Credit Bureaus – The Devil?
It never fails, year after year, debt collection complaints rank among
the most-common consumer grievances the Federal Trade Commission
receives. In fact, in 2011, the FTC’s second most common complaints
were that of deceptive debt collection tactics after identity theft.
Since 2001, overall FTC complaint volume for all industries has risen
from 325,000 complaints to 1.8 million complaints overall.
We as consumers know how crooked the banks can be. For instance, one of
the big banks (starts with a C ends with an E) is currently being
investigated by the government for improper credit card collections. Can
you believe it? It is unfortunate that we have to rely on the banks for
financing for our homes, cars, school loans, and in some cases medical
bills. They have the ability to turn the tables fast during a hardship
even after claiming they understand that “life happens”, but yet are
quick to report negative information to the credit bureaus when you are
a second late even if you have contacted them to work something out.
Did you know that the credit bureaus make money off of people having
financial hardships? I know what you are thinking, “How can the credit
bureaus make money off of me if I don’t have any money?” They make
MILLIONS off of people who have poor credit and no money because the
banks buy this information from them. The credit bureaus are in the
business to make money. They make this money by selling data (names,
addresses, credit scores, etc.) to banks that are requesting certain
criteria and they will pay top dollar for this information. Why would
they pay money for a list of people with bad credit?
Let me give you an example of why they do this:
Put yourself in the shoes of a bank that offers high interest loans.
What is your main objective as a bank? Right, to make money, lots of
money. Think about this scenario for a moment.
You have a block of loans to sell. Two potential customers walk into
your bank. Customer A is a consumer with good credit, who has access to
a lot of credit cards and can pretty much get a loan for anything he
wants, anytime he wants.
Customer B is a consumer with bad credit. His credit took a dive when he
lost his job. He's been struggling to pay his bills and to put food on
the table for his family. It's more difficult for him to get loans
because his credit is shot, and since his credit cards are all maxed out
and overdue, he doesn't have any available credit.
Which of these consumers do you think is more likely to want or need a
loan from the bank?
If you picked customer A, then you are wrong. Customer A isn't in need
like customer B is. Customer A can get a loan anywhere for any rate.
Why would they want to settle for your bank?
Customer B is in desperate need of anyone who will loan them the money
they need to get by and (hopefully) get back on their feet. Since they
are likely struggling, and likely don't have a lot of loan options
available to them, they are more likely to be in a position to need the
loan from the bank. In other words, gotcha!
What makes the deal for customer B even sweeter for the bank is that the
loan is more profitable because with bad credit, customer B will have a
much higher interest rate and pay more for the loan.
It is for this reason that certain banks, credit card companies, and
"sub-prime" lenders want to offer their "sub-prime" products to
consumers with bad credit. It is why they go to the credit bureaus to
purchase "bad credit" (or sub-prime) data in order to market their
products to consumers who desperately need or want them. Credit bureaus
make a killing off of this information and can charge premium rates for
sub-prime data since it is in high demand. Can we say “Predatory
This also means that once your credit sucks, the credit bureaus have no
motivation to correct inaccuracies. They make it difficult for you to
get any type of response when disputing your credit reports. They have
designed their whole system around “guilty until proven innocent”
theory, which when you can prove that you are innocent, they still
don’t comply by deleting inaccuracies. Why should they? It would mean
less money for them in the long run. That is the reason that it has been
said that the credit bureaus are a for-profit organization – and now
you know why.
You know what? By them ignoring your requests to investigate
inaccuracies and delete information that can be proven to be inaccurate,
they are breaking the law. You as a consumer have rights explained in
the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection
Practices Act (FDCPA) that protect you from these slimy credit bureaus.
However, it is up to you to research these laws (they are listed for you
in the back of this book) and keep diligent records of all
correspondence between you and your creditors in order to make a case
against them. They are not looking out for your best interest. You
Excerpted from "Sue the Creditors - Fix Your Credit: How to Legally Sue Your Creditors to Repair Your Credit and Win (Volume 1)" by Renee McClain. Copyright © 2012 by Renee McClain. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.