The Abuse of the Borrowing Consumer

The Abuse of the Borrowing Consumer

FICO Scores & Credit Scores

What the consumer doesn’t know won’t hurt them, so say some in the mortgage business. Not so! What many of the consumers don’t know is costly them money every month they have a mortgage. The reason is the manipulated credit score used for the interest rate of their mortgage, car loan, or any other loan. This can be referred to as the rape of the consumer.

A individual can go online and pay a fee for a credit score which they will receive. They take that credit score to a car dealer the same day and learn that their credit score is lower than they understood depending on who supplied the dealer with the credit score. The same is true with a mortgage lender.

There are three credit collection depositories, Equifax, Experian, and Transunion. These companies collect the information about all citizens in the USA. Most people refer to their credit score as their FICO score which is only obtainable from Equifax because they are the only company that uses the mathematical formula (form) produced by the Fair Issacs Company (FICO).

There is a standing lawsuit against Experian and Transunion by the Fair Issacs Company prohibiting them from using the FICO name for a credit score because they use a different mathematical formula for calculating the credit score. So now we have three different credit scores by three different depositories. Which one is correct? Worse however, when a lender wants to make a loan for a auto buy, they go to different credit agencies to acquire the consumer’s credit score. Which one should they use? Additionally the credit agency reduces the calculated score by a risk factor, which causes the borrower to pay a higher interest rate. The same thing happens in the mortgage business, except the underwriter obtains a so-called merged credit report from all three depositories and uses the middle score of the three depositories. What good is that? The middle score of three different formulas from three different depositories method what? It method that there are classifications of credit worthiness sometimes referred to as Class A, Class B, and Class C paper. Each has an interest rate range applied to the Class.

The Class A is associated with the higher credit score and the lower interest rate. However, if the credit score is reduced and the loan is classified is placed in a lower class paper, the borrower pays a higher interest rate and consequently the rape begins. Of course the investors/institutions who buy the loan packages from the lenders, are more than happy to receive higher interest rates/return on the loans they buy.

The questions keep. Why didn’t Congress monitor these transactions? Should we feel sorry for the investors/institutions who own the loans? What connections exist between our Congress and the institutions? Who feeds who? Go to to learn how to pay off these loans in an accelerated time without using additional money from the experiencing borrowers.

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