topic Re: Guilty until proven innocent. in General Credit Topics

Guilty until proven innocent.

Anonymous — Mon, 09 Dec 2013 05:52:25 GMT

Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usally have to be listed as an AU or get a secured card.

I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.

Re: Guilty until proven innocent.

Anonymous — Mon, 09 Dec 2013 07:09:14 GMT

I don't think it's lenders looking down at anyone. They are just trying to protect themselves by not taking a risk on someone who may not pay them back.

It does kind of suck but at least there are always alternatives so that you can build credit and show you deserve an unsecured CC.

Re: Guilty until proven innocent.

JediNeo — Mon, 09 Dec 2013 07:26:30 GMT

+1 I don't feel they looking down upon new applicants, it's just that they have nothing to base their judgements on. If I asked you to loan me $500 without any collateral would you do it?

Re: Guilty until proven innocent.

09Lexie — Mon, 09 Dec 2013 07:32:53 GMT

Credit lending is business and not personal. A computer is deciding approved or denied and it's not meant to look down or be demeaning. Obtaining and building good credit takes time.

My parents had very good credit, never late, no bks, liens etc and lived within their means. I would not expect, if I was starting out in the credit world to be given the same lines of credit and terms as they had on their CR's,

Like anything else, you appreciate the return better if you have to work for it; I'm sure that if everyone was given $20k CL's on their first card it would not resonate the same as earning that CL through building a solid credit profile.

Re: Guilty until proven innocent.

Gunnar419 — Mon, 09 Dec 2013 11:36:55 GMT

@Anonymous wrote:
Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usally have to be listed as an AU or get a secured card.

I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.

Do you think it's fair of you to demand that businesses (and ultimately their individual shareholders) give you both trust and money that you haven't earned yet?

AU status, secured cards and co-signed loans allow you to prove yourself. They are the CHANCE a beginner needs. Prove yourself first and you'll earn good credit opportunities.

Re: Guilty until proven innocent.

takeshi74 — Mon, 09 Dec 2013 14:01:57 GMT

@Anonymous wrote:
Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usally have to be listed as an AU or get a secured card.

I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.

How are you determining the "usual" case? Based on forum postings? My first cards were unsecured. I didn't have a secured card until I had a BK and had to rebuild.

As stated above, it has nothing to do with "looking down" on anyone. It's a business and creditors, understandably, want to minimize risk when extending credit. How do you propose that creditors minimize risk yet give those without credit a chance that is different from the current approach?

Re: Guilty until proven innocent.

killer_queen229 — Tue, 10 Dec 2013 01:35:10 GMT

@Anonymous wrote:
Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usally have to be listed as an AU or get a secured card.

I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.

I think it's fair. They want to make sure they lend to people who will pay them back and credit history shows that. Most people had to start out at the bottom and make their way to the top. I could not even get a store card until I had a secured card.

Re: Guilty until proven innocent.

FinStar — Tue, 10 Dec 2013 01:55:39 GMT

@killer_queen229 wrote:
@Anonymous wrote:
Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usally have to be listed as an AU or get a secured card.

I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.
I think it's fair. They want to make sure they lend to people who will pay them back and credit history shows that. Most people had to start out at the bottom and make their way to the top. I could not even get a store card until I had a secured card.

OP - while it can be a challenge to build or rebuild credit, it does and will take time so you can't take it personal. All lenders function on a business relationship, they're not "looking down or snubbing you". Take emotion out of the equation and you'll get a different perspective when paving your own way to building/rebuilding your credit.

Re: Guilty until proven innocent.

tld409 — Tue, 10 Dec 2013 17:40:54 GMT

@Anonymous wrote:
Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usally have to be listed as an AU or get a secured card.

I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.

I hear what you are saying. When you are starting out in college, they throw credit card apps. and approvals at you. If you don't start establishing credit then, it is very hard to start later with out taking the AU and/or secured route.

Unfortunately, I ruined my credit after college then had to rebuild. As I cleaned up my credit, it was not to hard for me to get approvals.

Re: Guilty until proven innocent.

p- — Tue, 10 Dec 2013 20:30:25 GMT

FixMyCredit1992 wrote: Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usally have to be listed as an AU or get a secured card... I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.

It's more accurately described as risky until proven trustworthy. But to be fair, people with no credit like college students, etc. have historically qualified for smaller limit cards that those with bad credit can't.

I would challenge you to put your money where your mouth is. Go to an online lender like proper.com and put up a hundred or a thousand of your own dollars. Be honest with yourself; are you more comfortable choosing borrowers that have a history of repayment, or new users with no history at all?

Go ahead and make the loans, and enjoy the returns. After a year of doing this with your own money, do you think you will feel the same way? If it's your money on the line, are you still willing to give new borrowers a chance?

Re: Guilty until proven innocent.

ksantangelo23 — Wed, 11 Dec 2013 02:00:23 GMT

p- wrote:

FixMyCredit1992 wrote: Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usually have to be listed as an AU or get a secured card... I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.

It's more accurately described as risky until proven trustworthy.

I think that is a good example. I have $175 invested on Prosper.com at $25 per borrower. Im netting about $7 per month for three years assuming and hoping no one Im invested in defaults, or is late on a payment. My money is literally in another persons' hands.

This is chump change, but it still puts things in perspective how delicate lending can be. If things continue to go well, Ill have no problem bumping my lending up to $750, $1,000 in the next year.

Seeing people with many delinquencies, sometimes as high as 20, or a relatively thin file (to my investing standards) scare me off immediatly. And im just investing $175.

Head over to LendingClub.com or Prosper.com (different sites, same business model - peer to peer lending) and make a free account to get access to other peoples credit reports. It's very interesting to put yourself in the shoes of a lender and deciding if their investment is safe.

https://www.lendingclub.com/browse/browse.action#

You can even ask the borrower questions like "What caused you to need this consolidation loan?", "What are your monthly housing payments?", "Why were you XX days late on XX account?" etc.

Re: Guilty until proven innocent.

FinStar — Wed, 11 Dec 2013 02:15:57 GMT

@ksantangelo23 wrote:
@p- wrote:
FixMyCredit1992 wrote: Why is it that people with no credit (not bad credit, just a thin file), have a very hard time getting credit. They usually have to be listed as an AU or get a secured card... I don't think it's fair. Everyone should be given a chance. It seems odd for the lenders to look down upon someone with no credit the same way they do someone with bad credit.
It's more accurately described as risky until proven trustworthy.

I would challenge you to put your money where your mouth is. Go to an online lender like proper.com and put up a hundred or a thousand of your own dollars. Be honest with yourself; are you more comfortable choosing borrowers that have a history of repayment, or new users with no history at all?

Go ahead and make the loans, and enjoy the returns. After a year of doing this with your own money, do you think you will feel the same way? If it's your money on the line, are you still willing to give new borrowers a chance?

I think that is a good example. I have $175 invested on Prosper.com at $25 per borrower. Im netting about $7 per month for three years assuming and hoping no one Im invested in defaults, or is late on a payment. My money is literally in another persons' hands.

This is chump change, but it still puts things in perspective how delicate lending can be. If things continue to go well, Ill have no problem bumping my lending up to $750, $1,000 in the next year.

Seeing people with many delinquencies, sometimes as high as 20, or a relatively thin file (to my investing standards) scare me off immediatly. And im just investing $175.

Head over to LendingClub.com or Prosper.com (different sites, same business model - peer to peer lending) and make a free account to get access to other peoples credit reports. It's very interesting to put yourself in the shoes of a lender and deciding if their investment is safe.

https://www.lendingclub.com/browse/browse.action#

You can even ask the borrower questions like "What caused you to need this consolidation loan?", "What are your monthly housing payments?", "Why were you XX days late on XX account?" etc.

Very good points. When you're on the lending side of things OP, you tend to gain a better perspective since your money is on the line.