Wednesday, June 19, 2013

The Corrupt System of Credit Reporting

The article below highlights problems with CREDIT REPORTING.

There is simply no accountability!

Route 44 Toyota ILLEGALLY accessed my credit report TWICE and that of a friend - 6 MONTHS after a new car was paid for.
We NEVER applied for credit. This violated FCRA [Fair Credit Reporting Act].

There is no way other than court to force Route 44 Toyota to be accountable.


Posted here:
Route 44 Toyota: Where Arrogance and Disregard of the Law Prevails

A Corrupt System More Americans Need to be Talking About

In this country we concern ourselves with a varying degree of issues.  But there’s one that I rarely see mentioned anywhere and it has massive control over much of our lives—and that control only grows with each passing year.

While many fear the government and what it might “prevent us” from doing, this is something that has the power to make Americans pay tens of thousands more throughout their lives and it can even keep them from getting a job.

And the kicker?  Nobody really tells us how it’s calculated.

I’m talking about our credit scores.

And anyone who’s dealt with these credit rating companies know, they make massive errors—constantly.  Hell, we have three different scores depending on which company’s score you’re looking at.

I was once listed at an address I had never lived at.  Trying to get the company to change that seemed nearly impossible.  Accounts that weren’t mine have shown up without me knowing, and the only real way to monitor these companies is to pay to have access to your report.  Sure, you can get one free report a year from, but that’s just once per year.  If you want hands-on monitoring of your credit reports, you’ll have to pay.

And as we’ve progressed technologically as a society, these credit scores have become more and more intrusive into our lives.  Once they just determined your “worthiness” of getting some line of credit.  Now your credit score is often used to determine your insurance rates for your car or home and can even determine whether or not you’re allowed to open a checking account.

Nothing quite like paying 5, 10, 15+ years on car or home owner’s insurance, without a single claim or late payment, yet unexpectedly falling on rough times privately (though still paying both insurance policies on time) only to still see your insurance rates double because your credit rating dropped.

It doesn’t make any sense.  Your insurance record should be your “credit score” for insurance policies.  Your record as a home owner or driver should be all that’s needed to determine your rates. 

Being unable to pay your cell phone bill, resulting in downgraded credit, shouldn’t have a damn thing to do with how much someone pays for insurance when their insurance history is immaculate.

Hell, even employers have taken up with the practice of running your credit score before offering someone a job.  Which is extremely ironic considering people get denied for jobs due to their poor credit, yet if these people were given these jobs, they would have the income to pay their bills and improve their credit score.

Another issue that arises is how credit “hits” are handled.  It’s my opinion that unless your good payments are shown on your credit report, the bad payments shouldn’t be allowed.  Too often people will pay perfectly for years on items such as their cell phone or cable bill, only to fall on bad times. 

Some unfortunate event happens where they can no longer makes these payments, the services are shut off and the balances are then sent to a debt collector and the “default” is put on your credit report.

Never mind that you might have paid for a decade flawlessly, that won’t show up anywhere—the only part that will appear on your report will be where you stopped paying.

Then there’s the completely asinine statement many have heard, “Bad credit is better than no credit.” 

You could be financially stable, making good money, and have paid cash for most everything you’ve had.  Then one day find yourself in a situation where you have to take out a line of credit, well—good luck with that.  The fact that you have no debt is actually bad.

These people want you to have debt—but not too much.  See, your debt to income ration needs to be solid.  Meaning your debt needs to be a certain percentage of your income.  A debt to income ratio too high or too low will negatively impact your score.

Or there’s the stories I’ve heard about people pulling their individual credit scores and getting one number, say 705, only to apply for a loan and have that same company report their score as much lower—with no explanation as to why.

And I can’t forget the whole circus performance from these companies in how they reflect how you pay your debt.  Did you know, you can actually hurt your score by paying off installment loans too soon?  That closing a credit card often hurts your credit score?  That you need balances on cards otherwise opening credit accounts with zero balance can lower your score as well?  That following credit “promotions” and paying balances off before the interest would kick in can cause your score to drop too?

Does any of that make sense?  Hell no.

Now we all know why this system is set up the way it is, to screw most Americans.  It’s built to give companies an excuse to pay you less or charge you more.

Millions of Americans end up paying tens of thousands more throughout their lifetime because of a credit system built on secrecy, confusion and frustration.

While many might just say “pay your bills on time and you’ll have good credit,” that’s simply an ignorant response from someone who doesn’t know the first thing about how credit scores work.
If credit scores were just about paying bills, someone with no credit but a flawless record paying their bills (with cash) would have the best score.  But like I said before, if they have no credit they’re actually worse off most times than someone with bad credit.

And these companies really don’t “lose” money when people fail to pay their bills.  What almost every one of these companies does is create an account in their yearly budgets they consider “losses.”  But they balance these losses by overcharging services elsewhere.  Even if they had 100% of their customers pay their bills, they still would have this account where they assumed loss and still continue to charge customers more.

Then they “sell” these delinquent accounts to debt collectors for a fraction of what’s owed.  Then these debt collectors attempt to make a profit by making you pay “40% of your balance to settle this debt”—when they might have only paid 10% (or less) of what the original debt actually was.

So not only are most of these original companies not suffering any kind of real loss, because they’ve already assumed a certain amount of “loss” while charging more for their services to account for that, debt companies are making millions collecting money on debt that was never owed to them.  They just bid a small percentage on the total debt, then pretend to offer “deals” to get people to pay them money.

It’s a system rigged to squeeze as much as possible out of people, while trapping them into debt.
Because that’s what a “good credit score” essentially tells you that you must do—have debt to have good credit.  It’s a scam that I feel more people need to talk about—be enraged about.

It’s ridiculous that a handful of private companies, with seemingly no accountability to anyone, have such power over the lives of each and every one of us.  Then when we demand answers, they refuse to give us any.

And I feel it’s about damn time we put an end to this scam.