This is the Cato Daily Podcast for Monday, September 30th, 2019.

I'm Caleb Brown.

Bernie Sanders wants to improve your credit score,

or at least improve the way it's calculated.

But would a score subject to more direct political constraints actually provide a more

reality-based measure of creditworthiness? Kato's Diego Zulaga comments.

There are three that I'm aware of, credit reporting agencies, they are Experian, TransUnion, and Equifax.

Now that alone sends up sort of red flags for me that there are only three of these agencies that hold such sway over Americans' ability to secure credit. But Bernie Sanders wants to go one better. He wants to put all of them out of business. Why?

So Bernie Sanders' campaign has proposed to create what they call a public credit scoring system

to replace the existing scores that Credit Bureau has come up with, not replace in the sense of necessarily ban the other Credit Bureau's, but to provide an alternative that would be constructed differently.

Right?

Now, Credit Bureau's collect information about people's credit history, payment history.

They use various different models to come up with a measure of how likely any borrower is likely to repay credit.

And the way they do business is both by divulging to customers themselves what their credit score is and sort of additional

information about what the factors are that have helped or hindered better

performance but they also sell credit scores to financial institutions so that those institutions can do their

own underwriting.

It's important to note that the credit score is an important measure, but it's not the only

one that lenders use when deciding whether to lend to somebody and at what rate.

They do, most lenders do their own underwriting as well.

In a big component of any credit score is, comes from an organization called FICO or the Ferrisa Corporation

and what they do is they've come up and they continue to with some tweaks come up

...