Saturday, September 22, 2007

Credit Bureaus - What Is Their Purpose?

Well, that sounds like it has an easy answer now doesn't it? Actually they have more than one purpose, but they have ONE MAIN purpose. And the answers are pretty easy. Just by the name, you know that they are a warehouse for credit information. But, what is a warehouse used for? Storing stuff. Well, yes, credit bureaus store stuff - our information. But what do warehouse owners do with the stuff in the warehouse besides store it? They SELL it! Yep! That's right. So do credit bureaus!

Credit bureaus are in the business of making money! Your credit is the product that they sell. They sell your information to any one who wants to buy it, which may be one of their subscribers or whoever you authorize to view your credit by filling out an application for credit. That's how they make money. Just as having bad credit costs you more to get more credit, say a loan or car, or line of credit, or the interest rate on credit cards, bad credit brings them a heck of a lot more money than selling a file with good credit. In fact, the 3 main bureaus, Experian, Equifax and TransUnion, have a combined annual revenue of over $4 BILLION!!!!

They know that people with bad credit more often than not, have some financial concerns. They apply for credit more often. About 10 times more often than people with good credit. They don't care if the information on your credit report is wrong. They know that it has errors on it. It's a game to them. They know that the law says that the only information that can be on your report is information that is 100% correct. But they figure, unless you catch the error, why should they waste the time and money verifying your information is accurate? That would cost them too much money and cut into their profits!

There's all kinds of information floating around about what percentage of credit reports have errors on them. NY state attorney general estimates that 1/3 of all credit reports have errors on them. The US Congress estimates that 1/2 of all credit reports have errors on them. Then there are studies and surveys done that report different amounts. I've read some that estimate about 60% and the bureaus themselves admit to about 79%. I think that they're all way off, and that the bureaus are dyslexically reporting their numbers. I think that the number that is closer to accurate is 97%! In the 14 years I've been doing credit repair, I've found errors in 100% of the credit reports I've reviewed!

I'm not being fair though. I have people come to me to help them clean up their credit. I see a lot of poor credit. So it's very likely that I don't get to see the perfectly reported credit that is stored at the bureaus. I mean, hey, there are billions of credit files out there and probably only about 3 percent of them are accurate. What's the chance of seeing one that is 100% correct? My chances of winning the lottery are probably better than my chance of seeing one of those!

Just so those of you with bad credit don't feel too bad, let me tell you this. I'm a real estate agent. My office also brokers real estate loans. We have clients with great credit, good credit, okay credit, and poor credit. Here's how I'm going to help you feel a little better. I'm going to tell you a secret! The secret is...............

Are you shocked? Millionaires with crappy credit!! I've seen it for myself! I'm telling you the truth. I have NEVER seen a credit report, good or bad, that didn't have errors on them! It almost seems intentional. Just like creditors hate their customers that pay their bills off every month, credit bureaus hate perfect credit. (okay, not necessarily a fact, but my opinion)! They are in the business to make money. They are not government agencies. They are not even government regulated. They are FOR-PROFIT-COMPANIES!

So, how can you slow them down a bit from making money off of you? Here you go! You need to get on the "OPT-OUT" list. This is a list of consumers that says to them, "I don't want you to sell my information to anyone!" It's free to do. It prevents them from selling your information to all those companies that offer you credit by mail or phone. That's what all those inquiries on your credit report are, that only you can see. There's a bonus to doing this as well. I don't know why, but I have noticed a little jump in the credit score after my clients have opted out.

So, if you want to get on the "Opt-Out" list, I've provided the information below! It's time to start fighting back, every little way we can!

OPT OUT by Phone
(Make sure you wait for the prompt to opt out for good. The first one is only for a few years. Selecting the second option, by pressing 3, will opt you out forever)

OPT OUT by Mail

You need to send the letters to all 3 bureaus. You can go here for a sample form letter to send them. - (if you need to copy/paste!)

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