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Home > Privacy and Business > Financial Privacy > The Value of Free-Flowing Financial Information > Lower Cost of Credit

Lower Cost of Credit

The U.S. credit reporting system provides benefits to American consumers that are not available to consumers in countries without such a system. In the U.S., both negative and positive credit information about people is collected, and the information stays with them. This allows companies to extend credit wisely, lowering the cost of credit to consumers with good credit histories and appropriately raising the cost of credit to consumers with bad or unknown credit histories.

Because of the sharing of financial information that occurs in the U.S. credit reporting system, mortgages are processed much faster and they are as much as 200 basis points (2%) lower. This extends homeownership to more people who otherwise would not have it.

Consumers who do not wish to participate in the credit reporting system should have that option, and they do. They can refuse offers of credit and pay cash for their purchases. Such people should expect to pay more if they seek credit because both their good and bad credit histories can not be checked. Most people participate in the credit reporting system and enjoy the benefits and convenience of good credit.


US Credit Reporting: Perceived Benefits Outweigh Privacy Concerns [pdf], by Walter F. Kitchenman, The Tower Group (January, 1999)

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[updated 04/18/02]

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