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Question By
JamielCotman

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Do the credit agencies WANT your score to be low?
Its time we all face it. Those with lower scores pay more. So, could it be said that this is true,- THE CREDIT AGENCIES WANT YOUR SCORE LOW!!!!!!! They would have FINANCIAL interest in everyone having a low score, not a high one right? I just want to hear everyone's thoughts on the moral hazard here.

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It's worth keeping in mind that the credit bureaus that maintain your report and calculate your score do not usually make any lending decisions. The banks and financial institutions make lending decisions based on the data they receive from the credit bureaus. 

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FCRA already addresses this issue

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It ‘could be said’ that creditors could destroy someone’s credit for financial gain.  However, the FCRA is there to prevent just that.  Basically creditors can only report accurate or true information to the credit bureaus.  If it’s not true or accurate, you have the law backing your rights to dispute the item for correction or removal.

Credit scoring models used by lenders are simply calculators meant to determine risk levels in loaning you money as a number.  There are literally thousands of these scoring models because there is never a guarantee that the past will predict accurate future results.  However when a company assigns an interest rate to a score level, they are trying to minimize their losses and still come out with a profit later by more having people pay slightly more from the start.

Additionally, people with high scores tend to default less, so they can still make a profit by offering them lower rates of interest.

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Credit granting agencies want consumers that will ultimately pay off their debts. The credit reporting agencies, such as Equifax, have no interest in your score being high or low, only that it is an accurate indicator of your ability to pay your debts.

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