Because there is value in a large group speaking with a unified voice to say “this is wrong, and you need to know that the rest of us think it’s wrong. Your behavior will affect the relationship you have with us all going forward”. Direct intervention isn’t the only form of consequence.
Is it the best solution to the problem? No. Is it still worth doing? Yes.
It is important to note that while a FICO score is roughly equivalent to “trustworthiness”, the three credit agency scores (Equifax, TransUnion, and Experian) are NOT meant to reflect your trustworthiness directly. Rather, they are specifically designed to inform lenders of your profitability for them.
It’s an important distinction because having a an outstanding payment history alone won’t improve these scores, if you aren’t utilizing available credit and maintaining some running balance with lenders.
Basically, if you’re just going to borrow money and never pay any interest on the loans, you aren’t actually a source of profit and therefore aren’t a desirable customer for lenders and creditors