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# Every time a business grants financial credit to an

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CEO
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22 Sep 2003, 08:23
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Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individualтАЩs financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumerтАЩs right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

The author argues that any harm individual consumers suffer from the relatively free access of the business community to the information compiled by credit bureaus is

compensated by the benefits that free access provides to consumers in general

attributable to the reluctance of many businesses to increase their exposure to risk

unavoidable, because consumers must sacrifice some of their rights in exchange for credit

sufficient to justify the business communityтАЩs careful scrutiny of the data supplied by credit bureaus

negligible, in view of the business communityтАЩs need for accurate financial histories
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22 Sep 2003, 09:54
A hard one... Looks like from the LSAT.
The financial information helps businesses reduce their risk. Getting such info harms individuals. Therefore, harming individuals is a consequence of reducing the risk by businesses. I vote for B.
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22 Sep 2003, 12:41
stolyar wrote:
A hard one... Looks like from the LSAT.
The financial information helps businesses reduce their risk. Getting such info harms individuals. Therefore, harming individuals is a consequence of reducing the risk by businesses. I vote for B.

Tell me about it...a real hard one..

Stolyar, businesses DO NOT get access to private information....the argument says that if ONLY limited information was available ,businesses can reduce their exposure to risk.

so B cant be the answer

could you complete the sentence now:)
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22 Sep 2003, 17:17
Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individualтАЩs financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumerтАЩs right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

limited restrictions are placed on the availability means businesses have ALMOST free access to all the info they need to evaluate the customer's credit rating and hence to minimize thier risk - which is implied in D , hence is the best answer
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22 Sep 2003, 20:12
I vote for A, The phrase: "...while at the same time extending larger amounts of credit to more people." makes the point that consumers are going to be compensated for the invasion of their privacy.
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22 Sep 2003, 21:22
I say it is A also.....same reason as cited by Yoda
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23 Sep 2003, 06:07
Choice (C) also looks good. The harm caused by invasion of privacy will be the price paid for getting credit.
Between (C) and (A), which is the correct choice?
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Re: CR : Financial Credit [#permalink]

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25 Sep 2003, 07:38
praetorian123 wrote:
Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individualтАЩs financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumerтАЩs right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

The author argues that any harm individual consumers suffer from the relatively free access of the business community to the information compiled by credit bureaus is

compensated by the benefits that free access provides to consumers in general

attributable to the reluctance of many businesses to increase their exposure to risk

unavoidable, because consumers must sacrifice some of their rights in exchange for credit

sufficient to justify the business communityтАЩs careful scrutiny of the data supplied by credit bureaus

negligible, in view of the business communityтАЩs need for accurate financial histories

I choose A.

The author is careful to point out both benefits and harms of sharing information, but the jist of his statement is that is that by imposing some restrictions upon the information (implying that the harm will be also limited), the benefits outweight the harm.

B may be true but it is not the point of the author's argument. In addition, that harm is a secondary effect.

C is too strong. It says that "any" harm is unavoidable where the author implies that by imposing some restrictions on the use of personal information, that the harm will be mitigated to the point where the benefits outweigh the harm.

D is also too strong. The author concedes that there is potential for abuse.

E is also too strong. The author never states nor implies that any harm is "negligible".
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AkamaiBrah
Former Senior Instructor, Manhattan GMAT and VeritasPrep
Vice President, Midtown NYC Investment Bank, Structured Finance IT
MFE, Haas School of Business, UC Berkeley, Class of 2005
MBA, Anderson School of Management, UCLA, Class of 1993

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26 Aug 2006, 07:25
I'm with (A) on this one. C came close, however "unavoidable" and "must" are very extreme compared to the conservative phrasing of A.

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Re: CR : Financial Credit [#permalink]

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13 Jul 2010, 01:22
An old gem...thought of bumping this one up for general benefit... some handy explanation from AkamaiBrah...No OA though..Praet are you still around to provide OA?
Re: CR : Financial Credit   [#permalink] 13 Jul 2010, 01:22
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