Dear Friends,
Today, I want to talk about the companies known as the "Big Three": Experian, Equifax, and TransUnion. Unfortunately, although these companies were founded with good intentions, they have now become organizations that unjustly siphon money from the pockets of the American people and funnel it into the banks.
In America, if you make a mistake, you may receive a ticket from the police and have the chance to defend yourself in court. If found guilty, you pay your fine to the government. However, if you delay a few bills, your credit score drops, and you are not given the right to defend yourself. As a result, the next day, when you want to buy a car on installment, you face higher interest rates and are forced to pay thousands of dollars more. The extra money you pay doesn’t go to the government; it goes into the bank’s vault. The credit companies’ arbitrary lowering of credit scores unfairly benefits banks.
While credit reporting companies claim to work to provide credit reliability, they cause financial hardships for individuals by lowering credit scores due to late or unpaid bills. Moreover, there is insufficient recourse for consumers to challenge these drops in their credit scores. Banks and financial institutions take advantage of these low scores by increasing interest rates, causing consumers to pay thousands of dollars more.
Credit Score and the Penalty Mechanism
Here are a few examples of unfair practices:
- When you get a new credit card, they lower your credit score.
- When you close a credit card, they lower your credit score.
- If you use less than 30% or more than 70% of your credit limit, they lower your score.
- When you request a credit report, they lower your score.
- If you make any late payments, they lower your score.
- When you pay off a loan early, they lower your score.
- If you have a short credit history, they lower your score.
This system’s injustice becomes evident when small, temporary changes lead to credit score drops. When people’s scores drop, banks apply high-interest rates to the loans they get. For example, someone who should pay $300 monthly ends up paying $400. In this system, the “Big Three” credit reporting agencies have become reverse “Robin Hoods,” transferring money from the poor to the rich instead of the other way around.
The Dirty Relationship Between Collection Agents and the "Big Three"
Small unpaid debts are transferred to collection agencies. These agencies then exploit the situation by lowering your credit score, pressuring you to pay up. They issue veiled threats like, “If you don’t pay, your credit score will drop even further.” Consequently, someone who wants to settle their debt may end up paying double the original amount due to interest and fees.
The collaboration between collection agencies and the Big Three increases consumers’ financial burdens, worsening their situations.
Who Does This System Protect?
A low credit score forces individuals to rely on legal loan sharks. People with low scores who can’t get loans from banks are compelled to turn to institutions like "Title Max." These companies offer loans at interest rates of up to 30-35%. If borrowers fail to repay, their cars are repossessed. Right now, Title Max alone possesses thousands of vehicles forcibly taken from people, later auctioned off at bargain prices. This financial mechanism pushes struggling individuals even deeper into poverty.
This distorted system sometimes forces people to buy on credit just to build credit history and increase their scores. Among themselves, people advise, “Buy a car on installments; it will raise your credit score.”
Unjust Gains and an Unfair System
Recently, a friend’s wife had to pay $200,000 more for a mortgage due to an interest rate increase stemming from a $75 overdue credit card payment. The fact that a small delay of $75 could lead to a $200,000 burden exposes the unfairness of the credit system.
Here’s a comparison of the extra costs between loans taken at 5% interest versus 7%:
- At 5% interest: Monthly payment is approximately $2,147.29. The total payment after 30 years is $773,023.14.
- At 7% interest: Monthly payment is approximately $2,661.21. The total payment after 30 years is $958,035.59.
The difference between the two interest rates (over 30 years) is $185,012.46.
Financial Intelligence and Violation of the Constitution
Money borrowed from the American Federal Reserve Bank at around 7% interest is sold to the public by financial companies at rates of up to 30%. This system does not foster production or employment but instead functions as a setup designed to transfer public funds into the coffers of large corporations. Offering loans at 30% interest instead of 7% to those in financial distress is unfair and goes against the spirit of the American Constitution.
In conclusion, credit score companies like Experian, Equifax, and TransUnion have established a system that takes money from the people and transfers it to financial institutions. Thousands of people are losing their homes, cars, and jobs due to the arbitrary decisions of these companies. As the American people, we need to unite against this unfair system, raise our voices, and limit the influence of these companies over the public.
Let us remember that the fake justice of credit scores and their dirty relationships with financial institutions threaten not only individuals but also social peace.
Stay well.