautionary Tale.
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Image credit: Sergio Ortega

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