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Frequent Contributor
snowangel
Posts: 291
Registered: ‎07-29-2011
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Re: College essay on interest rates

It's nice to research in advance, but you can't predict the rate you'll get, nor the credit limit.



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Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
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Re: College essay on interest rates


snowangel wrote:

It's nice to research in advance, but you can't predict the rate you'll get, nor the credit limit.


You can always predict, you may not be right.

 

Lots of cards, have a specific rate which does not depend on your score.   Your CL is the hard one to predict.

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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: College essay on interest rates


Duality240 wrote:

haulingthescoreup wrote:

Hi Duality, welcome to the forums!

 

It's possible (and very useful) to quote the post that you're replying to. When you hit "reply" to a specific post, and the text box opens up, you'll see a button above on the right that says "quote." Hit that, and the original post appears in your text box. Before you start to enter your reply, make sure that your cursor is out of the quoted area and back on the left-hand margin, either above or below the quote.

 

It sounds like you're getting some useful help, and so I'll only comment that most CCC's (credit card companies) use more than just a credit score of whatever type. They typically will also look at your internal history with that company --if you've ever "burned" them, for instance, and they'll look at your underlying credit report to see what created your score. For instance a 720 FICO score can mean someone with 6 years of history, one 30-day late four years ago, and very few balances reporting (= a good customer), or it can mean someone who had a 795 three days ago, and a collection just hit the report. :smileysurprised:

 

I realize that this is an assignment for an English class, not a finance class, but if only for your own future info, you should be aware of the above.  :smileywink:


Thank you for the welcome and the great tips! And yes, it definitely helps to have a better understanding of the topic I am covering.  I just wanted to make sure everyone understood that I am trying to impress upon an English professor and not a Finance professor.  I could probably fudge some of the facts on my essay without hurting my grade as long as I follow the proper formula for a persuasive essay.


OK, now I am completely depressed...

 

Sorry for revealing my 56-year-old old-fartness, but there's a lot to be said for doing your damnedest to meet the terms of the assignment, thereby learning how to write a persuasive essay, than to shine up any old thing for a grade. To hell with your grade; learn something new and kind of difficult. That's what college is for.

 

*wanders off to have a glass of warm milk*

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Valued Contributor
ptr2593
Posts: 1,486
Registered: ‎08-14-2011
0

I think it's comparable to spending hours making cheat sh...

[ Edited ]

haulingthescoreup wrote:

Duality240 wrote:

haulingthescoreup wrote:

Hi Duality, welcome to the forums!

 

It's possible (and very useful) to quote the post that you're replying to. When you hit "reply" to a specific post, and the text box opens up, you'll see a button above on the right that says "quote." Hit that, and the original post appears in your text box. Before you start to enter your reply, make sure that your cursor is out of the quoted area and back on the left-hand margin, either above or below the quote.

 

It sounds like you're getting some useful help, and so I'll only comment that most CCC's (credit card companies) use more than just a credit score of whatever type. They typically will also look at your internal history with that company --if you've ever "burned" them, for instance, and they'll look at your underlying credit report to see what created your score. For instance a 720 FICO score can mean someone with 6 years of history, one 30-day late four years ago, and very few balances reporting (= a good customer), or it can mean someone who had a 795 three days ago, and a collection just hit the report. :smileysurprised:

 

I realize that this is an assignment for an English class, not a finance class, but if only for your own future info, you should be aware of the above.  :smileywink:


Thank you for the welcome and the great tips! And yes, it definitely helps to have a better understanding of the topic I am covering.  I just wanted to make sure everyone understood that I am trying to impress upon an English professor and not a Finance professor.  I could probably fudge some of the facts on my essay without hurting my grade as long as I follow the proper formula for a persuasive essay.


OK, now I am completely depressed...

 

Sorry for revealing my 56-year-old old-fartness, but there's a lot to be said for doing your damnedest to meet the terms of the assignment, thereby learning how to write a persuasive essay, than to shine up any old thing for a grade. To hell with your grade; learn something new and kind of difficult. That's what college is for.

 

*wanders off to have a glass of warm milk*


I think it's comparable to spending hours making cheat sheets.  It's just easier to learn and write the truth than try to keep the made up facts in order.

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New Member
Duality240
Posts: 15
Registered: ‎09-03-2011
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Re: I'd like to help but I don't support the statement that &...

ptr2593,

 

You are correct, a persuasive essay should propose an alternative and that is one of the reasons why I have come to this forum.  I hope to gain enough knowledge through this forum and my other research avenues to propose an alternative to the current system.  If I am unable to argue for a change, I will be forced to revise my thesis statement and argue for the current system.  I am only in week two of this class and I do not have to submit my rough draft until week eight.  There is time for change but I would prefer to argue the point from the perspective of a consumer and not an executive of a credit card company.  Yes, it would be easier to argue from that perspective but I feel that I would learn more by choosing the hard road.

 

And, just because I am in an argumentative mood because I just spent almost eight hours composing a paper for the same class that led me to this forum:

 

1.  "Your credit score, at least somewhat, indicates how credit worthy and low-interest-deserving an individual is."  Bill Gates could have a crappy credit score, would you charge him extra because he was between accountants and a couple of million dollars worth of bills didn't get paid on time?

 

2.  "Yes, it sucks to not have a job and to have debt piling up, but, again, you still have a responsibility to repay your lender(s)."  Agreed, however, credit scores do not take your current job situation into account at all.  Let's assume that you just got a great job that pays $1,000,000 per year.  Will your credit score drastically change one month after you start your new job?

 

3.  "Also, to chime in on the possible comparison with racial profiling, you are not born into your credit score."  Au Contraire, I have known several people that discovered they were drowning in debt as soon as they reached adulthood because their irresponsible parents used their name and social security number to secure phone or electric service.  Also, credit card companies assume that you are a bad risk even if you are applying for credit for the very first time.  Your argument does not hold water on this one.

 

4.  "You earn your score (good or bad) based on your actions and as is the case for so many of us here you have the ability to change your score just by learning and improving your credit practices."  See above answer.  A person applying for credit for the first time in their life does not have a "middle of the spectrum" credit score.

 

5.  " However, there is transparency with interest rates and you know what you'll get based on your score/report"  I think transparency may be too strong of a word.  If any of the credit card offers I received in the mail on a daily basis told me that I would pay 9% interest for a credit score above 760, 10% interest for a score between 700 and 769, 12% for a score between 650 and 699 and I would be rejected for a score of 649 or lower based on the (insert the score that they are going to use to make this judgement here), I would sign up for that card in a New York minute.  All of the legal gobbledygook on the back of a credit card statement does not constitute transparency.

 

6.  "Lenders will flatout tell you why you didn't get the best rate."  I have had the finance officer at an auto dealership tell me why I didn't qualify for the 0% interest they were offering (after threatening to walk out on the sale) but the only thing a credit card company has ever done after denying me a line of credit (yes, it has happened and I'm not embarrassed to say it) was to send me a form letter explaining that I did not qualify based on my credit report and that I was not entitled to a free copy of said credit report, none of which was ever read by a human being at the credit card company I was applying to.

 

I am not even going to go into the racial profiling thing because, so far, no one seems to understand that I am not writing a paper on racial profiling.  I regret even mentioning it at this point as I feel it has detracted from the subject at hand.  I e-mailed my professor, explained where I planned to use that comparison, explained my logic and he agreed that it was inflammatory but accurate in the context that I plan to use it in.  

 

Not calling you out, you just happened to be the first post that I read when I logged on and I was in a foul mood.  Thanks for presenting me with the opportunity to vent and hopefully gain some more insight into the complicated world of finance! :smileyhappy:

New Member
Duality240
Posts: 15
Registered: ‎09-03-2011
0

Re: College essay on interest rates

tinuviel,

 

That is an excellent point and will certainly find a way into my essay.  This is exactly the type of response I was looking for when I signed up for this forum.  Keep 'em coming please and I will do my best to keep you all entertained for a little while.  You know what they say, if you can't dazzle them with brilliance, baffle them with b.s!

Established Contributor
stan_the_man
Posts: 855
Registered: ‎06-29-2010
0

Re: College essay on interest rates


Wolf3 wrote:

snowangel wrote:

Another point that you can add to your essays is that scores can  be manipulated - being added as an authorized user on someone else's account, having new accounts backdated (amex), pay for deletes, and such.

 

The other point to consider is that a credit score is just a snapshot of someone's credit at one point in time.  Since utilization is factored into a credit score, when a CC company reports can vary someone's score.  Did they make a large purchase 3 days before their statement cut but  paid it off a few days later?  Their score could be lower for the 30 day period while that balance reported.    

 

Credit inquiries also affect a person't score and tend to be looked at negatively, but what is someone is shopping around for credit cards like they would car loans?  


Might be a better topic.

 

Manipulation of Credit Score via utilization is constantly promoted on this site.  


I never saw it as manipulation. I always saw it as Fico rewarding you for both 1) doing what's best financially, and 2) knowing the rules.

Established Contributor
stan_the_man
Posts: 855
Registered: ‎06-29-2010
0

Re: College essay on interest rates


Duality240 wrote:

I'll answer your questions in order:

 

1.  I assume that MOST not ALL credit card companies use FICO.  It doesn't matter which score they use but they do use a score to determine interest rates.

2.  Must be a logical argument, this is a college essay.  I have room for opinion in the first paragraph only.

3.  I mentioned racial profiling because my first sentence (introduction) is supposed to grab the readers attention and like I said above, this is my only chance to stray from the facts.  And here is what I meant by it, racial profiling involves judging someones character based on one piece of information (race) and any institution that uses a credit score as it's sole determining factor for extending credit (as many credit card issuers do) is also only using one piece of information to judge someones character.


One of the reasons banks use credit scores is so that they can create a system where discrimination (in areas such as racial, ethnic, age, sexual orientation, etc.) does not exist. By removing subjective decisions from the underwriting process, banks ensure that their employees' prejudices neither prevent the bank from making money, nor cause the bank to incur legal liability.

Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
0

Re: College essay on interest rates


stan_the_man wrote:

Wolf3 wrote:

snowangel wrote:

Another point that you can add to your essays is that scores can  be manipulated - being added as an authorized user on someone else's account, having new accounts backdated (amex), pay for deletes, and such.

 

The other point to consider is that a credit score is just a snapshot of someone's credit at one point in time.  Since utilization is factored into a credit score, when a CC company reports can vary someone's score.  Did they make a large purchase 3 days before their statement cut but  paid it off a few days later?  Their score could be lower for the 30 day period while that balance reported.    

 

Credit inquiries also affect a person't score and tend to be looked at negatively, but what is someone is shopping around for credit cards like they would car loans?  


Might be a better topic.

 

Manipulation of Credit Score via utilization is constantly promoted on this site.  


I never saw it as manipulation. I always saw it as Fico rewarding you for both 1) doing what's best financially, and 2) knowing the rules.


It does become a reward for knowing the rules.    Saying it is doing whats best financially is a stretch. 

 

 

 

 

If I PIF every month (which I usually do) by the due date, my utilization is usually over 60% and varies a lot depending on the day of the month.  Let us assume that is an accurate FICO score for me.

 

If I take a month and pay early so I end up with a 9% utilization, I get a big boost in FICO score for that period.  I can use that period of time for applications.   Next month I go back to my normal practice and my score settles back to normal.  Since nothing substantial has changed to make me a better or worse credit risk, I have manipulated the FICO score to my advantage.

 

I do this, I advacate this.   It is not illegal.   I don't consider it unethical.   I do maintain it is a manipulation of the FICO system.

 

Now many people on this forum strongly recommend doing this every month.   I maintain it is a manipulation, albeit a constant one.

 

 

Frequent Contributor
snowangel
Posts: 291
Registered: ‎07-29-2011
0

Re: College essay on interest rates

Oops, wrong choice of wording.  You are correct!



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SL baddies fall off between Jan '13 - Oct '14

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