stef37 wrote:I'd like to think I am a responsible person, but something like this *could* cause me to want to carry a balance. I think I will stay away from accounts such as this, as I am trying to re-establish credit. I need all the help I can get.
Without getting into the specifics of any particular card that may or may not be on the market today, I would be interested in know what others would think of a hypothetical credit that did not report to CRAs. I'm thinking of a revolving card with a traditional credit line, not a pre-paid card, secured card, or debit card.
Some thoughts that come to mind:
1. Would this be a sustainable situation for the underwriter? Why wouldn't it be? These types of cards have existed for decades. What would the underwriter do when people start to default on the card to mitigate risk? Report the defaulted credit lines and pursue collections, as they have done for decades.
2. If such a card existed, would it attract a higher portion of riskier borrowers and would that require a higher APR to create a sustainable return? Not necessarily. Just because a card doesn't report to the bureaus doesn't mean they hand them out like candy. They still have standards that have to be met, hence the hard inquiry.
3. Would consumers like the idea? Absolutely. Would they see it as freedom to spend without prying eyes? Or would they see it as being deprived of the score rewards of responsible payment? Some would. Some would just treat it like any other card.
4. Would certain types of benefits, such as extended product warranties, be harder to offer with a non-reporting card? Why would they be? Amex offers extended warranties and they don't always report (my corporate card never reported).
5. Would non-reporting encourage bad credit behavior? Nope. Would people use a non-reporting credit card (NRCC) more irresponsibly if they thought they could 'get away it'? Not if they have any common sense. I'm pretty sure that if you default on any card that pulls credit before issuing, they will definitely report defaulted accounts. Why else would they pull your credit to begin with?
I'm sure there are more issues, but this is what has popped into my head in a Sunday morning, pre-coffee state.