Bill Major Loss for Banking Industry



boo hoo hooo hoo

Don't we all feel so sorry for Bank of America, Chase Financial, CiTi Group, and RBC Centura

Quote :

" The credit card rules would take effect in February. The bill is moderately tougher on banks and card issuers than are new Federal Reserve rules set to take effect July 2010. The legislation makes it harder for people under age 21 to get credit cards. It would also ban rate hikes unless a consumer is more than 60 days late -- and then restore the previous rate after six months if minimum payments are made. "Over the past three years as I have labored on this bill, the need to stop credit card abuses has become ever more apparent with every passing billing cycle," said th The bill marks a major loss for the banking industry. "

...

Quote :

" credit crisis and force banks to drop some risky credit card holders"

These people probably should not have a credit card anyway than.

Quote :

"In recent months, credit card companies have been raising fees and interest rates. From November 2008 to February 2009, rates increased from an average to 13.08% from 12.02%, according to a Federal Reserve Board report. "

Quote :

"The House voted 361-64 in favor and also approved by 279-147 an unrelated measure allowing people to carry guns into national parks. Senate passed the credit card bill, along with the unrelated gun measure, by a 90-5 vote on Tuesday. "

I am seriously glad people were able to put the partisan bickering away for long enough to pass a much needed legislation for the good of the American People not just for their lobbyists. They even passed some good gun legislation as i'm sure banning CC in our many national parks surely stopped members of the drug cartels and other criminals .

http://money.cnn.com/2009/05/20/news/economy/credit_cards/index.htm?postversion=2009052014

[Edited on May 20, 2009 at 5:38 PM. Reason : j]

5/20/2009 5:35:16 PM

Here's a better list of the exact measures.

http://caffertyfile.blogs.cnn.com/2009/05/20/should-credit-card-companies-target-customers-with-good-credit/

Quote :

" Lenders have to post their credit card agreements online and let customers pay their bills on the internet or by phone without an added fee. - Customers have to be more than 60 days behind on a payment before seeing a rate increase; and even then, the company has to go back to the lower interest rate after six months if the customer pays the minimum balance on time. - Consumers get 45 days’ notice and an explanation before rates go up. - Before getting a card, customers under 21 have to prove they can repay the money or that a parent or guardian could pay off the debt "

I do not see anything wrong with any of this except for the fact that BAC stockholders might lost a couple cents from EPS

The under 21 thing is kinda greyish but if you do not have a job than you probably should not be running up a credit card anyway. Many 18 yr olds do not understand that they are putting themselves in a deep fucking hole by maxing out a 5000 credit limit with 19% interest that they only pay off bits at a time with their summer job.

5/20/2009 5:41:42 PM

Everything seems pretty legit in trying to protect people from predatory tactics, except the 21 rule. That I don't agree with. At 18 you are a legal adult, and for better or worse you should be treated just like any other. I mean... I hate to say this, but isn't it somewhat discriminatory based on age. 21 seems a rather arbitrary number. I've known plenty of responsbile 18 year olds (and younger) and plenty of irresponsible "adults" over 21. You shouldn't have any higher burden to get access to credit due to your age.

5/20/2009 5:54:30 PM

The only valid reason to have a credit card is if it gives you sweet as hell rewards and you pay it off at the end of every month.

5/20/2009 5:59:18 PM

^^It's probably got something to do with the whole "Free No Risk Credit Card!" offers floating ALL OVER college campuses in the first couple weeks of every fall semester.

Personally, I think any college student who actually falls for that shit deserves every bit of the repercussions, and that after reaching 18 there shouldn't be any additional arbitrary legal age barriers put on people... but campus credit card offers are probably what inspired the 21 limit.

Quote :

"Many 18 yr olds do not understand that they are putting themselves in a deep fucking hole by maxing out a 5000 credit limit with 19% interest that they only pay off bits at a time with their summer job."

How can someone not understand that? I could see your point if we were talking about clinically retarded 18-year-olds, or perhaps even high-school drop-outs who never passed Pre-Algebra... but anyone who has had even a minimal level of math education should be able to understand the concepts of debt and interest... and frankly if someone is both stupid and selfish enough to max out a credit card that they don't have the money to pay within months, let them take the consequences.

If people haven't learned by 18 that irresponsible actions have negative consequences, how do we expect them to ever learn it if we're throwing the limits on up to 21? Should we bump it up to 25 after we find out that even at 21, irresponsible dumbasses exist? Then up to 30 when we find out that most people don't really change their behavior once they get past a certain age?

[Edited on May 20, 2009 at 6:11 PM. Reason : .]

5/20/2009 6:01:16 PM

Oh yeah, no doubt that is a big reason that it was added, but doesn't make it right. Hell, I would be more comfortable if they just made it so any school that accepts federal money had to ban credit card solicitation on campus. Hell, I remember a few years ago there was a lot of flak about some schools actually selling names to CC companies. That's some fucked up shit..

5/20/2009 6:04:19 PM

See the problem is unless these kids have good parents that tell them how credit cards work, they generally have no idea. Its something that should go into a general finance course in HS.

Otherwise you end up with people making minimum payments and then when they have a huge balance they wonder what went wrong.

Its pretty much identical to the mortgage market. People who dont know enough about it and/or are underqualified get loans they cant afford or dont understand.

We should 1) educate them in high school and 2) prevent unqualified people from getting loans/credit cards

[Edited on May 20, 2009 at 6:13 PM. Reason : .]

5/20/2009 6:10:48 PM

Quote :

"See the problem is unless these kids have good parents that tell them how credit cards work, they generally have no idea"

My parents never explicitly explained anything about credit cards to me, and I still know that buying something with money you don't have is fundamentally idiotic (unless you're taking out a loan on something like a car or a house, and even then you need to be sure you'll have the salary to pay for it). Again, anyone who does it deserves every ounce of the repercussions.

Quote :

"We should 1) educate them in high school "

For some reason I keep thinking that fundamentals of interest, loans, and payments are a part of the Civics/Economics class. Probably not, though, or if it is they aren't saying enough about it.

And then another part of me thinks that we shouldn't need to educate people on something that should be inherent knowledge (aka "common sense").

5/20/2009 6:19:19 PM

Quote :

"At 18 you are a legal adult, and for better or worse you should be treated just like any other."

I pretty much agree; think what got legislators involved with this aspect better or worse is...

Quote :

"t's probably got something to do with the whole "Free No Risk Credit Card!" offers floating ALL OVER college campuses in the first couple weeks of every fall semester."

Just walk through the brickyard the 1st week of classes and the free T-shirt stands are everywhere (at least when i was there)

sweet dude a free t-shirt and credit card i'm a big kid now!!

On the other hand this bill only hurts college kids and freeloaders. Not sure what the criteria for "able to afford" but i'm assuming if you
can prove employment (i.e. Military, pay stub from McD's, etc) than you should still can obtain a credit card.

Quote :

"How can someone not understand that? I could see your point if we were talking about clinically retarded 18-year-olds, "

I agree. There are plenty of 40 yr olds that are just as financially stupid as an 18 yr old signing up for the free hat and cooze at the Chase
table on hillsbourgh street. At least though the 40 yr old hopefully has a job; and if the 18 yr old working than they hopefully
can get a credit card anyway.

Quote :

"We should 1) educate them in high school and 2) prevent unqualified people from getting loans/credit cards "

Agreed. We need to have some kinda "common sense" financial class in high school. Instead thanks to shit like NCLB schools are more
worried about teaching the fucking test but thats a different issue.

5/20/2009 6:21:01 PM

I like the under 21 rule. My parents (not sure why) encouraged me to get a credit card so that I could build good credit. Unfortunately, I don't think that by doing that they realized that I would rack up almost $10k in credit card by the age of 21.

Yes, it was my own stupid decision, but it wasn't smart for me to have a credit card at that age.

5/20/2009 6:27:06 PM

Quote :

"Agreed. We need to have some kinda "common sense" financial class in high school. Instead thanks to shit like NCLB schools are more worried about teaching the fucking test but thats a different issue."

Unfortunately, if someone doesn't care enough to keep their financial business in decent order once they're legal adults, they probably won't care enough to pay any more attention in their "financial common sense" class than the minimum they need to pass it. Some people just don't learn, and at some point society needs to realize that it falls more upon the way they're raised than it does on the education system. Shit, there might even be a chance that it falls upon genetics (if people can be born retarded, it seems entirely likely that they can also be born naturally stupid, naturally smart, or just average... frankly I don't know enough about the whole subject, though, and besides that it's off the topic of this thread).

I like the idea, though. Just add it to the Civics/Economics class high schools already have. Certainly couldn't hurt things, unless they start removing other needed information from the course.

Quote :

"My parents (not sure why) encouraged me to get a credit card so that I could build good credit. Unfortunately, I don't think that by doing that they realized that I would rack up almost $10k in credit card by the age of 21."

So.... they encouraged you to get a credit card to build good credit, but didn't teach you that you need to be able to pay it off by the end of the month to actually establish that good credit? Not really a wise move by either of you.

I will admit, people do need to be explicitly educated on things like the good credit/bad credit system. It's not the most common-sense-oriented system out there.

[Edited on May 20, 2009 at 6:34 PM. Reason : .]

5/20/2009 6:29:23 PM

Quote :

"I will admit, people do need to be explicitly educated on things like the good credit/bad credit system. It's not the most common-sense-oriented system out there."

You are right. I think the problem is that the credit card companies specifically go after and prey on these people who end up paying double, after interest adds up over time over the original principle. As no bleeding heart liberal; i'd love to just point and laugh at these financial morons.

The bigger problem I think is that some of these financial 'morons' will end up filing chapter 11 when their debt starts spiraling about of control. Lets say one year a slightly higher amount of people end up defaulting on the bank (due to economic fluctuations). To make up for their loss of profit the bank raises interests rates, fees, and/or penalties (which many banks including BAC are known to have done since the credit crisis began to make up for the shortfall by using their customers). Now a bunch of people who were on the 'verge' of bankruptcy (for whatever reason) with their credit card interest at 11%; do go bankrupt after their rate goes to 15%.

OOPSS!!! yes people should have been more responsible but you got Mr. Credit Card Company CRYING to the GUBERMENTS that they need help and a bail out using your tax money! I know I kinda simplified the credit crisis to one little sliver but i think this illustrates the point. If little Jimmy has to be responsible and not get over his head in credit card debt; why do we let our Multi-Billion dollar corporation, led by so called 'experts' in financials, off the hook. This debate could be asserted both ways in hundreds of pages of PhD level dissertation. From my simple understanding though I think this legislation goes beyond a bunch of liberals crying over Susie Homemaker getting violated by the Big Bad Credit Card Company. As this bill seemed to have overwhelming support by legislators on both sides who surely have some major banking lobbyists dropping by to show their dissent.

I think there is a 3rd psychological aspect too. I have not read any evidence but surely people who are working using their paycheck more for goods/services/investments are more productive (better for employer) and likely to stay employed thus better for the economy. Billy Rae going to his miserable job just to pay down the interest after CiTi Bank jacked credit card interest % from 5 to 15 after one missed payment versus Billy Rae working to get that new truck down payment. This is just theory though...




[Edited on May 20, 2009 at 7:27 PM. Reason : l]

5/20/2009 7:15:15 PM

I see the arguments for the new rules, but I really don't like it.

Ultimately what this comes down to is that people don't like some of the shit that the CC companies do, but we have plenty of industries that do shit we don't like. Airlines charge us for luggage, pizza companies charge us a delivery fee, and there are plenty of other examples. Why is this situation any different?

A credit card comes with a contract that is, ultimately, explicit. It says all of this shit right there. There is no deception going on. I've never read my credit card policies, but then again, I also have a credit card from a reputable bank. Let's face it, credit cards are free loans. And nothing "free' is really ever "free." We want the easy credit, but we don't want the other bad shit that comes along with it. Too bad. Suck it up, get over it.

Quote :

"To make up for their loss of profit the bank raises interests rates, fees, and/or penalties"

And you don't think that's going to happen now? Guess what, the credit card companies aren't going to be able to count on the suckers as much now, so they will, *gasp* raise the rates for EVERYONE in order to make up the difference.

5/20/2009 7:37:23 PM

What is the gun rider?

5/20/2009 7:41:27 PM

concealed carry in national parks

5/20/2009 7:43:49 PM

I see.

5/20/2009 7:44:43 PM

do you

5/20/2009 7:45:16 PM

Why yes!

5/20/2009 7:54:29 PM

You know, as much as I think these rules are dumb - essentially amounting to protecting people from their own stupidity - it wouldn't bother me much at all were it not for some fairly explicit messages that this is going to translate into higher rates and less benefits for people who actually pay their cards on time and don't carry a balance. In other words, responsible people like myself.

To sum it up: once again, people who are responsible with their finances will get screwed to bail out those who are not. People who didn't buy houses they couldn't afford (including those of us who had to - horror of all horrors - rent) are now forced to bail out those who didn't. People who used their credit responsibly will now see it constrained for those who didn't.

Fantastic. I'm sure there's a lesson in here about moral hazard which will be completely ignored.

Again.

[Edited on May 20, 2009 at 8:09 PM. Reason : .]

5/20/2009 8:06:52 PM

Quote :

"Let's face it, credit cards are free loans. And nothing "free' is really ever "free." We want the easy credit"

You do know Credit card companies make money off every transaction you purchase right??

The reward points gimmick shit is not just b.c American Express is just a really nice company.

What about though when someone steals a card and uses it to rack up $2000 in shit?

In US law the vendor not the card company take the hit. The Credit Card companies even with these rules are still going to make $bank. The rules in certain circumstances will benefit them too as explained above. Apparently 90% of congress not only though these companies were misleading consumers but were also self-destructive to the institutions themselves who in the long run end up coming to capital hill crying for monies when the shit hits the fan.

5/20/2009 8:09:00 PM

Quote :

""Let's face it, credit cards are free loans. And nothing "free' is really ever "free." We want the easy credit""

CC loans aren't "free" they're "unsecured"

^ Most losses on credit cards come from idiots racking up 20k in debt legitimately and then just never paying, not fraud

5/20/2009 9:03:33 PM

if credit cards are so dangerous, then we should just completely outlaw them. We can't make something that is intrinsically unsafe into something that is safe.

Quote :

"In US law the vendor not the card company take the hit."

So, change that law. That will fix the problem.

^ yes, I know that's the proper term, but "free" makes more sense and makes it clearer what you mean

5/20/2009 9:16:15 PM

Quote :

"if credit cards are so dangerous, then we should just completely outlaw them"

Nobody is saying this don't be a fucking n00b.

5/20/2009 9:30:29 PM

really?

Quote :

"The bigger problem I think is that some of these financial 'morons' will end up filing chapter 11 when their debt starts spiraling about of control. Lets say one year a slightly higher amount of people end up defaulting on the bank (due to economic fluctuations). To make up for their loss of profit the bank raises interests rates, fees, and/or penalties (which many banks including BAC are known to have done since the credit crisis began to make up for the shortfall by using their customers). Now a bunch of people who were on the 'verge' of bankruptcy (for whatever reason) with their credit card interest at 11%; do go bankrupt after their rate goes to 15%. OOPSS!!! yes people should have been more responsible but you got Mr. Credit Card Company CRYING to the GUBERMENTS that they need help and a bail out using your tax money! I know I kinda simplified the credit crisis..."

Kinda sounds like an argument that credit cards are dangerous...

5/20/2009 9:32:41 PM

Do u watch the news or are you just that dense?? OBVIOUSLY in the context of CREDIT CRISIS; the use of CREDIT is not in the context of CREDIT CARDS or perhaps you do not understand about the recession and troubles among financial institutions.

[Edited on May 20, 2009 at 9:37 PM. Reason : l]

5/20/2009 9:36:19 PM

if that's the case, then why did you say "Mr CREDIT CARD COMPANY?"

5/20/2009 9:37:21 PM

Many if not Most banks have a credit card division which they issue to their banking customers.

I apologize for confusing you; to be more clear my sarcastic analogy should have said

Mr. Bank who lost lots of money on mortgage defaults but also issues Credit Cards to Consumers

5/20/2009 9:39:38 PM

Ok. fine, then, I'll let you weasel out that way.

So tell me, then, how is the CC situation any different than airlines charging for luggage or pizza companies charging a delivery fee?

5/20/2009 9:50:48 PM

Gov't interference in private contracts. The more constrictions placed on the CC companies, the harder it will be for everyone to get credit. But you knew that already.

5/20/2009 9:53:42 PM

The pizza company over the phone does not tell me the fee is $2 for delivery than in mid-route to my house decide to change the fee to $3 b.c the driver realized gas prices have gone up $0.30 cents today and the fuel costs cut into his profit

5/20/2009 9:54:43 PM

but, you also did not give the pizza company the permission to do that, either.

the contract between you and the pizza company is "I will pay x for this pizza."

5/20/2009 9:57:58 PM

Quote :

"t wouldn't bother me much at all were it not for some fairly explicit messages that this is going to translate into higher rates and less benefits for people who actually pay their cards on time and don't carry a balance. In other words, responsible people like myself. To sum it up: once again, people who are responsible with their finances will get screwed to bail out those who are not. People who didn't buy houses they couldn't afford (including those of us who had to - horror of all horrors - rent) are now forced to bail out those who didn't. People who used their credit responsibly will now see it constrained for those who didn't. "

I touched on this in the other thread, but don't let the card companies fool you here, these measures were already in the works. Why? Because the models they had for giving out cards to people that shouldn't have them blew up with the downturn. In a functioning economy, where the irresponsible managed to keep a job, the companies could just keep jacking the rates and people would keep trying and paying them while they still had income. Now that the economy is smoked, those people are done and are just defaulting. The credit card companies wanted it, and just like the morons who never thought housing would come down, they are reaping what they sowed.

So now they are doing what every good bonus drunk exec does, they are doing anything possible to keep the revenue up, this means charging the only customers they have left, you and I. If they all do this in concert, and they is no reason to expect they wont in the short term, we have nowhere to go expect back to cash. They are banking that the convenience will be worth the costs. For most people, it probably still will be.

Mish had a blog item a couple weeks ago about a guy in Tampa that couldn't get a card with an 800 fico score because they deem Tampa a high risk area.

I closed a 31.6k limit account with Walkallovia after they stopped sending me e-statements, causing me to miss a payment, then claiming to me on the phone that they don't send e-statements. I opened a Capital One card and they stuck me at a 2k limit, my Fico was 782 when I switched. I called last week after 3 months of on time payments asking for a mild limit increase and got a "sorry, I can't do anything about it, you'll come up automatically whenever the computer determines you can have an increase, just keep making your payments on time".

5/20/2009 10:12:51 PM

Once again we're treating the symptoms and not the disease. The problem isn't predatory lenders (they are a problem, but not The Problem), the problem are idiot consumers who have no regard for their own finances and well being and expect everyone else to look out for them.

If your credit card company doesn't let you pay in the method of your choice, get a different credit card. By law, the only form of payment they have to accept is cash ("...legal tender for all debts..."), everything else is convenient, but not required (until now of course).

Same thing for rate increases, if your rate goes up, go someplace else. When I first went off to school, I got a credit card just like most kids do, ~18% for interest. After 3 years of paying on time, I missed a bill and they jacked my rate up to 27%. Instead of whining to the government and hoping someone would pass a law to protect me from the evil credit card company, I grabbed one of the many card offers in the junk mail pile, got myself approved for another card at 17% with 0% for balance transfers and then called my current card company and told them I was closing out the account and transferring out the balance. When they asked me why, I told them "because you jacked up my rate after one late payment in 3 years, and I've got a better offer at 14%." Amazingly, they managed to find it in their hearts to forgive my horrible transgression and even "managed to make it" so that I could have a 13% interest rate instead. All told about 20 minutes of my time to solve the problem, and no federal regulations were required.

As for the under 21 bullshit, same deal. You're an adult at 18, if you can't look out for yourself, you shouldn't be playing with fire. Besides if 18 is old enough to fuck this country with your voting, it's old enough to fuck yourself with your spending.

5/20/2009 10:17:59 PM

American Express is way go.

I made one payment b.c i was moving (did not have access to internet for 5 days). Called the customer service place; told them look at my expenses (UHAUL TRUCK, gas two different cities) can you guys work with me. They dropped $20 fee and my interest rate was not touched.

5/20/2009 10:23:14 PM

Quote :

"Same thing for rate increases, if your rate goes up, go someplace else."

Only the card companies have a monopoly over your credit profile and when you do this they punish you for it. Here is something weird though, I caught Clark Howard one day talking to a caller...her local bank advised her to close 2 of her 3 credit cards to lower her available credit, and Clark was baffled because its common knowledge that closing cards lowers your score in the short term. What baffles me is why this is written in to the rating, that reducing your potential debt exposure actually lowers your rating.

Quote :

"Amazingly, they managed to find it in their hearts to forgive my horrible transgression and even "managed to make it" so that I could have a 13% interest rate instead. All told about 20 minutes of my time to solve the problem, and no federal regulations were required."

Sure, it worked in a competitive market where they thrived off your business. I did the same thing when they dinged me and they were completely indifferent about it. I think they actually wanted me to close the account to get such a large liability off their books

[Edited on May 20, 2009 at 10:33 PM. Reason : .]

5/20/2009 10:31:18 PM

Quote :

"Only the card companies have a monopoly over your credit profile and when you do this they punish you for it."

They don't have a monopoly on your credit profile, whatever that means... And, you only get "punished" for a short time, and in a small amount. I would like to see something along the lines of "If you close an account in good standing 4 months after paying it in full, you don't take a hit, unless you had a bad report on that account within the past year" or something to that effect. Namely, let's give people the ability to close out an account without the closure action looking bad.

Quote :

"Here is something weird though, I caught Clark Howard one day talking to a caller...her local bank advised her to close 2 of her 3 credit cards to lower her available credit, and Clark was baffled because its common knowledge that closing cards lowers your score in the short term. What baffles me is why this is written in to the rating, that reducing your potential debt exposure actually lowers your rating."

Well, it's not reducing the debt exposure that is fucking things up... Rather, it's probably the used credit ratio. I'm not really sure how we could go about changing that, though.

5/20/2009 10:51:19 PM

Quote :

"They don't have a monopoly on your credit profile, whatever that means"

I apologize, they have a monopoly over your credit rating and there is no competition in this space.

Quote :

"And, you only get "punished" for a short time, and in a small amount."

It doesn't matter for how long it is, no one should have their capability to get the absolute best rates possible diminished for reducing their credit exposure. It's madness and I'm sure it's in the rating specifically to discourage you from hopping from one credit card company to another.

Quote :

"I'm not really sure how we could go about changing that, though."

How about reduce the debt/credit ratio portion of the calculation and increase the debt exposure (or lack thereof) of the calculation for one simple idea? For periods of decades, risk has been manged just fine until the system becomes too stable and people become too greedy. Then they stop paying attention to risk and go for short term profits instead of long term prosperity. And as long as GS and the rest of Wall Street owns DC, they'll be able to socialize the losses.

From a cost point of view, it's probably cheaper to pay lobbyist to get the legislation you need (bankruptcy law change) than to pay teams of econ/quant physics PHds to come up with up to date risk models to keep you from having to feed on the governments teat (thanks to aforementioned lobbyist) when your schemes blow your hand off.

[Edited on May 20, 2009 at 11:10 PM. Reason : .]

5/20/2009 11:09:18 PM

Transunion, Experian, and Equifax are NOT owned by the credit card companies, they are independent of the companies

I have no problem with these companies using time tested models and analysis to establish a credit score. These companies exist to establish the score and models, so I would bet that they are constantly reviewing thier procedures. A large number of companies use the SCORE as one factor in regards to lending practices, there is still the credit history which your lendor is free to review as well, and you are free to let them know that they should do so.

[Edited on May 20, 2009 at 11:15 PM. Reason : .]

5/20/2009 11:14:37 PM

I wish personal finance was required in all high schools. The best class I ever took at NC State was BUS 225 with Huggard.

5/20/2009 11:15:25 PM

Quote :

"I apologize, they have a monopoly over your credit rating and there is no competition in this space."

Frankly, this is what concerns me the most - the complete and utter opaqueness of the credit rating industry. Basically, there's a centralized series of ratings agencies who seem to have a great deal of info on you - more than you even typically have, and this basically controls your eligibility for damn near everything.

I don't object to the notion of credit rating in principle, but it strikes me as greatly concerning how much influence - and how pervasive this influence is.

5/20/2009 11:16:59 PM

^i have no problem with it assuming that procedures are in place to protect the information and correct it if neccesary.

it used to be more opaque until they passed the law a few years ago allowing you to recieve your free report from each.

credit ratings are a neccessity in today's financial society, how else would you like them to become more transparent

5/20/2009 11:21:16 PM

Quote :

"how else would you like them to become more transparent"

How about publish the methodology behind the score for the nation to critique? It would be particular;y interesting to know exactly what will happen to the score if you close an account, if you're late on a payment, and what your best rates to expect on a loan might be given any action that could effect your score.

[Edited on May 20, 2009 at 11:42 PM. Reason : .]

5/20/2009 11:42:15 PM

^^For one, the scoring mechanisms are highly proprietary.

I'm not saying that there having been moves toward greater openness - the annual credit report is an example. Like I said, though - the sheer pervasiveness of what amounts to a fairly opaque process (even given the recent reforms) is what is somewhat concerning.

Again, I'm not objecting to the notion of credit rating - clearly, it's a necessary evil. But given that, and given the fact that such an enormous influence is vested in basically three private entities, demanding a little more transparency as to how these factors are calculated is not unreasonable.

[Edited on May 20, 2009 at 11:43 PM. Reason : FB gpt there first]

5/20/2009 11:42:55 PM

^^because 99.99% of the nation isn't close to qualified to evaluating the methodology used to establish credit scores. its not like its 40%, 30%, 20% equation, its a risk evaluation model that most of the country couldn't even understand if they published it tomorrow. so what difference would it make to publish it.

^^ & ^ there is already tons of resources available for consumers to evaluate their credit rating, scores, and how to improve them. some of these are even available by the credit card companies and the credit score companies themselves...what else do you propose

^so what that they are proprietary, that shouldn't be surprising. Citibank chooses one vendor to provide scores because they have found that vendor to be accurate in assessing risk. I imagine that there is a fair amount of competition between the big three to be the best/accurate model

[Edited on May 20, 2009 at 11:52 PM. Reason : .]

5/20/2009 11:50:12 PM

Part of the problem i have with current credit rating system is the lack of power of the consumer to challenge their rating and how creditors can hold a customer by the balls at times.

Let's say i use Progress Energy for my bill. Every month my bill ranges from $20-$40/month. For some reason though the transducer fucks, something shorts in the mains, power checker dude gets lazy writes down wrong number but for whatever reason i get a bill one month for $120.

Yes i am going to fight this but lets say they are being stubborn and try to push me off as trying to "get out" of paying the energy i used. At this point i'm stuck in a catch-22. As the customer i have the right to fight this over charge. In the mean time though if I do not pay my $120 electric bill in time it will go on my credit rating as a late payment. So to not have any negative impact on my credit rating I have to pay my unjust bill than work to get my money back. this is bullshit in my opinion as I can not simply ride the free market to pick another electrical supplier.

They actually had a situation in Wilmington last fall where something fucked up with the water meter of a bunch of residents in some community and the Utility company came along and tried to force all these people to back pay for water which for some totaled in the $1000's. I am sure those who did not pay took a hit in their credit rating.

5/20/2009 11:51:07 PM

my guess would be that charges/accounts in dispute are not reported to credit agencies the same way as standard accounts.

5/20/2009 11:56:45 PM

I could understand how some aspects of this bill are debatable like the 21 yr old point (I'd almost not allow anyone to get
a credit card without proof of income or a co-signer. A 40 yr w/o a job can be just as irresponsible as a 19 yr old). Also the
60 day notice before a rate increase due to late payment could be considered kinda slow in a volatile market place.

Other though like

Quote :

"" Lenders have to post their credit card agreements online and let customers pay their bills on the internet or by phone without an added fee."

Quote :

"45 day notice before a normal fee or interst adjustment"

unless you are a blood sucking stake holder of Goldman Sachs or CiTi Group set on making profit using deciet, greed, or ignorance
of your customers what is the problem?

I do not think it addresses the problem but another thing that should not be allowed is card companies who alter rates on customers
who may pay on time every month for 10 years but the bank found out they say paid their cell phone bill late. This is absolute bullshit in my
opinion.
BUT HUR IF YE DUN LIKE IT DEN FREE MAREKT GIT ER FUCK OUT & GIT NEW CARD!!!
Yes if a bank did this to me i would be getting a new card. The point is as a consumer i should not have to read the fine print
and check my APY every month checking against back bills to see if my card company is trying to give me the screw job. Banks
put this in as a clever way to shake out customers for extra pennies on the end of quarter EPS.

Lobbyist 364 days a year push for legislation or for politicians to turn a blind eye to various topics that benefit the banking industry. Counter-punches every once in awhile to benefit the consumer with worthwhile legislation like this is the balance in my opinion. Bonus points for seeming to get partisan support.

[Edited on May 21, 2009 at 12:24 AM. Reason : l]

5/21/2009 12:22:09 AM

Quote :

"^^because 99.99% of the nation isn't close to qualified to evaluating the methodology used to establish credit scores. its not like its 40%, 30%, 20% equation, its a risk evaluation model that most of the country couldn't even understand if they published it tomorrow. so what difference would it make to publish it."

What a stupid comment. I don't know what all goes into the safety mechanisms of a nuclear power plant, does that mean that these mechanisms shouldn't be known? The point of having the information available is so that the other .01% that you are claiming would be qualified, you know some of the really smart bloggers out there that typically are paid to know these sorts of things, can see it and critique it for the benefit of everyone.

Quote :

"^^ & ^ there is already tons of resources available for consumers to evaluate their credit rating, scores, and how to improve them. some of these are even available by the credit card companies and the credit score companies themselves...what else do you propose"

There is so much misinformation and speculation about what will happen to your credit score under given scenarios that it is really mind boggling. Like I said earlier, I should have the right to know how my ability to get the best mortgage or personal loan rates will be effected by any action I may take regarding my credit profile, not speculation or "rule of thumb' bullshit, especially when a piece of the system that is counter intuitive like closing credit lines negatively impacts your score is in place.

5/21/2009 7:20:02 AM

bah

[Edited on May 21, 2009 at 8:05 AM. Reason : later]

5/21/2009 8:05:31 AM

I totally agree that there should be transparancy in the credit markets and that consumers should be able to access their credit history at will.

Going back to the credit card thing though, since the advent of the mastercard/visa/whoever debit card theres really no reason to have a credit card.

5/21/2009 9:20:30 AM