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How Credit Bureaus Get Paid

Texas Consumer Credit - Friday, March 04, 2016
You may already know that the credit bureaus make money by selling credit reports to companies who request a copy, but did you know that they also make money off of the inaccurate information on your credit report?

That’s right, the credit bureaus have made quite a successful business out of processing disputes resulting from inaccurate information on your credit report. According to the U.S. Public Interest Research Group (PIRG), 79% of credit reports have inaccurate information. Under the Fair Credit Reporting Act (FCRA), consumers have a right to dispute the inaccurate information on their credit report with the credit bureaus and creditors. Processing these disputes has, in turn, become a highly profitable business for the credit bureaus. For example, according to Automated Injustice, before 2004, Equifax handled some disputes in-house, and the average cost per dispute was $4.67. By the end of 2004, however, Equifax began outsourcing disputes through a vendor called ACS in Montego Bay, Jamaica, and the price to investigate the disputes dropped to $1.08. That’s almost an 80% cost reduction!  As it stands today, DDC, an agency in the Philippines, has enabled Equifax to reduce the cost to a mere $0.57 per dispute, despite the number of accounts that are disputed. 

How do they make their money, you ask? Let’s say a consumer takes a look at their credit report finding multiple inaccuracies and files 1 dispute to cover 5 errors. The credit bureau then forwards the dispute to the outsourcing agency overseas and pays them $0.57 to process all 5 errors. If they find that the lending institution provided inaccurate or unverifiable information, the credit bureaus charge them a $.25 incorrect data fee for each error, turning those 5 errors into $1.25. After paying the outsourcing agency, the credit bureau sees a profit of $0.68 on what was a $0.57 investment.  

This information is public record based on Congressional Testimony; however, it has not been widely reported by any news media outlet, including the internet. 

Considering the number of people who are injured by the credit bureaus’ need to turn a profit on everything they do, one would assume that the report would have made national headlines. However, due to credit reporting agencies considerable investment in propaganda campaigns, advertising, and lobbying, negative information about them is rarely publicized. 

Do you know of any inaccurate information on you credit report? If so, call us today for a free credit report check-up. (915) 201-2604

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