Re: The History of Credit
12-06-2011 01:30 PM
I'm not sure that you're understanding what my question is. My concern is that a lender will decide the interest rate on the debtor due to a low FICO score. A low FICO score, more times than not, inidcate a person who is struggling with finances. A debtor may get desparate and think that more credit will help them out of their situation. Once they do this, they are approved and charged a large interest rate, all the while they are paying a minimum payment that will never get them out of debt.
My question focuses on the potential for abuse by new lenders to charge high interest rates on drowning debtors who are still able to attain credit (because they pay their minimum payments). Payment history doesn't catch a person who pays the minimum payment and cannot afford more credit. Payment history simply shows someone who can pay a minimum payment. Stopping new credit can prevent large debt from accumulating.
Thanks for the quick response.
I understand completely what you are saying. But banks, credit card companies, auto lenders, mortgage lenders are all out to get money. The lower the score, the higher the interest, the more money they get. They aren't your best friend looking out for your own good.
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