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Thread: credit score

  1. #21
    Quote Originally Posted by rdf View Post
    Past history. Plus although I use CCs sparingly, I still use them on occasion. The credit bureaus have plenty of info to judge my worthiness.
    Statistically speaking, the more time that passes, the less relevant that becomes, and that's reflected in some of the credit scoring models.
    Daniel

  2. #22
    Quote Originally Posted by willingtocope View Post
    And, there is another misconception. The credit grantors are not interested in whether or not they'll get their money back...they're interested in "return on investment". They'll gladly let you keep the $1,000 they originally loaned to you, as long as you pay them 10-24% you agreed to give them every year. That is what the credit scoring system measures...what is the likelyhood that you'll get suckered into the minimum payment trap and give them a cash flow that will extend for 23 years, and give them back their original $1,000 many times over.
    To be specific, I said "make good on your obligations" which includes both principal and interest payments.

    And yes, people that don't have enough money to pay off their balances every month, yet, are affluent and responsible enough to pay their minimum debt obligations (most of the time) are an important and profitable part of consumer credit card issuer's portfolio. I'm not sure why you keep referring to these people as "suckers." Credit card issuers offer a valuable service, enabling people to make purchases on a payment plan that they would otherwise be unable to afford.
    Daniel

  3. #23
    i disagree w/willing. i have had a credit score far into the excellent range for yrs and i have never come close to making min payments (mine are much higher) and my balance is very small. i dunno where your info comes from. i have info from my cpa regarding what affects credit.

  4. #24
    Senior Member willingtocope's Avatar
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    Quote Originally Posted by cass View Post
    i disagree w/willing. i have had a credit score far into the excellent range for yrs and i have never come close to making min payments (mine are much higher) and my balance is very small. i dunno where your info comes from. i have info from my cpa regarding what affects credit.
    I'm sorry. This is a difficult subject to discuss, because there is so much counter-intuitive half truths that conflicts with "common" knowledge, even knowledge that comes from professionals like your CPA.

    The biggest half-truth is that the higher your score, the more likely you are to be approved for credit. One half of that truth is that "perfect" credit...a FICO Consumer Score of 850...will indeed get you approved for prime credit cards with reasonably low interest rates.

    The other half of the truth is that MOST creditor grantors would prefer customers with less than perfect credit. The "sweet" spot is in the 650 to 720 range. Those scores predict that in addition to getting their original loan principal back (eventually), the creditor can count on collecting interest for many years and maybe even occasional late or over limit fees.

    In fact, there are some credit card companies whose business model is built around debtors with scores in the 600 - 650 range. Those debtors will certainly fall in the minimum payment trap, and will certainly be late or over limit.

    If the creditor makes 24% per year on the 600-650 range, they can factor in the cost of the people who default, and still make huge profits. This is particularly true if the account has some "age" to it...meaning the debtor has paid enough over 3 or 5 years to actually pay back the principle, and is now working on the interest.
    Last edited by willingtocope; 01-08-2012 at 07:39 PM.

  5. #25
    Senior Member wtf's Avatar
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    Quote Originally Posted by willingtocope View Post
    I'm sorry. This is a difficult subject to discuss, because there is so much counter-intuitive half truths that conflicts with "common" knowledge, even knowledge that comes from professionals like your CPA.

    The biggest half-truth is that the higher your score, the more likely you are to be approved for credit. One half of that truth is that "perfect" credit...a FICO Consumer Score of 850...will indeed get you approved for prime credit cards with reasonably low interest rates.

    The other half of the truth is that MOST creditor grantors would prefer customers with less than perfect credit. The "sweet" spot is in the 650 to 720 range. Those scores predict that in addition to getting their original loan principal back (eventually), the creditor can count on collecting interest for many years and maybe even occasional late or over limit fees.

    In fact, there are some credit card companies whose business model is built around debtors with scores in the 600 - 650 range. Those debtors will certainly fall in the minimum payment trap, and will certainly be late or over limit.

    If the creditor makes 24% per year on the 600-650 range, they can factor in the cost of the people who default, and still make huge profits. This is particularly true if the account has some "age" to it...meaning the debtor has paid enough over 3 or 5 years to actually pay back the principle, and is now working on the interest.
    Yeah, you're right, I think I read on yahoo or msn what you're saying. I don't have stellar credit I teeter back and forth 695-705. I was just wondering if I close these 4 accounts will I drop down to low 600's.

  6. #26
    Senior Member willingtocope's Avatar
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    Quote Originally Posted by wtf View Post
    ...if I close these 4 accounts will I drop down to low 600's.
    The sucker score may drop...10-15 points. Mortgage score, new car score, etc will probably rise 20-30 points.

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