divemedic

Why the CRA wants your score low

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There is, in the financial planning world, a mathematical equation called the "Rule Of 72". In short, the definition of the Rule Of 72 is: If you divide the interest rate you’re getting into 72 it will tell you how long (in terms of the number of years) it takes money to double. $1 becomes $2. $2 becomes $4. $4 becomes $8, etc, etc.

Most people think that if you double your interest rate, you double your money. That is not true. Using this rule, we can see that interest adds up much faster. For example, let’s look at a sample of rates and imagine that we have $10,000 to invest for 24 years:

Interest %______Balance after 24 years

3 __________ $20,000

6 __________ $40,000

12 _________ $160,000

19 _________ $804,000

24 _________$2,560,000

You can see that investing at 4 times the interest rate (6% to 24%) gets you 64 times as much money. This formula works just as well if you LEND $10,000 at similar rates. The rule of 72 and the astonishing ramifications of high interest rates explains:

1) Why there is an enormous conspiracy between CRA's and creditors to TRASH your score, so that the highest possible interest rates can be charged, yielding the highest possible profits for the creditors, (the CRA's customer base).

2) Why every major bank has a sub-prime lending unit.

2) Why, once you get far behind in your debt, the interest rates are like freight trains and will SOON run over you if you’re not careful.

3) Why so many Bankruptcies occur where people say: "I don't understand it. We just got a little behind with our CC's and the next thing we knew, here we are in BK".

4) Why YOU need to be extremely aware of the math that can either work in your favor or work against you, possibly driving YOU straight back into credit hell.

1) So, fight your way into prime territory as soon as you can.

2) Keep those high interest debts under control.

3) Figure out a way to make extra money if you can. Use it to pay down your debt and then use it to invest wisely.

4) It is better to pay down those CC’s, and then only use them if you can pay in full every month.

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1) Why there is an enormous conspiracy between CRA's and creditors to TRASH your score, so that the highest possible interest rates can be charged, yielding the highest possible profits for the creditors, (the CRA's customer base).

1) So, fight your way into prime territory as soon as you can.

2) Keep those high interest debts under control.

3) Figure out a way to make extra money if you can. Use it to pay down your debt and then use it to invest wisely.

4) It is better to pay down those CC’s, and then only use them if you can pay in full every month.

You had confirmed what I thought. This Conspiracy Theory makes perfect sense to me. It fully explains why it is nearly impossible to get deletes and/or corrections in our credit reports. I am preparing now to make some extra money, get out of debt and stay out, increase my credit score (better to have and don't need than to need and don't have) and pay ca$h for everything I purchase (large or small). Perhaps someday someone will have the guts enough to sue the CRAs, Creditors, CAs and JDBs under the RICO Act.

Thank you very much Dive,

June

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I do not think it is a conspiracy, I think the CRA's are just giving their customers what they want- lower scores, which allow them to charge more intrest.

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The single most destructive thing the CRAs do to people's credit scores is by deleting good, closed tradelines after 7 to 10 years. Let me explain.

FICO scores take into account the length of your credit history and lenders also look at the length of your credit history to determine your eligability.

So by deleting closed, good tradelines, they artificially reduce your length of credit history. This hurts nearly all consumers. The only ones who dodge this CRA bullet are those lucky enough to have a house mortgage that never is sold or transferred to another lender. Yes, when a mortgage is sold to another lender the old lender will drop off just like a closed auto loan or credit card will.

By example. I recently applied for a credit card and was denied based on too short of a credit history (That was the reason given on the rejection letter). My credit score was 698. Ironic, because I got my first loan in 1990 when I bought a computer on an American General installment contract. But if you look at my credit report, it shows I only have 7 years of credit history, not 16. Why? Because those sh*t-heads at the CRAs deleted all my good closed acocunts from the 1990s.

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I do not think it is a conspiracy, I think the CRA's are just giving their customers what they want- lower scores, which allow them to charge more intrest.
The rule of 72 and the astonishing ramifications of high interest rates explains: 1) Why there is an enormous conspiracy between CRA's and creditors to TRASH your score, so that the highest possible interest rates can be charged, yielding the highest possible profits for the creditors, (the CRA's customer base).

"Enormous Conspiracy" are the words you had used. Whatever:!: :!: :!:

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This exact situation just dropped my TU score from 683 to 640 in the past 3 days. I called TU first and they put me back to True Credit who could only advise me that the difference as they could see is that I have 56 closed accts vs 58 3 days ago. My balances went down, no new inquiries, no new accts, nothing!!!! 43 points-that should be criminal!!!!

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I don't get it! Years of Credit in the CRA Database or length of Credit History cannot change. Although, there are no "Good Accounts" listed on my TU Credit Report for the year 1990, my TU Credit Report clearly states that "You have been on our files since 03/1990", which is 16+ years of credit history.

It stands to reason that no matter how many Good Tradelines that the CRAs may delete (as required by law), the length of Credit History in the CRAs Database cannot change.

History like DOLA or DOFD cannot change. Is this a new problem for us consumers? I would definitely challenge the CRAs on that one. In my opinion, "Changing History' is reporting inaccurate or incomplete information which impacts my Credit Score. Perhaps, the experts here can weigh in!!!

Best Regards,

June

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It stands to reason that no matter how many Good Tradelines that the CRAs may delete (as required by law), the length of Credit History in the CRAs Database cannot change.

While I agree with you that the length of credit history should not change, unfortunately, the law is silent about how long CRA's must report account information once the account is closed, so long as there is no derogatory information. The says what they cannot do - they cannot report bad stuff for too long, but it doesn't say that they report good stuff after the account is closed.

I haven't researched it enough to know if all the CRA's maintain a separate field for the length of your credit history or if it calculated on the fly based upon current tradelines. I know for sure that when a tradeline is added which has an open date earlier than your earliest tradeline, then the length of credit history is increased.

My guess is that the CRAs have no data stored reflected the length of credit history and calculate this value on the fly while generating the reports.

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June- perhaps enourmous conspiracy was a poor choice of words. I do not think there is a smok efilled room where the CRA's and banks get together to formulate a way to trash our credit. I think that what does happen is that the CRA's know it is in the best interest of the bottom line to keep your credit low. They use every law they can to their advantage, and find loopholes for the rest.

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My guess is that the CRAs have no data stored reflected the length of credit history and calculate this value on the fly while generating the reports.

This is a huge nightmare! If you're correct, this means two steps forward, three step backwards:confused: during Credit Repair.

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June- perhaps enourmous conspiracy was a poor choice of words. I do not think there is a smoke filled room where the CRA's and banks get together to formulate a way to trash our credit. I think that what does happen is that the CRA's know it is in the best interest of the bottom line to keep your credit low. They use every law they can to their advantage, and find loopholes for the rest.

With all due respect, in ALL my cases, I find that the CRAs and the Banks NEVER follow the beautifully constructed FCRA and they hope that I NEVER find the loopholes. It was one happy day when I found this Board.;)

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This whole credit score things really sucks! :mad:

Like for e.g. there are 2 things you can infer from someone's report who has lots of store cards.

1) The person is desperately in need of credit.

2) The person likes to take advantage of discounts offered by department stores. (Which by the way could be seen as responsible financial behavior).

Guess which way FICO chooses to interprets it! :evil:

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LMAO is all I have to say about all this. Well, I guess I could add a few...

You ever think that maybe interest rates help keep the economy under control? Umm, that's what the Feds do all the time... adjust interest rates to help control growth or recession.

LMAO.. conspiracy. I have so much more to say, but why bother. None of you would understand. Hey, anyone want to buy alien bone fragments I found on my uncle's cow farm?

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This whole credit score things really sucks! :mad:

Like for e.g. there are 2 things you can infer from someone's report who has lots of store cards.

1) The person is desperately in need of credit.

2) The person likes to take advantage of discounts offered by department stores. (Which by the way could be seen as responsible financial behavior).

Guess which way FICO chooses to interprets it! :evil:

I second that. How about, there are 2 things you can infer from someone's credit report who has more than 2 Inquiries within six months.

1) The sophisticated consumer is shopping around for a decent APR.

2) The desperate "loser" is being DENIED credit by others.

Guess which way potential lenders choose to interpret it!

They are AGGRAVATING! :<img src=:'>

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3) Why so many Bankruptcies occur where people say: "I don't understand it. We just got a little behind with our CC's and the next thing we knew, here we are in BK".

Those bankruptcies occurred because those individuals stretched themselves too thin. They said, "I make $3000 after taxes, so I can spend $3000 on all my bills." They didn't think about what happens when their car breaks down or little Johnny gets sick or little Jamie needs braces. When those things happen, they put it on the credit cards. Then the monthly payment goes up and now they need to make more than $3000 just to keep up. Then bam, dad breaks arm and is out of work for two months. He gets unemployment, but at far less than 100% of what he was making. The family gets even farther behind.

This is one of many scenarios that happens all the time to lead someone into BK. You can't blame the CRAs or the credit card companies. People shouldn't stretch themselves too far, but they do. People should save up a few months of salary, for "just in case" scenarios. Instead, they buy that big TV.

People don't live within their means. Period.

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It fully explains why it is nearly impossible to get deletes and/or corrections in our credit reports.

Umm, and that's a good thing. Imagine what would happen to our economy if it was easy to get deletes. Imagine how many people would get loans or credit that shouldn't. When they can't pay, what happens? The rest of us pay. Personally, I don't want to have to pay more because other individuals get irresponsible, then make the quick fix. If you don't like being held accountable, vote Democrat! If you believe in holding people responsible for their own actions, vote Republican!

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If you don't like being held accountable, vote Democrat! If you believe in holding people responsible for their own actions, vote Republican!

Don't you know that "Elections are not decided by those who cast the votes but by those who count them" :lol::lol::lol:

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PolarBear, how about the CRA that deletes positives before they are 7 years old? How about positives that the CRA doesn't report? I have a CC that is open and has a $400 balance with a $2500 CL. I know they are reporting, because I have the UDF's. The TL is not on any of my reports. If you are going to claim that negatives should report so CR's can be accurate, what about those?

What about rent? Cell phones? Utilities? Wouldn't including those make reporting more accurate? Why only include them if they are delinquent?

The top 3 reasons for BK are loss of job, loss of a spouse through death or divorce, and medical. Don't for a minute think that sub prime loans are not profitable, if they weren't, every major lender in the country would not have a sub prime unit.

BTW- when you are put in "universal default" for a collection that isn't even yours, and your monthly interest goes from $200 to $500 a month, how is that your fault? How is that even fair? It isn't.

Voting Republican doesn't make you accountable. Ask Enron employees. How responsible was Rush Limbaugh held for illegal drug use?

Don't be so judgemental. After all, it wasn't that long ago that you were posting this:

I have 10 SLs that went into default.

and this

I have $14K in medical bills from 3 years ago, and I'm hoping to settle them next year for 30-60% of value

Are you saying that you should not have tried to fix your credit? Perhaps you should write the CRA's and ask them to reinsert the info?

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Are you saying that you should not have tried to fix your credit? Perhaps you should write the CRA's and ask them to reinsert the info?

All 10 of my TLs for those medical collections are still there.

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All 10 of my TLs for those medical collections are still there.

As Posted by PolarBearnCO Today, Saturday, December 9, 2006 - In

MY FICO UPDATE Thread:

"Nice. I've gone from 512 on July 8 to 603 Dec 6. 91 points in 5 months, and I haven't DVed a single creditor. Last edited by PolarBearnCO : Today at 08:02 PM."

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This is a huge nightmare! If you're correct, this means two steps forward, three step backwards:confused: during Credit Repair.

Why should this be any different than any other aspect of credit repair?

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All 10 of my TLs for those medical collections are still there.

Anytime I see people getting overly sentimental about credit scores and the sanctity or purity of the credit reporting system, I just have to chime in. Credit scoring works very, very well when taken as a whole. It is not intended for the individual consumer and cannot in any way even begin to represent the creditworthiness of the individual consumer.

My parents are probably the lowest credit risk people I know. They PIF everything within a week of invoice. They carefully check every detail of every bill. They own their house and cars outright and pull down well into 6 figures tax-free. They have not missed a single payment for over 30 years. the funny thing - they also cannot open a department store card.

Why would this be? Well, they use credit in their business's name instead of personal credit. Their credit files are next to empty.

When you take the population as a whole, empty credit files represent serious risk - if you are buying a portfolio of paper with thin files, you had better have priced that in.

But on the individual level, it is absolutely meaningless.

There are so many examples!

1. I don't have medical collections on my credit report. Others do. Why? Because I raked the collector over the coals until they removed it. I was not going to let a $20 debt missed on a oversight put me in a category of shmucks.

2. I was recently late on a credit card. My FICO dropped 80 points. It's now back where it started. Why? Because I am a sweet talker and obsessive and I GW'd it. Others cannot write nice, flowerly letters and work the phone to the VP's desk. Does that make them more or less of a credit risk? Not at all.

3. DW just came to the US. Her credit file is 11 months long. No AU accounts, only joint accounts which I manage. Her credit score is higher than mine. She has never paid a single bill in her life and doesn't know how, and yet her middle FICO is over 740!

The system is way too flawed to be fair to the consumer. It's designed for big business and some consumers luck out, others lose out.

If a consumer has problems with managing his money, then he should learn to manage money. If he is foolish and undisciplined, then it's probably good that he has problems with his credit report that limit his access to credit. Other than that, I consider it moronic to overly glorify this rediculous system and subject yourself to it. If you have rights which will allow you to get your meaningless FICO score higher, then do it by all means!

Then, the question becomes - what if everyone starts doing this and the credit system that feeds our economy breaks down? Well, i suggest you start by addressing all the inequities in the system that operate at the expense of the consumer, before asking the consumer to be subject to the system.

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Thats all fine and dandy, and I probably agree with everything you typed. What's absurd is the original topic of this thread. The CRAs report. They could care less what they report. I doubt they even care if what they report is valid. To them, it's valid until proven otherwise. The CRAs don't care if your score is high or low. They don't care if interest rates are high or low. They get paid when the report is delivered, regardless of what's on it.

In actuality, if all factors remained the same, they'd probably prefer that everyone had a score around 800. Higher scores mean access to more credit, which means potentially more credit pulls, which would mean more revenue for them.

I know if credit pulls didn't hurt my score, I know I'd apply for everything out there... #1 to take advantage of the 10% offs here and there, and #2 to shop for the best deals on interest rates. Many of the rest of us would, too.

Someone even mentioned something about why rent and utility histories aren't reported. Again, what does this have to do with CRAs? LMAO!

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The CRA may not care, but the banks do. The flaw in your argument is the assumption that banks have unlimited access to funds in order to make loans. Not true, the available funds do not change. That being true, you (as a bank) want to loan out what you have at the highest rates possible in order to maximize profits.

The banks are going to use the CRA that gives them the excuse to place as many consumers as possible in sub prime territory. Lower scores mean credit at higher rates. The CRA that gets pulled the most make the most money.

Therefore, the CRA is going to do all they can to be the one that is the most pulled. You give your customers what they want.

What do utilities and rents have to do with CRA's? You yourself were talking about how deletes should be hard to get, so that irresponsible people don't ruin credit for everyone else (funny how you didn't include yourself as being irresponsible, esp seeing as how you yourself have credit problems) This hints that accuracy of reports is important. My point is that accuracy is shot if ALL data is not included.

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Someone even mentioned something about why rent and utility histories aren't reported. Again, what does this have to do with CRAs? LMAO!

I'm Confused. Why is it so humorous to you that Rent, Utilities and Cell Phone histories are not being properly reported to the CRAs, unless they become delinquent and damaging to our scores? :roll:

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