A Conspiracy Theory from a Credit Clean-Up Expert--This Will Make You Go "Hmmmmm"

About once a month I get a call from a credit clean-up "expert" who wants me to refer business to him.  We invested in credit clean-up software, that works amazingly well, so I never entertain these sales pitches.

This latest "expert," William, came at me from a different angle.  "Aaron, we do credit clean-up and I have a few clients for you that are ready to buy!!"  

I got sucked "Zig Zigler-style" so I ended up meeting with him.

We had a good meeting and William seemed to know his stuff.   I may refer him when someone has horrible credit to fix however he said something in the meeting that I thought was so interesting.  

A consipiracy theory of sorts but one that makes a lot of sense. 

We talked about how hard it is to get the credit bureaus to remove faulty items from your credit report unless you follow exact procedure, which is a blog for another time.

I want to share with you my conversation with William, the credit "expert."

William said "How do the three major credit bureaus, Experian, Equifax, and Trans Union make money?"

"By selling credit reports to consumers and to businesses," I said.  

"You are right!!  They charge around $15 each time you or a company runs it."  exclaimed William. 

I felt as if I just got to the $50,000 level of the TV show, "Who Wants to Be Millionaire."

"Now let's suppose you have great credit and you go to buy a car," William explained.  "Well, you walk into the Ford dealership and you pick out the Explorer you want, the sales guy introduces you to the credit manager, who then runs your credit ONE TIME, shops you thru his lenders for a deal, finds one, and congratulations you got yourself a brand new car.  And the credit bureau made $15."     

 William was in a zone.  "Now, let's say you have BAD credit, you walk into the same dealership but this time the credit manager pulls your credit  and can't get you financed.  So now you go down to the Lincoln dealership.  Same thing.  Now you go down to the used car lot in the seedy part of town.  Same thing.  Now, you didn't get a car but your credit got pulled three times so the credit bureaus made $45."

"OK, so?" I asked.

William leaped from his chair.  "The credit companies have no incentive to help you fix your credit!!  They make more money when you have bad credit!!  The worse your credit, the more times it has to be pulled for any purchase, the more money they make!!" 

Do the credit bureaus actually think this way?   Bad credit can cost you $10,000's in additional interest.  Do you really think they are that calculating and callous?

I am no conspriracy theorist, but having gone through the torturous exercise of trying to get errors removed from my own credit report before I knew the exact procedure they respond to, that one seems to make some sense.

I hope William is wrong but something tells me he may be onto something here.