I’ve been denied an Apple Card but, while that’s frustrating and a little embarrassing, it’s not what’s got me salty enough to write an article. I’m under no delusions that I — a humble writer and sporadically-employed IT consultant struggling to make it through a period of economic recession and rampant unemployment — am a prime candidate for a line of credit.
No, what’s frustrating about this is that it’s evidence to me that credit scores, as I have long suspected, are a swindle. Furthermore, as I’m about to demonstrate, it’s proof that even if the numbers did mean something, the systems by which they are communicated to the various parties who are supposed to be stakeholders and partners in this convoluted scheme, render them effectively pointless.
Here’s a snippet of the email I got from Apple about 10 seconds after the Wallet app told me to get lost.
The important parts are the first and third paragraphs, which are chock-full of goodies. First, we’ve got the name of the credit-reporting agency: TransUnion. Hey, I know that name! They’re one of the two giant credit-reporting agencies that we all know about, the other being Equifax (also known as They Of The Historically Massive Data Breach That Compromised Most Americans’ Identities And Which We’ve All Given Them A Collective Free Pass On, Apparently), and both of those agencies report to CreditKarma, an app I have and which we’ll be discussing shortly.
The third paragraph tells us two things: the date on which my credit score was pulled, and the result of that query. It certainly looks to be the case that on October 21st my TransUnion score was 575, which is not very good.
I mean, if I were Goldman I might also be inclined to deny myself a credit line. On a slight tangent, I do find it odd that I can’t request a specific amount. Ideally, I’d like a $500 line, just to rack up some cash-back and have something to occasionally bridge between weeks where clients pay me late but I need to pay a bill, but whatever. It just seems strange because I don’t know what they assume I wanted from them. There’s a big difference between a few hundred dollars and six thousand — which did they work the probabilities of default on?
Here’s the thing: that’s not my credit score.
I mean, to be perfectly honest, I haven’t any idea what my credit score is at this point because clearly neither does anyone else. Maybe Goldman is right? Maybe my credit score really is 575 at TransUnion, but that would be really frustrating because it would mean that CreditKarma is lying to me (or at least wrong).
CreditKarma is a service which is free and monitors your credit score from Equifax and TransUnion for you. That’s what they claim to do, at any rate — at this juncture I am no longer so sure. They had a series of extremely dystopian commercials on television a while ago that were supposed to be funny, usually involving two people obsessing over their credit scores and unironically waxing poetic about how much those arbitrary numbers generated by people who know you least well and not at all can enhance or destroy your ability to pursue success and joy in your life. The people in the commercials are blissfully unaware of the philosophical conundrums this reality poses for their lives.¹
When the score that Goldman told me they’d gotten from TransUnion was close to 100 points lower than the one CreditKarma told me they’d gotten from TransUnion I was confused. Maybe I’m just a simpleton, but it seems to me that if TransUnion has a score for me, then when person A asks for that score, they ought to get the same number as person B. Is that … am I missing some fundamental feature of credit scores that only a plebe like me would overlook?
Here’s a screenshot from today’s CreditKarma report. Today is October 24th, 3 days after the one Goldman sent me, but it doesn’t make a difference because CreditKarma updates their scores every 7 days and, as you can see, the score for TransUnion was 12 points lower the last time it checked. That would mean that my score was 656 on 21 October.
That’s 81 points lower than what Goldman told me they had been told my score was. Weird! My score is supposed to be about 12.35% higher than what Goldman thinks it is, which is a pretty big difference when you’re assessing a person’s credit-worthiness.
I wouldn’t have noticed this discrepancy either if I didn’t already use CreditKarma, and if i hadn’t specifically checked the app before applying for the Apple Card so that I could be confident that things were looking alright.
You see, I’d recently had an alarmingly drastic dip in my rating on TransUnion’s report because they had erroneous data in their files. Go figure. It still took some time before the thing went back to normal, and I waited a couple months before applying because I wanted to make sure it stabilized since the initial plunge was swift and unexpected (who expects that the credit-rating agencies will just hoover up some unrelated and incorrect data?²).
One thing I considered is that perhaps the issue is that the score fluctuates more or less in real-time. Computers and the internet are a thing, so probably my credit card talks to the credit agencies so they know what my balance is, causing my score to drop as I rack up usage, and then raising it again when I pay it off every month.
Nope. I know for a fact that’s false because when I bought my new iPhone outright a few months ago, I charged it to my credit card, using up a substantial portion of the available balance. I did this because I keep a lot of my money in stocks and needed to liquidate some positions and transfer the money to checking and I wanted my phone now. You know, like — the reason people have lines of credit? Anyway, I paid that balance off the very next day when the deposit from Robinhood hit my checking account. The balance never carried between billing cycles.
Nevertheless, I got an alert from CreditKarma that my score had plummeted precipitously because I was now using up a little over half of my credit line. Shame! The next week there was no change, and the app steadfastly told me that my credit utilization was still the same, despite the payment having posted to my account, leaving the card with a $0 balance, three days before the score was updated.
The next week? Same. The week after that? Same. It took at least three weeks for the stupid thing to correct itself. From that I can conclude that it’s pretty obvious TransUnion and CapitalOne are not in constant contact regarding customer accounts.
It doesn’t make sense …
Which leaves me angry. What possible excuse could there be for Goldman Sachs, one of the most powerful banks in the world (themselves the underwriters of a credit card being offered by Apple Computer, Inc., one of the most valuable corporations in the world) to have a false credit score on me?
I understand that consumer banking is decidedly not what Goldman Sachs is about, so perhaps they’re new to the whole “pull consumer credit reports” routine, but that seems like a bad excuse. Goldman Sachs has no excuse for not being able to negotiate a contract with TransUnion or Equifax to have the credit-reporting agency install a simple interface with their own systems, or provide a functional and bespoke API for Goldman’s use, or whatever.
This is just like, something that the financial industry does. Do you think Goldman has the same problems with Bloomberg terminals? Are they as haphazard about information there too? Like do you suppose that if they did an audit they might find that some of their terminals were reporting outdated or entirely inaccurate quotes? Would they care?
I like to imagine a scenario where one of their multi-billion dollar investment fund manager clients calls up, trying to buy a tranche of Apple Computer, Inc. corporate bonds, and her personal relationship banker quotes her a spread. “Um, are you sure about that?” she asks. He checks his terminal, and restates the numbers. They’re wrong. The deal falls through and they lose the account and when he has to explain this to his boss, the senior partner throws his hands up and laughs. “Haha Johnny my boy, that’s just how the game goes. Getting correct financial information about things is really hard. You win some, you lose some. Computers, pfft,” he casually elbows the stunned investment banker in the ribs, with much bonhomie, “am I right?”
I doubt it. But then again, I also strongly suspect that within the financial industry it’s probably well-accepted that credit scores are clunky, juvenile things. They’re the hated cousin at family gatherings who is forced to stand awkwardly in the corner because nobody wants to talk with him about his ant-farm collection. Nobody takes him seriously; he’s a joke. Meanwhile his elder sister, Standard & Poor’s, is working the room with charm and grace, wowing everyone with her bond ratings and prodigious … stock indexing skills.
It makes me nervous to think that I might apply for an apartment and be turned down because they got a credit score almost 100 points lower than the one I actually have. Some sources say 650 is the point where apartment managers begin to second-guess you, so at this very moment TransUnion is telling CreditKarma that I’m worthy of having a roof over my head, while turning around and telling Goldman Sachs that I’m a bum. If the apartment manager never bothers to show me the score they got, I’ll never be able to show them the score I got. Why is that even something that I need to be worried about? Which score is real? What is TransUnion doing? You might have noticed in the screenshot above that the score for Equifax and TransUnion are different. That seems kind of troubling too …
A credit score shouldn’t be some subjective thing, with a secret formula for calculating it. They shouldn’t be drawing from different pools of information and making different decisions in an attempt to get an edge over their competition in providing numbers about people that effect their lives in increasingly drastic ways.
The idea that I couldn’t sit down with my own financial documents, plug a few numbers into a calculator, and get the same score that the credit-reporting agencies get is a pretty big concern. Either my credit-worthiness is a thing that can be measured, or it’s a made up, subjective, nonsensical idea that’s used as an excuse to justify arbitrary decisions. (Spoiler: it’s the latter.)
Because you see, if a credit score is a proprietary thing, based on different inputs, then it’s not actually an objective measurement. It’s laughably unscientific. “Reproducibility?” Ask the credit-rating agencies, “Never heard of it.” And yet, they’re allowed unfettered access to our personal details, which they don’t bother to safeguard properly, and then churn out numbers that can make the difference between a person getting a job, or an apartment, or a line of credit to start a business, or who knows what next.
They don’t tell us how they get those numbers, they make correcting information they get wrong as difficult as possible, and — as I have just discovered — they apparently can’t even be bothered to reliably provide the same arbitrary number to separate requestors.
There are a lot of questions I have, but there’s nobody to ask.
All I wanted was like, a $500 credit line so that I could start earning a little cash-back on my regular purchases, the ones that I’m usually using my debit account for. Being able to have that card native to my iPhone so it works seamlessly with the Wallet app would be terrific. Goldman gets to collect merchant transaction fees when I use their card, I get a small cut of that back to incentivize me to use their card; everybody wins.
Instead I got a stark reminder that my credit score means nothing. Somewhere, someone got the wrong score. Was it CreditKarma, a wildly popular fintech company that offers massive incentives to credit-reporting agencies for reporting things accurately? Was it Goldman Sachs, one of the most powerful financial institutions on the planet, who also offers massive incentives for credit-reporting agencies to report things correctly? Was it TransUnion? Was … was TransUnion hitting the sauce on October 21st, 2020, and it just accidentally handed out the score of a person in an adjacent row of the SQL database to one or the other organizations who informed me of my score?
I’ll likely never know. But I do want to thank Goldman for having the chutzpah to tell me the score they received. That was extremely helpful information. If they hadn’t done that, I might have internalized being declined for an Apple Card. I totally get it, Goldman; if the score you think is my score really was my score, I wouldn’t have given me a line of credit either. It’s a shame you’re wrong. Or, I guess maybe it’s a shame CreditKarma is wrong. Or, possibly it’s a shame that TransUnion is nothing but an incompetent shyster who can’t reliably assess credit-worthiness.
For myself, I think the lattermost option is true, regardless of where the additional error of miscommunication may have originated in this particular case. Credit reporting may have started out as an alright idea for providing one tool amongst many in assessing the credit of a person. Their incessant claims at being accurate and reliable and objective sullied the waters and gave people the false impression that this was anything other than a basic metric that ought to be taken into consideration with a variety of other factors. Now we’re stuck living in a world where these strange, bumbling, hucksters peddle schlock, but we’re all caught in the mass-delusion that it’s really the most comprehensive and accurate distillation of a person’s character modern methods can produce.
Whatever the case may be, I guess I’ll stick with letting CapitalOne rake in those merchant transaction fees on my revolving credit line, not that I really have a choice. In a few months if I feel like playing the lottery again I’ll resubmit my application. Keep your fingers crossed for me, dear reader; clearly luck and chance play an outsized role in this arena.
¹ I should note that this is not an unusual state of being for characters in commercials. In order to work, you can’t just have a commercial say the quiet parts out loud. “I want a big pickup truck because I believe it will enhance my sense of masculinity or dominance, despite the fact I will only rarely use it for its designed purpose of carrying large, heavy objects between locations, and that the reduced fuel efficiency inherent in this mode of transportation will magnify my contribution to pollution and global warming by a drastic amount, while simultaneously increasing my monthly expenditures on fuel in relation to a mode of transport better suited to my needs” is not going to go over well with consumers, even if it has the desirable quality of offering truth in advertising.
² Actually I guess I should expect that at this point. This whole situation has been so frustrating that I’m no longer willing to give benefit to the doubt to the credit agencies. These people can’t even get things right internally, and now they can’t even quote the same score to different people? What possible societal utility could they serve? And yet they are marching inexorably towards being the single most important factor in determining a person’s ability to find a place to live, get a job, or access funds.