The role of the Credit Reporting Agencies in the destruction of America, page 1

- The central bank gives money to big brother - Big brother gives money to little brother - Little brother gives money to consumers

I would like to clarify the original post.

First, consumers borrower money from banks - Wells Fargo, Chase, etc. These banks have money to lend because they have money on deposit from ordinary checking accounts and from the money earned on investments --- primarily loans on commercial real estate.

Banks earn interest from their loans - mortgages, lines of credit, credit cards, etc.

The whole "money out of nothing" idea is just plain silly. Banks have money on deposit, and lend it out at interest. If they borrow temporarily from the Federal Reserve system, they have to pay interest to the Federal Reserve.

This whole notion that banks just "magically" lend money "out of thin air" is just nonsense. The money lent - real money - comes from the bank's wealth of deposits and the interest earned on loans.

Now, let's discuss credit reports.

Personally, I have looked at thousands of personal credit reports. And, I can tell you, that there are 3 major reasons that are legitimate as to why people have low credit scores. First is a medical emergency. Second: a divorce. Third: a business failure or job loss with extended unemployment.

The reasons noted above are legit reasons for a low credit score. These borrowers are honest people caught in difficult circumstances. Because of their good character, they usually bounce back once the event passes because they pay their bills on time.

Then, you have a whole other breed of people that have bad credit scores for "bad character" reasons. Basically, they don't pay their bills either because they spend too much - or they are just plain crooked. These people will always have credit problems, and will never bounce back from their credit issues because of the fundamental flaws in their personal character. They believe that they have the "right" to defraud everybody and everyone - from their cell phone bill to their landlord. They have a long track record of abusing credit.

A small minority fall into credit problems because of their lack of competence and/or intelligence - They just don't know any better. These people are rare.

Most people - in general - fall into these 2 categories: Either you pay your bills, or you don't pay your bills. It is really that simple. The people that don't pay their bills make the cost of living ten times more expensive for the people that do. Because when someone charges off a credit card for say $10,000 and never pays the credit card company back, the credit card company has to make up for this loss somehow. They make up for the loss by building the loss into higher interest rates from their good customers that do pay on time.

A good percentage of the population has credit scores at 700 or above. I would estimate 50% or more of the population has decent credit scores. Again, it's usually black or white. People pay their bills or they don't.

Now, occasionally you do find someone that slipped up or had a dispute over a credit item, and has 1 or 2 credit blemishes on their credit report. They had a dispute with their electric company, for example, and the issue was never resolved. Or they had a few slow pays in the past because they lost their job temporarily. This is generally rare - Most of the time, the credit report is either clean as a whistle, or it's horrendous. Very few people fall in between.

Personally, I have little empathy for people who don't pay their bills and abuse the credit system in this country. Are their legit reasons for credit issues? Yes, absolutely. But most of the time, the issue is a character issue and a person has trashed their credit report because of their own character flaws.

As a lender, character is by far the most important criteria for a bank. Credit reports are simply historical records used to make a credit decision.