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Old 01-12-2018, 07:32 PM
 
Location: the Permian Basin
4,093 posts, read 2,819,540 times
Reputation: 5665

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Quote:
Originally Posted by hitpausebutton2 View Post
Reason i have low history is because i paid things off early to keep from having to pay high interest.
If you can afford to pay things off early, who not save up and pay cash next time? That way you'll be paying 0% interest.


Quote:
Originally Posted by hitpausebutton2 View Post
To me having a flat rate on loans only makes more sense to those that pay on time, pay off early and loaner still makes money.
They make less money when you pay the loan off early. Maybe that's why they're keeping your interest rates high, to offset the fact that you'll be making fewer payments (and thus, paying less in total interest) than what is stated in the loan documentation.

Have you ever heard of amortization? If not, you should familiarize yourself with it.

 
Old 01-12-2018, 11:00 PM
 
1,925 posts, read 1,325,614 times
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Quote:
Originally Posted by hitpausebutton2 View Post
So why not charge them a higher rate on interest since they have the ability to pay it back. So you bank on higher risk folks vs not making any interest on "good score"?
Ask the government student loan loan sharks why they do it the same way. Did you ever think about that?

So. Answer your own question. Why don't lenders lend that way? Why not ask yourself any assortment of pointless questions. Why doesn't everybody just rob banks for a living. Why doesn't the government just print money and give everybody a million dollars? All kinds of "what if" questions.

So, sweeping aside the absurdity, why don't you ask yourself why a person with perfect credit would pay me 12 percent interest on a loan when the guy standing next to me would offer them the same loan at 8 percent. And the guy standing him would do it for 4 percent (because he's desperate for business - but not so desperate he would loan it at 4 percent to a guy with bad credit.

Just answer your own question. I mean, it's obvious you understand the world doesn't work this way. It's just that you don't want it to operate that way. But the bottom line is.... the bad risks pay more money so lenders can offset the losses they incur when lending to them.

But dogs don't eat with silverware... and lenders don't lend money to high risk borrowers without building in some safeguards.


You also need to consider the fact that freedom includes the right of two individuals to make a contract with one another in a way they see fit. Why do you want to interfere in that?
 
Old 01-12-2018, 11:31 PM
 
16,484 posts, read 17,501,756 times
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Quote:
Originally Posted by hitpausebutton2 View Post
So seems were all judge by a score system and the interest rate is base on that. With that being said, what is the purpose of jacking up a interest rate on somebody vs just having a flat bottom rate for everybody? Pro and con..
So you’re saying that regardless of someone’s history of payments we should all pay the same rate? Lol ok
 
Old 01-12-2018, 11:53 PM
 
1,760 posts, read 580,610 times
Reputation: 1786
The government shouldnt be fixing the price of money to begin with. It creates more problems.
 
Old 01-13-2018, 01:30 AM
 
Location: Anchorage
760 posts, read 1,421,472 times
Reputation: 724
Quote:
Originally Posted by hitpausebutton2 View Post
Biggest hurt is history...
Yes, history length was also my problem, as I started out a bit later than most - but it is a problem that can potentially solve itself over time! That just means your latest credit account is not, say, 10 years old or more. the older they are, the better!

So, even if you don't need a credit card - DON'T close it, especially the oldest one!! They calculate the average account age into the credit score. So, if you close old accounts and keep starting new ones (only to "pay them off early"), that keeps lowering the average age of your accounts, thus lowering the score.

Quote:
Originally Posted by Aredhel View Post
Don't you understand that if you pay off the credit card charges each month on or before the statement due date, you pay no interest at all?
I agree.
Don't worry about the rate %, as long as you are paying off ALL of your balance every month, whatever you spent during that time frame.
That way, you pay NO interest, essentially using your credit card as cash - yet still get to show record of timely payments AND your history is growing older! And earn points

Quote:
Originally Posted by hitpausebutton2 View Post
They all said they want me to get a $500 CC and put 5% on it and pay the bill each month. This will put history on the report and a low CC ratio. Do this for 3+ years to get any benefits of it. umm NO!
This is EXACTLY what one needs to do, to improve their credit score! Don't know why you refused; maybe they just did not explain well... Anyway, having researched ALL the possible ways to raise my credit score, that precisely is the best thing you can do!!
Just don't ever charge more than 50% of your credit limit (even if you still pay it all off), and better yet - never more than 30%... If you think you might at some point need a bigger loan, request credit increase every once in a while: that way, it's there for you if you ever need it.

Look: in the very beginning, I actually applied for a car loan for the sole purpose of starting my credit history! (Because I had a goal of buying a house and wanted to get there as fast as I possibly could, so I researched everything that makes a positive impact and then tracked the changes continuously)... I could have bought a used car for cash, but I got a car loan, anyway, to diversify my credit accounts (best to have both revolving and installment accounts - which maybe is something you are missing?) Anyway, I opened one and also paid early - and even though it is not ideal, it still helped a lot to have an installment account added to my history!

As far as the very first account - credit card - I was more than willing to open a secure credit card first and put even $5,000 of my own money into that special account that "secures" my credit card, just so they'll open one but will start out with more than $500 limit! Nothing scary about that. Eventually, you WILL need a good credit history - whether to buy a car or a house - and it's worth working toward that goal!

Quote:
Originally Posted by Aredhel View Post
Don't you understand that if you pay off the credit card charges each month on or before the statement due date, you pay no interest at all?
Exactly. Don't worry about the rate %, as long as you are paying off ALL of your balance every month, whatever you spend during that time frame. That way, you pay NO interest, yet still show record of timely payments PLUS your history is growing older! And earn points
 
Old 01-13-2018, 01:34 AM
 
Location: Anchorage
760 posts, read 1,421,472 times
Reputation: 724
If you set up account with a score tracker website, like https://www.selectidtheftprotection.com/, etc., you can see exactly how your behavior & accounts affect your score, as well as run some hypothetical scenarios to see the outcomes before you do something.

To me, it was worth a small monthly fee (as I said, I had a goal to buy a house as soon as my credit lets me!)
 
Old 01-13-2018, 07:04 AM
 
Location: annandale, va & slidell, la
6,376 posts, read 2,581,128 times
Reputation: 5372
Quote:
Originally Posted by hitpausebutton2 View Post
So seems were all judge by a score system and the interest rate is base on that. With that being said, what is the purpose of jacking up a interest rate on somebody vs just having a flat bottom rate for everybody? Pro and con..
I'm always amazed at how sheltered some are about the basics. Interest rates obviously vary depending on the worthiness of the borrower.
Dreks pay more because well, they are dreks.
 
Old 01-13-2018, 07:07 AM
 
64,532 posts, read 66,075,955 times
Reputation: 42978
but i bet these people who have such a poor education in important things like their financial well being know more about sports statistics , or their car or refrigerator .
 
Old 01-13-2018, 07:51 AM
 
16,484 posts, read 17,501,756 times
Reputation: 23521
The same reason not everyone has the same loan rate is the same reason I don’t rent to high risk people who have bad credit or low income.

It’s called a risk and I’m more willing to give a better deal with a guy who has income and good credit than a guy who doesn’t. Because with the guy who doesn’t I’m akways going to wonder what the excuse is when I won’t get paid on time or at all.
 
Old 01-13-2018, 08:01 AM
 
64,532 posts, read 66,075,955 times
Reputation: 42978
no credit history can be just as bad . no answer is no answer .

you want to do all you can to protect and build that score . so much hinges on it.

study after study shows there is a link between how you treat your finances and who you are as a person .

no one knows anyone today .all you may be judged by is your background check ,your credit report and your drug testing .

it does not mean someone who scores well is better , but it does mean at least they made it this far and demonstrated good qualities .

a lot of the unemployed today are unemployed because by today's standards they are unemployable for anything but the lowest end jobs . they can't get through the vetting to even have their work skills come up .
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