Creditors in the credit equation are known as Data Furnishers. They are the agencies who offer financing to consumers, then report the pay histories back to the credit reporting agencies or the credit bureaus.
Some other personal information is also given by creditors, including consumers’ names, date of birth, social security number, address, prior addresses, current employer, previous employer, and even inquiries for credit applications used to determine spending patterns.
Everything they can collect from the consumer and report back to the bureaus by law, they do collect and report.
Most data furnishers are private and public for-profit companies. They make money based on lending to consumers and earning a return through interest.
This interest is based on risk. The higher your risk, the more you pay in interest. And in most cases, your interest rate is tied directly to your credit scores. The lower your scores, the higher your interest rate will be.
Credit card companies don’t make anything on 0% cards. But the minute you go late on your payment, your interest rate skyrockets. This is where they make their money, on 13% and higher interest rate charges.
A published study shows that some companies make 3 times more money on their sub-prime clients as they do their prime clients. The worse your credit is, the more your creditors charge, and the more profits they make on you.
This is why your creditors monitor your credit report frequently. Any decrease to your score or adverse information on your report can then be used to raise your interest rates, even if you didn’t go late on that creditor’s account.
But notice, you have probably never had a creditor monitor your credit then politely inform you of misreported information on your report. This is because the worse your credit is, the more money your creditors will make. And you will find that credit errors are rarely in your favor, for the same reason.
BOTH your creditors and the credit bureaus make more money the worse your credit is. It is in their benefit that your credit is bad, so don’t expect them to spend a lot of time ensuring that your credit profile is accurate and positive.
