The United states Credit system is Broken

Most Americans irrespective of their credit score s have had to deal with the three major credit bureaus.  If it is not a breach of your private information on their servers, then they are reporting incorrect information about you or they are misrepresenting who you are as a credit worthy borrower by assigning you a low FICO score.   All three Credit Bureaus are private business, and yet their power and influence are impacting our lives and our ability conduct business with the control of a government agency.  How is this possible?

If you have been following the House Finance Committee in Washington DC, the major credit reporting companies have been on the hot seat from legislators and it is about time.   Early this year, the credit reporting companies faced a renewed scrutiny.  The top executives of the three bureaus had to defend their business models. This move was prompted by the biggest public breach in the history of credit reporting where Equifax was hacked, exposing data belonging to more than 143 million customers.  My question is why are they so late to the game?  These Credit Bureau have become so powerful and embedded in our economic system that I am not sure if congress can do any less than shutting them down.  How are the Credit bureaus any different than Facebook and its Libra currency initiative?  Congress is up in arms over Facebook creating a currency that could control commerce and the economies of sovereign nations including the United States and yet we have three major Credit Bureaus “privately held” who are doing the same them but with credit ratings.  Another example would be three major Bond Rating Companies who with one report could devastate a city, county, State or Country from being able to raise capital by issuing bonds.  No private business should have this kind of power.

Democrats and republicans in the congress seem to have a united front on this issue. On July 11th, the U.S House Committee on Financial Services passed a legislation to reform the credit reporting system, increase diversity, and strengthen housing protections. The committee held a markup of ten bills that would see the reformation of the broken credit reporting system.

But is the credit system really broken?

Yes. Unfortunately, the credit system in our country is broken. The current credit scoring system is broken as it doesn’t accurately reflect and assess the risks for different categories of people in different situations. I have always believed that the FICO score is discriminatory against minorities.  One is reason is because it was born out of an environment of hate and discrimination against African Americans, and it was an official government policy of discrimination from the highest levels of government to local banks and lenders.

Secondly, the playing field for access to credit, employment and especially homeownership has never been even with whites since the beginning and ending of slavery, the passing of the Civil Rights Act, the Fair Housing Act, and Equal Credit Opportunity Act.  Just recently every major bank has been sued for discrimination, redlining and fair lending violation. The problem still exists.  How can an entire community of people be held hostage by a bias computer model created by individuals who supported the discriminatory decisions made by banks and supported by the government.  These computer models that were designs reflect the thinking and the standards about credit at that time, just like very views held about race at that time with those who have had the benefit of white privileged an are creating the models.   Or are we to be naïve and believe that there was and still is no bias in the FICO Scoring models?

Let’s talk about the breach that happened in late 2017, it was reported that the attackers gained access to Equifax servers as early as may meaning that by the time we were getting a hold of the news, people’s personal data had already been circulating for months. That’s not the real threat because beyond that damage the breach revealed some deep absurdities in Equifax business model. Remember that the company was one of the central stores for people’s personal data, and normally, it is the place you’d go to check to make sure that you weren’t writing a mortgage to an imposter. Now that the imposters themselves have this data the same as everyone else, what happens then. Which raises the question, that I can’t quite figure out, if you can’t keep people’s data secure in the first place, why stockpile it?

What we must understand is that credit scores are more than just numbers for loans, credit card and mortgage applications.  It is far more sinister than that.  Most landlords and apartment owners rely on this data.  Employers are relying on this data before hiring you.  Health Care companies, rental car companies, membership to clubs and organizations.   It has become the new tool for discrimination.   There are so many meaningful things that rely on a credit score as a basis for the terms and even the decision someone is making about you,” John Ulzheimer, an expert on credit scores and credit scoring.

The fact is that we have been enslaved by these corporations and the bitter truth is that it is almost impossible to do anything major, like buying a home, without these overrated credit scores. While we continue to base our lives on the credit numbers, credit reports of about 1 in 5 people have an error of some kind according to a study by the Federal Trade Commission. This is not just about FICO, the problem cuts across every credit reporting company who have ganged together to compete with FICO and now cooperate with FICO.

Clearly, the credit reporting agency have an oligopoly and need to be broken up or shut down because it’s a violation of antitrust.  I don’t understand why anyone in the government is not looking this. The credit reporting system is just a private business providing a service to consumers and to businesses. However, over the years, they have grown to become an Oligopoly and should be broken up as to not have the influence over our lives that they do. The problem is deepening, however, there is light at the end of this tunnel. The members of the House Financial Services Committee are now determined to get to the root of the problem.  Will they succeed.  Unlikely.  The Bureaus are too powerful now and rich.  All you need to block anything from happening in congress is money.  All politicians are on take in someway or the other. They can’t elect with compromising something.  Maybe I am just jaded but that is how I feel about our current political environment.

Early this year, members from both the political divides grilled CEOs of the three major credit reporting companies calling for a change and accountability from these companies. Chairwoman Maxine Waters called the hearing after the breach of 2017 and to also discuss the proposed bills to reform the current credit system.

“The system is broken,” ranking member Patrick McHenry, R-N.C., said Tuesday. “While the credit scoring system provides us with a foundation that allows millions of Americans to access credit quickly and efficiently, the credit reporting system is in need of major repair.”

No matter what they tell us, one thing is out in the open that to this monopoly, we are just a commodity, which is an ideology that has further fortified these cartels. “This commodification of consumers and their personal data is the core reason why our nation’s consumer credit reporting system is broken,” Waters says.

The goal of every business is to commodify the consumer.  Let’s get real about living in a capitalistic society.  We need Government protection from Business who take their efforts to grow their business by commodifying the consumer.  It is governments job to keep them in check and break them up when they get too big and cocky or to shut them down and make credit reporting a division or agency of the Federal Government.

African American’s at one time where a commodity in this country.  The help grow this Economic Engine known as America and gave birth to the strongest country and nation in the world.  It took congressional action and Federal Law enforcement to change America, so that African American’s could be free and participate in the very economy they created.     African Americans are only 156 years out of slavery since the Emancipation Proclamation which was passed in 1863.  It is only been 150 years that African Americans could even make a claim to citizenship of the United States. Prior to 1869 they were considered chattel, someone’s personal property.  Not human beings.  It has only been 55 years since passing of the civil rights act in 1964.   51 years since the passing of the fair housing act in 1968. If it wasn’t for these laws and constitutional amendments I can’t imagine where we would be as a community.

It was Jim Crow laws, nationalism and racism and discriminatory practices that made it almost impossible African Americans to build wealth and to have access to credit.  The fair Isaac corporation and the FICO score model, Experian, Trans Union, and Equifax we’re all born out of this environment and their existence has had a disparate negative impact on minority’s because the playing field has never been level.  African American’s have existed and persevered on an uneven playing field and hostile environment that has tried everything possible to prevent them from building wealth and succeeding.  We are all now slaves to these credit company and we need to be set free.  They are controlling every aspect of our lives and they are just getting started.  We need the Federal Government to step in now! Representative Patrick McHenry said, “What I see here is an oligopoly,” he told executives. “I don’t see that vibrant competition which is needed for these agencies to actually help consumers.”

The Power Is Now strives to bring you the latest developments in real estate economics, mortgage lending, and the market. We are committed to making sure that you are updated with what’s happening around you and to be your resource acquisitions and sells.   We are partnered with great agents across the country and with First Bank to provide the products and programs that First Time Homebuyers need to buy a home or income property now because tomorrow it will be even more difficult. Go to and get started today.  The Power to buy is now!

Eric Lawrence Frazier MBA
Vice President and Mortgage Advisor of First Bank
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President and CEO of The Power Is Now Inc.
CalDRE 01143484

Works Cited

Brandom, Russell. “Our Entire Credit Bureau System Is Broken.” The Verge, The Verge, 8 Sept. 2017. Accessed 16 July 2019.

“Committee Passes Legislation to Reform the Credit Reporting System, Increase Diversity, and Strengthen Housing Protections.” Financial Services Committee, 11 July 2019. Accessed 16 July 2019.

Covert, Bryce. “America’s Credit System Is Broken.” Salon,, 3 Jan. 2013. Accessed 16 July 2019.

Leonhardt, Megan. “Democrats and Republicans in Congress Agree: The System That Determines Credit Scores Is ‘Broken.’” CNBC, CNBC, 27 Feb. 2019. Accessed 16 July 2019.

Schroeder, Pete. “Credit Reporting Agencies Face Pressure from Skeptical U.S. Congress.” U.S., Reuters, 27 Feb. 2019.



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