The FICO Score Scam

<sup>Quick note before we start: This is a longer post than what I usually write. I’ve been digging into this for about four months, and along the way found a lot of data that genuinely surprised me and, honestly, changed how I think about the whole credit score system. If you’re here for the full breakdown, I’m glad you’re diving in.

If you’d rather skip straight to the practical stuff, you can jump ahead to the TL;DR and see what you can actually do.</sup>

I was scrolling social media one day when an Experian ad slid into my feed.

Usually I swipe past ads without a second thought, but this one was different. It was fast, flashy, and made a very specific promise:

“Sign up and you could boost your FICO score!”

Not “Pay your bills on time and your score will rise.”

Not “Manage your debt responsibly over years.”

No. Just… sign up for their “thing.”

I always thought FICO scores were supposed to reflect your actual borrowing and repayment history? Not whether you enrolled in a shiny membership program with one of the three big credit bureaus?

So I watched the whole ad. And it really did not sit right.

Here Experian was pitching “Boost,” their program that lets you link bank accounts so they can comb through your utility, phone, streaming, and rent payments. And then graciously decide whether you deserve a tiny score bump.

On the surface, it sounds helpful. Almost generous.

But in reality, the trade is simple. In exchange for this possible boost, you hand over more of your transaction data, consent to more terms, and authorize them to sell more pieces of your financial life to the highest bidder, so they get richer whether your score moves or not.

Wait? They can do that?

Yep.

Before anyone jumps into the comments. All of this is perfectly legal.

But you're going to see that sometimes "legal" and "right" are two very different things.

And that is exactly what makes the FICO ecosystem such a beautiful scam.

Wait… why do three private companies get to grade our lives?

Let’s do a quick catch up.

The “big three” credit bureaus are:

• Experian
• Equifax
• TransUnion

These are not government agencies. They are private, for-profit corporations that built their empires by collecting your financial data and selling access to it.

Sitting above all of them is Fair Isaac Corporation, the company behind the FICO score itself.

Fair, Isaac and Company was founded in 1956 by engineer Bill Fair and mathematician Earl Isaac. At the time, most lending decisions were made by human loan officers using gut instinct, personal bias, and wildly inconsistent rules. Fair and Isaac believed statistical models could predict credit risk more accurately and more consistently than people could. And they were right.

But for those models to work at national scale, the system needed a unique identifier. Something that could follow you across banks, jobs, lenders, and decades. What it grabbed instead was your Social Security number. A number that was never designed to identify you in private commerce, never meant to verify your identity, and never intended to anchor your financial life. It was built to track government benefits. That is it. But once banks, bureaus, and lenders adopted it as a universal ID, there was no putting the genie back in the bottle.

In 1989, Fair Isaac partnered with Equifax to launch the first consumer-facing FICO score. That moment standardized financial risk into a single number, tied it to your Social Security number, distributed it nationwide through the bureaus, and trained both lenders and the public to treat that number as financial truth.

Fast forward to now, and that one proprietary score is used in over 10 billion credit decisions every year by about 90 percent of U.S. lenders. And according to Barron’s, in 2023 alone, FICO pulled in around $920 million from scores and another $798 million from software.

More than half of that became operating profit.

Since its IPO, the stock is up roughly 172,000 percent.

Yeah. Percent.

So let’s translate that into plain language.

Your stress about “keeping your score high” is part of a business model.

And that business model is wildly profitable.

The uncomfortable truth is that, as adults, we are not really given a choice about participating in this system. You either play the game, or you make your life meaningfully harder on purpose. Harder to rent. Harder to buy. Harder to borrow. Harder to get things like insurance, jobs, and quality of life.

And once you are in, your participation does not just affect you. It shapes what your kids and even your grandkids will have access to (we'll come back to this later).

Because participation is effectively mandatory, the costs of that system are impossible to avoid.

Even though you rarely pay FICO directly, you absolutely pay for it. Through interest. Through fees. Through subscriptions. Through penalties attached to a number you never consented to create.

Is any of that automatically evil? No.

But pretending it is neutral, fair, or purely objective? That is the real fiction.

The paywall problem: your own data, sold back to you

By law, you are entitled to a free credit report from each bureau every year through AnnualCreditReport.com. That report lists your accounts, balances, and payment history.

Notice what that law does not guarantee:

1. Free access to your actual credit score.
2. A clear explanation of which score you are even looking at.
3. The right to see that score without being forced to surrender more personal data.

Because somewhere along the way, the bureaus learned they could turn “know your score” into a product.

Take TransUnion.

I opened their app to grab my TU score. Entered my info. Verified everything. And out popped my free annual credit report.

Great!

Except... it was conveniently missing the one thing I actually wanted.

My score.

After poking around for a few minutes, I learned the con: They were purposely omitting it.

I can only see my own TransUnion score if I sign up for one of their memberships.

Let that sink in.

I am not allowed to see the number created from my own data, the number that controls my interest rates, loan approvals, insurance pricing, and sometimes even employment, unless I pay the very company that built it from data I never consented to have stored, scored, packaged, and sold in the first place.

And this is where things cross from annoying to deeply sketchy...

You provide the raw material. Your borrowing history, your made and missed payments, your anxious little login at midnight when you check if your utilization finally improved.

The bureaus package that data and sell it to lenders.

The lenders use it to make decisions about your life.

And then the bureaus turn around and charge you to access the very score they already monetized from a product you provided to them for free.

Imagine your doctor billing your insurance company for access to your medical chart, selling anonymized insights to pharmaceutical companies… and then charging you a monthly fee just to find out whether your cholesterol is still high.

It's kinda the same thing. Deeply personal data you should always be able to access without walls.

Yes, you can absolutely get your credit reports for free. And yes, many banks will show you a version of your score for free too. But the industry has worked very hard to blur that line so you feel like you need yet another login, yet another app, and yet another fucking subscription just to keep your financial identity “in check.”

You are not paying for information.

You are paying to remove friction they intentionally built.

Wait. How many score versions are there anyway?

Here is the part that really messes with your head. There is not just one FICO score. There are dozens of them, built from different formulas and tailored to different situations like credit cards, auto loans, mortgages, personal loans, and even different lender preferences.

At the same time, you can have:

A FICO 8
A FICO 9
A FICO 10
A FICO 10T
A mortgage-specific FICO
An auto-specific FICO
A bankcard FICO

And more...

All different numbers.

All allegedly describing the same person.

So when an app proudly tells you, “Your score is 742,” the correct response should not be celebration yet. It should be, “Cool. Which one?”

Because the lender about to approve or deny your loan may be looking at a completely different version of you.

This is where the whiplash comes in. You check your score in one app and it looks great. You apply for a loan/mortgage/rental. And suddenly the lender says your score is thirty to fifty points lower. You did not get worse in five minutes. You just stepped into a different math problem.

And that’s the scammy part.

You are encouraged to obsess over what is presented as a single number that you do not control, cannot fully see, and that is not even consistent across the very system that judges you. You are told to “keep your score high” without anyone telling you which score, for which decision, on which day, using which formula.

It is like being graded by twelve different teachers who all use different rubrics, and none of them will show you the rubric.

But they will absolutely judge you by it.

This is also why all those “boost your score” tools feel so slippery. You might boost one version while another version shrugs, and you would never know the difference until it is too late.

So when people say, “Just work on your credit score,” what they really mean is, “Try to optimize a moving target you are not allowed to properly see.”

That's not personal finance clarity.

It's a guessing game dressed up as certainty.

The part nobody warns you about: paying off debt can hurt you

Here is the sneakiest trick in the whole system.

You finally do the responsible thing. You pay off a credit card. You close a loan. You zero out a balance that has been haunting you for years.

And then your credit score drops.

What the heck?

This is where people start to feel like they are losing their minds, because everything in your real financial life just got better. Less stress. Fewer bills. Less interest. More breathing room.

But the number that supposedly measures your “financial health” decides to sulk.

Here is why.

1. They like you better when you are using debt.
   
   A huge chunk of your FICO score comes from "credit utilization," which is just the percentage of your available credit that you are using.
   
   If you have one card with a $10,000 limit, and a $3,000 balance, your utilization is 30 percent. That is usually seen as “good.”
   
   Now imagine you pay that card off and decide to close it because you are done with that chapter of your life.
   
   Congrats. Your utilization just went from 30 percent to… whatever else is still on your report. And if that was your only revolving account, your utilization effectively explodes because your available credit just vanished.
   
   You became less risky in real life.
   
   You became more risky on paper.
   
   Because the model wants to see you using credit. Not avoiding it.
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2. Closing accounts shortens your financial “memory.”
   
   Another big slice of your score is based on the average age of your accounts.
   
   That old credit card you opened in college. The one you finally paid off and closed because you are tired of looking at it. That card was actively propping up your score with its long history.
   
   When you shut it down, your average account age dropped overnight.
   
   Same behavior. Same person. Lower score.
   
   Not because you did anything dangerous. But because the model lost a piece of your timeline.
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3. You get rewarded for juggling, not finishing.
   
   There is also something called credit mix. The system likes to see that you can handle credit cards, auto loans, student loans, mortgages…
   
   If you finally knock out your last installment loan and now only have one credit card left, your “mix” technically gets worse and your score drops.
   
   So the picture that gets rewarded is not:
   
   “This person finished what they started and cleaned up their debts.”
   
   It is:
   
   “This person is successfully juggling multiple forms of debt at once.”
   
   That is a very specific definition of success.
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4. And the emotional whiplash is the point.
   
   This is the part that really messes with people psychologically.
   
   You do the right thing. The system slaps your wrist. You start second-guessing yourself. Maybe you should not have closed that account. Maybe you should keep a small balance. Maybe you should open another card just to “diversify.”
   
   And just like that, you are back in the maze.
   
   Not because you need more debt—because the score trained you to fear what happens when you escape it too cleanly.

“Boosts,” memberships, and the data grab

Back to Experian Boost.

On paper, it is marketed as a way to help people with thin credit files get rewarded for the bills they already pay. You connect your bank account, Experian scans it for eligible payments, like internet, mobile phone services, and even Netflix—and some people really do see a small bump in their Experian-based score.

Here is the first problem. It only affects one specific version of one bureau’s score.

The lender who actually approves your mortgage is probably not using that particular Experian score. Many use different versions of FICO or VantageScore. So you might be optimizing for a number that the decision maker never sees.

You feel better.

The bank remains unimpressed.

But the deeper problem is more subtle, and should make your skin crawl a little.

They are not just measuring your credit behavior anymore. They are sneakily expanding what counts as score-worthy credit behavior. Netflix. Spotify. Other subscriptions.

Why?

Not because these suddenly became better predictors of risk. But because they create a new pipeline to harvest your data, pull transaction-level items straight out of your bank account, and sell it to the highest bidder.

They are using you to make more money.

Then they dress it up as benevolence.

If they mess up, your life takes the hit

The next layer is accuracy.

Credit bureaus love to position themselves as neutral record keepers. Impartial referees. Silent observers of your financial life.

Their track record tells a very different story.

According to Reuters, in 2025, the Consumer Financial Protection Bureau (CFPB) sued Experian for running what it called “sham investigations” into consumer credit disputes. According to the CFPB, Experian failed to properly investigate errors, allowed incorrect information to reappear after being removed, and directly harmed consumers in the process.

In that same enforcement wave, the CFPB also ordered Equifax to pay $15 million for failing to properly investigate disputes and resolve inaccurate information.

Earlier examinations found that one or more of the major bureaus were not even properly reporting complaint outcomes to the CFPB and had to change their internal policies as a result.

So when something is wrong on your report, fixing it can feel less like a process and more like screaming into a void.

Meanwhile, real life keeps moving.

Your interest rates go up.

Your loan applications get denied.

Your car insurance might cost more.

And you end up paying for their mistakes while they keep collecting fees.

Then, right on cue, the vultures arrive...

According to Investopedia, the CFPB is currently distributing $1.8 billion in redress after a massive credit repair scheme. Companies like Lexington Law were found to have charged illegal fees and used deceptive marketing to sell “credit repair” services to people who were already overwhelmed, already stressed, and already behind.

So the full model starts to look like this:

A for-profit system creates opaque scores.

Those scores are hard to understand and even harder to fix when they are wrong.

And when they are wrong, the process to correct them is designed to be exhausting.

So entire industries pop up to “help” you repair the so-called "damage"… for a price.

It's become a monetization of your anxiety.

What this really reveals

This is not a system built to celebrate freedom from debt. It is a system built to keep you IN debt and measure how predictably you use it.

Because predictable borrowers generate interest, generate fees, generate transaction data, feed risk models, and ultimately generate profit. Debt-free people generate silence.

And silence is not very monetizable.

So when people say, “The FICO system encourages responsible borrowing,” what they should say is that it encourages continuous borrowing without visible catastrophe.

Which is a very different goal.

Here are truths they will never put in an ad on social media.

You can be financially healthier and still look worse to the model.
You can owe less money and still be labeled “riskier.”
You can win at real life and lose points in the game.

If that feels backwards, good. You are paying attention.

Because a system that punishes people for closing the door behind them and bettering their life is not neutral. It has preferences.

And those preferences are very, very profitable.

How FICO bakes in racial inequality

I'd also like to touch on part that should make your stomach drop.

Credit scores were not created yesterday. They sit on top of decades of housing discrimination, wage gaps, redlining, medical debt, employment bias, and unequal access to banking. And then they pretend all of that history never happened.

On paper, the system is “race blind.”

In reality, it is race remembered in math.

In 2021, the National Consumer Law Center found the median credit score for Black consumers was about 639, nearly 100 points lower than the median score for white consumers at 730. Latino consumers fell in between. Black and Latino households are also far more likely to be “credit invisible” or have files too thin to score at all, meaning millions of people cannot even enter the system that judges them.

This is not because they fail to pay bills. It is because the credit system only recognizes certain kinds of financial life as real. Decades of redlining, exclusion from mainstream banking, reliance on cash or debit, informal family lending, and rent and utility payments that go unreported all combine to leave responsible households effectively unseen by the scoring model.

And when you zoom in on mortgages, the picture gets bleaker. Even after controlling for income, debt, and loan size, Black applicants have been found to be more than twice as likely to be denied as white applicants. The gatekeeping tool that keeps showing up in those denials?

Credit scores.

So why does this keep happening if the formula never asks your race? Because the formula is built on variables that are already shaped by race. What the model actually rewards is access to prime lending instead of predatory subprime products, stable employment in systems that historically favored white workers, neighborhoods that were never redlined, generational access to banking and credit, and freedom from surprise medical debt.

If your grandparents were locked out of safe home loans, your parents were pushed into predatory interest rates, and you grew up in neighborhoods saturated with high-fee financial products, the model does not treat those outcomes as historical consequences.

It treats them as your personal risk profile.

Medical debt alone is a perfect example. Communities of color carry disproportionately high medical debt due to unequal access to care, insurance gaps, and billing abuse. That debt hits your credit. Your credit hits your interest rates. Your interest rates hit your ability to build wealth. And the cycle tightens.

And it does not stop at loans. According to the Consumer Federation of America, the Federal Trade Commission, and a 2023 study by the Consumer Federation of America out of New Mexico, there is clear evidence that “insurance scores” built from credit data carry racially skewed outcomes. That New Mexico study found that race was the single most predictive factor in insurance scoring and premiums, even though race itself was never explicitly used.

Which means people are often paying more not purely because of their driving behavior. But because of where they live, what debt touched their file, and which systems surrounded them growing up.

So when someone says, “Your FICO is low, therefore you are risky,” it might be true. It might reflect your behavior.

But it also might not. It might reflect your circumstances. It might even reflect your family’s past that has nothing to do with who you are.

Because, very often, that history is showing up in the math.

And that is not a neutral measurement like it claims to be.

Medical debt and the illusion of objectivity

Speaking of medical debt, here is another example of how arbitrary this system can be.

The CFPB recently tried to implement a rule that would remove most medical debt from credit reports. The reasoning was simple. Medical bills are a terrible predictor of whether someone will repay a loan, and they disproportionately drag down scores in communities of color.

A federal judge blocked that rule.

That single decision meant that roughly $49 billion in medical debt stayed on credit reports, and about 15 million people lost out on an average 20-point score increase they would have otherwise seen.

Same people.

Same behavior.

Different rules.

Different scores.

If a single courtroom ruling can move millions of scores by 20 points overnight, how “objective” is this number really?

My broken TransUnion app and the security question

Now layer in the tech.

I'm told these companies are responsible for some of the most sensitive data in my life. Not just my income and balances, but my full financial identity. The map to my house. The key to my credit. The blueprint for anyone who might try to become me.

Then I log into the TransUnion app and watch it glitch, crash, and spin endlessly while trying to show me my own report or score.

I'm a software engineer by trade. I know what it takes to build systems that are secure, stable, and resilient at scale. Seeing these issues in the TU app does not instill confidence.

Because I cannot help but wonder. If these bureaus' public-facing tools feel this fragile, what does that say about the system holding everything together behind the scenes?

This industry already has a documented history of massive data breaches, where millions of identities were exposed. The damage from that is not abstract. It is identity theft. Fraudulent accounts. Years of cleanup. Borrowed money you never touched. Credit destroyed before you even know what happened.

And what is the response when that happens?

“Here is a year of free monitoring.”
“Please create another login.”
“Please accept another set of terms.”

The same companies that allowed the breach take a slap on the wrist and then get a fresh opportunity to monetize your fear of the next one.

There is no accountability.

And that is the part that should bother you.

Because these companies did not stumble into holding your data. They built entire business models around it. They profit from it. They sell it. They score it. They gate your life with it.

So where is the moral responsibility that should come with that power? Where are the safeguards and the real accountability? And where is the willingness to pay the cost needed to actually protecting what they collect?

I guarantee you, they do not want to pay that cost.

Which is why this entire arrangement feels backwards.

They hold the keys.

They make the money.

They get breached.

And somehow you are the one left cleaning up the wreckage of their failure.

So is FICO a scam?

Legally, calling something a “scam” implies outright fraud. So, to avoid receiving a spicy cease-and-desist letter from a very well-funded legal team, I have to say “no.”

At least legally.

But in the United States, it bewilders me how often “legal” and “scam” are blurred together.

It sure as shit feels like a scam.

Because this is about how the system behaves in practice:

1) A for-profit scoring system, owned by a private company, becomes a de facto gatekeeper for housing, jobs, cars, and insurance.

2) The raw material for that system is your life. Your payment history. Your mistakes. Your emergencies.

3) You are required to hand over that raw material just to function in modern society.

4) You do not have free, unrestricted, neutral access to the data created from it.

5) The scoring rules built from that data are opaque, changeable, and influenced by corporate and political decisions.

6) You have to jump through hoops to see and fix errors, even when the bureaus are repeatedly caught mishandling them.

7) Racial and economic inequalities get converted into “risk scores” that reinforce who gets approved and who gets locked out.

8) And then the same ecosystem turns around and sells you subscriptions, credit monitoring, credit repair, and “boosts” to help you survive inside the maze it built.

That is not a neutral public utility.

That is a business that profits from confusion, pressure, and fear.

Call that whatever you want.

What you can actually do

You cannot personally dismantle FICO this afternoon. Sadly.

You can, however, take some power back.

1. Get your reports, not just your score.
   
   Use AnnualCreditReport.com to pull your free reports from all three bureaus. Look for accounts you do not recognize, incorrect late payments, duplicate collections. Dispute what is wrong, even if the process feels annoying and slow. That is the game. You still have to play it.
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2. Stop paying for mystery points.
   
   Before you hand over money (or your data) for a “credit monitoring” membership or “boost” product, ask:
   
   Can I see a similar score free through my bank or card?
   
   Is this the type of score lenders in my situation actually use?
   
   Am I paying mostly for pretty dashboards?
   
   If the answer is “I do not really know,” start there.
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3. Do not confuse “score optimization” with what is actually good for you.
   
   The system often rewards you for carrying debt, juggling balances, and keeping accounts open longer than may be healthy for your real life. That does not mean more debt is good debt. It just means the model prefers predictable borrowers over free ones.
   
   You are allowed to make decisions that improve your actual finances even if the score throws a small tantrum about it for a while.
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4. Remember your score is not your worth.
   
   That three-digit number is a statistical risk model built on messy, incomplete data. It is not a moral grade. It is not a character judgment. And it is definitely not the full story of why you are where you are financially.
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5. Freeze your credit if you are not actively applying for anything.
   
   A credit freeze is legally free and prevents new accounts from being opened in your name without your direct authorization.
   
   You have to do it separately with all three bureaus: Experian, Equifax, and TransUnion. You can go directly to each of their websites and search “credit freeze,” or call them by phone to place it. Once your credit is frozen, no new accounts can be opened in your name without your explicit permission. It does not fix the system. But it does dramatically reduce how much damage someone else can do with your identity while the system keeps fumbling data.
   
   PLEASE keep in mind what I said. A CREDIT FREEZE IS LEGALLY FREE. DO NOT let anyone charge you for it. Experian, in particular, aggressively pushes a paid product called CreditLock that is designed to look and sound like a security freeze, even though it is not the same thing. CreditLock is a subscription. A real security freeze is a legal right. If you see a price attached to it, you are being redirected on purpose.
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6. Treat “score drops” with a long memory, not panic.
   
   If your score dips because you paid off a loan, closed an account, or simplified your life, that does not mean you broke something. It means the model reacted to a structural change. Give it months, not days, before assuming you made a mistake.
   ‍
7. Separate emergency survival from score strategy.
   
   If you need to carry a balance to get through a medical bill, a layoff, or a family difficulty, that is not a personal failure. That is real life colliding with a fragile scoring model. Take care of the difficulty first. You can clean up the math later.
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8. Talk about this stuff out loud.
   
   Credit scores thrive in silence and shame. The more isolated people feel about debt, mistakes, and fear, the easier they are to sell subscriptions and “fixes” to. Just naming what is happening removes some of the leverage.
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9. And finally. Pay attention to reforms.
   
   There are real fights happening right now over: removing or limiting medical debt in scoring, improving the dispute process, and reducing the power of data brokers.
   
   You do not need to become a policy expert. But when you see headlines about the CFPB taking on the bureaus , that is not abstract politics. That is your future interest rate.

Why I wrote this

In a world where everything seems to be sliding toward corporate greed, monetization, and getting less for more, this system has been overdue for a call-out.

And yes, this is also personal.

I spent years dragging myself back from a low credit score after some bad student loan decisions I made in college. The same system that encouraged me to take on massive debt is one I am still paying into today. That number followed me into apartments, interest rates, insurance, and decisions that had nothing to do with what kind of person I actually was. It became a permanent shadow attached to choices I made before I even understood the rules of the game.

That is why I do not want people to just shrug and accept “That is how it works.”

Because “how it works” right now is confusing by design, wildly profitable for a tiny set of companies, and punishing for people who are already on the back foot. This ecosystem is not built to protect you. It is built to extract from you. And I learned that the hard way.

At eighteen, nobody sat me down and explained interest, compounding, long-term drag, or how hard it is to unwind once you are inside it. The messaging was simple and comforting. Taking on student loan debt is normal. This is how you become an adult. This is what everyone does. Don't worry, you'll get a job right out of college and pay it all off quickly... or not. I didn't even need a FICO score for some of my student loans. Meanwhile, lenders, servicers, and scorekeepers all had a financial interest in keeping that pipeline flowing. It is like a drug dealer who makes the first step effortless, fully aware that the real money comes once you are already in.

Most Americans never get a real education on how this system actually works. They just get welcomed into it. And once you are in, the consequences last a lot longer than the sales pitch.

So if this article makes you pause the next time a credit app nudges you to sign up for their membership, a TikTok ad promises to “boost” your FICO score if you hand over more data, or an effortless loan offer shows up that suddenly feels a little too easy, that pause is exactly the reaction I hoped for. That hesitation is not paranoia. It is understanding.

You are just finally seeing the strings.

And if this hit close to home, send it to the friend who is stressing over their credit score more than their actual budget. Not to scare them. But to help them see the game more clearly than most of us were ever taught.

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