Can't we demand a better credit reporting system?

It seems to me just about everything about our current "credit reporting" system is messed up, and it's hard to believe we don't have more and louder voices calling for its complete replacement.

Three private companies gather large amounts of information on individuals and set up rules about how they will translate it for reporting our credit worthiness. There are so many examples of how bad this reporting is for that purpose that's it's laughable.

For example, I have one credit card, and purposely keep the balance to just above the amount I can possibly imagine ever wanting to put on the card. I couldn't quite buy a new car with it. My family uses that card for just about everything, since we're about forced to. Paying by check is not possible most places, and carrying large amounts of cash is dangerous in several ways. I pay off the balance every month.

But my credit score is lowered because my "balance" in relation to the credit limit is "too high". I submit that this ratio has NOTHING to do with my credit worthiness; but the logic appears to be that, if I have X credit and am using 1/3 X, that's "too high" by the rules, and therefore my score is lowered. But there are lots of ways to use credit responsibly that would have you do exactly this; just who do they serve by lowering the score in this case?

Well, it encourages either a higher credit limit or less credit use. The former is a good thing for the banks; it encourages me to use the card more, and the bank gets a percentage of that from the merchants. It also increases the chance that I will not pay it off at the end of the month, therefore spending money on fees and interest; is that what they think indicates better credit worthiness? My point is that this ratio of balance to available credit is only vaguely related to whether I'm handling my credit and money responsibly, that their formulas are messed up.

So are their identification procedures. If you ask the credit reporting agencies, they say they don't require an SSN to get a report; but just try to get a loan without one. (I don't know if a company loaning money is required to report it to the IRS these days, in which case they might need it, but they didn't use to do that and required the number anyway). It is the credit reporting agencies who have turned that number into a national identity ID, more than anything else. And the easy access to the SSNs is the foundation of identity theft; the credit reporting agencies practically invented that entire branch of crime. But it doesn't bother them, or the banks, so it's not their problem. Hey, they even found a new revenue stream - now that they've collected all of "your" information, they can CHARGE you to "monitor" it.

What if some rich foundation -- Gates, Carnegie, some outfit like that -- provided seed money to a new credit reporting agency. This agency would use different rules -- it would start everyone at 0, award points for things that indicated good credit habits and subtract points for things that detracted from it. An individual's information would be available to that person for a copying fee (less than $10), and make it readable to anyone with an 8th grade education. It could establish different forms of identification, NONE of which involved a SSN, making it possible to apply for credit without providing one. In case of a dispute over reported information, if the agency and the stakeholder were unable to agree, it could be referred to a mediation board prior to becoming eligible for court action.

There are lots more things it could do -- how about a "trend score", indicating how the person's credit worthiness has changed over the last 6 months, 1 year, 5 years? But the biggest things they could do would replace the things the current outfits do -- collect information, provide info on credit worthiness, but do it in a fashion that makes sense for credit worthiness, not in ways that just benefit the banks.

This agency could charge the people who wanted credit reports, and make money, probably lots of it. That is, if the current establishment didn't kill them (with laws, etc.) before they could get started.

Does this make too much sense to be implemented?