This article covers my position on establishing a new National Credit Bureau as a reform of our overall financial system, including the elimination of the Federal Reserve and the dispersal of its various powers across various governmental branches and departments. This National Credit Bureau proposal is tightly related to my overall vision for financial reform covered in separate articles. This includes my proposals for Monetary Reform, a National Credit Union, and a National Insurance Fund. All of these various reforms are also closely related to my views on inherent natural monopoly industries and the crucial need to operate such sectors of the economy as transparent bureaucracies with strict democratic oversight in order to ensure a fair and level field for all other businesses and consumers. There are only a handful of such natural monopolies, but if we continue to allow them to be run by private for-profit oligarchs, we will continue to watch our democracy fade away.

A National Credit Bureau could provide the lynchpin needed to establish a healthy and stable financial system for the 21st century and beyond.

A National Credit Bureau will provide credit ratings for:

  • Individuals
  • Corporations
  • States
  • Municipalities
  • Community Microlending Relenders and other relenders

The primary purpose for the National Credit Bureau’s credit incident history and formulaic credit ratings will be to determine the experience rated interest rate premium paid by borrowers receiving loans from the National Credit Union. These interest rate premiums go to ensure that all credit in the exchange is insured against any defaults on loan obligations.

Equal access to credit incident reporting. Any and all creditors will enjoy equal access to the National Credit Bureau to report credit payment incidents. The current practice in the financial sector is to allow only privileged creditors the ability to report credit incidents.

The National Credit Bureau will also grant debtors unprecedented control over their own credit reports. Read access to credit reports will be completely in the hands of a potential borrower. A potential borrower can authorize access to the National Credit Bureau to receive a new loan. A potential borrower can authorize access to a third party creditor or anyone else to show their credit-worthiness. Similarly, a potential borrower can elect to be included in aggregated search requests for debtors meeting particular credit history criteria. Unlike the private for-profit oligarchical credit reporting agencies, the National Credit Bureau places a potential borrower in complete control over who can and cannot access their credit report. The National Credit Bureau will also provide credit consumers with clear and simple methods to dispute any particular credit incident reported in their history and accordingly anyone may view their own credit report at any time without charge.

Democratic credit ratings and credit scores

The establishment of a National Credit Bureau has many benefits and avenues for democratic self-determination. A National Credit Bureau can structure credit ratings and credit scores to allow new borrowers easier access to the World of credit than current for-profit approaches. Just as with current credit agencies, the National Credit Bureau ratings can be putative for delinquent debtors but can also provide more appropriate social mechanisms to bring debtors back into favorable debtor position by encouraging things like: 1) credit counseling; 2) job search assistance; 3) budgeting assistance; 4) income-loss debt-service insurance . The key thing is that as public-run monopoly, the Bureau can provide systematic assistance to debtors unavailable to the segmented for-profit credit agencies and their member creditors. Moreover, the National Credit Bureau can include consideration of cyclical phenomenon and weight such delinquencies lower than delinquencies during economic boom times.

Community Microlending re-lenders and credit ratings

These interrelated financial system reforms allow community organizations to play key roles in credit and broader financial relations. Through local knowledge and community dynamics, community-based microlending pools will be able to attain stellar credit ratings and provide a mechanism for re-lending funds from the National Credit Union to the members of their community. Such community microlending pools will require only the slimmest of bureaucratic infrastructure since the National Credit Union and other National financial reform institutions will provide much of the infrastructure necessary to manage the re-lending process. The community microlending pools will only have to establish their own borrower screening processes and establish stronger local mechanisms to ensure loan repayment.

Credit Ratings for Corporations

Based on a formula involving the corporations officers and directors, their own personal credit histories and their own credit histories in prior positions as officers and directors of corporations.