I’m sure we all know who the big players in Credit Reporting are by Now… Experian, Equifax and Transunion. But what most people don’t know is that bad credit reports are actually a good thing for them. You think I’m crazy? Well good… Here’s why…

Who benefits the most from bad credit? You guessed it… Lenders.. Lenders are able to charge unrealistic interest rates to people with bad credit.

The higher interest rates allow them to make more money on the same amount lent compared to someone with good credit. In addition, if lenders are making more money on those with bad credit, what does that mean the credit bureaus will do? CHARGE MORE FOR THE INFORMATION!!! Voila.

As sad as it sounds, there is more money to be made on people with poor credit than good, and companies constantly take advantage of this fact.

Furthermore, banks do not get rich off of those who get approved for 0% interest rates on credit cards. They’re only getting back the same amount they lent out; nothing more and definitely nothing less. The biggest profits are for those they can hike up interest and fees on.

For Example

let’s say you buy a $250 TV on the first day of your credit card cycle and your interest rate is 19 per cent, then you will be charged roughly $5.47 in interest. And its compounded. That’s another story for another blog post.

The only risk they are taking is whether or not the borrower will default on the outstanding loan.

You can opt out of credit bureaus selling your information by going to www.optoutprescreen.com. The Fair Credit Reporting Act provides the right to “Opt-Out.” This prevents Consumer Credit Reporting Companies from providing your credit file information for Firm Offers.

Opting out has helped to increase the likelihood of negative items being removed. There is nothing for the Credit Bureaus to gain by keeping the negative items on your credit report. The incentive for them to keep the item on consumers’ credit reports is no longer there as they can’t sell it for profit anymore.

I hope this helps to understand why back credit is a Cash Cow for Credit Bureaus and lenders, but will cost the consumer tons over the long run.

Don’t be on the wrong side of Mr. Credit!!!

To lean more about our credit services, visit out credit consulting services.

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