Bad Credit Financing Offers Rebuilding
http://creditfederal.com/article/articles/446/1/Bad-Credit-Financing-Offers-Rebuilding
By CreditFederal.com - A good or bad credit personal loan, auto and mortgage financing, and credit card resource.
Published on 03/28/2008
Are loan lenders and credit card issuers who approve bad credit offers evil, or do they help rebuild hope for poor credit people? CreditFederal.com visitor opinion.
Credit Card and Loan Bad Credit Financing offers Hope to Rebuild Future
You hear tirades against lenders and card issuers who offer bad credit financing, but their purses help rebuild hope for many Americans.
Opinion by a CreditFederal.com visitor
Federal legislators are expected to solve the problems of their constituents, even if there really aren't any problems. Otherwise, they won't get elected or re-elected. So often legislatures will actively seek a crusade that will make them appear heroic and win votes.
Case in point: Bad Credit Financing
Fact: There are many Americans with bad credit, and the reasons are many. And many of those reasons have nothing to do with lenders and credit card issuers. Some have bad credit because they live beyond their means. Instead of saving money to make a purchase, they put the purchase on plastic and worry about repaying later. Although they had good credit which rewarded them with a super low interest rate, they still failed to repay the debt. They either lost their jobs, suffered a pay cut, had other unexpected emergencies, etc, and simply couldn't repay the debt. Now they have bad credit, and it wasn't the fault of some evil empire of financiers. It was their own impatience and poor planning.
But now march in the champions to correct a problem that doesn't even exist. How could an evil empire of financiers exist in a capitalist environment of competition? In order to attain and keep customers, banks, credit card issuers and other lenders are forced to offer competitive products (credit cards and loans). Otherwise they would lose customers to other banks, credit card issuers and lenders.
So how have so many Americans buried themselves in debt and subsequently been branded as bad credit consumers? Who should be blamed for this travesty? The financiers (banks, credit card issuers and lenders)? The lawmakers for not taking action or for stirring up trouble that didn't actually exist? Or is it the consumers?
There are indeed injustices, even in a free trade society. Health and life insurance companies offer different rates to different people based upon their past health history, just as creditors do based upon individual past credit history. What's truly unfair, is that other companies; such the health and life insurers previously mentioned, can legally discriminate on issues that people cannot control. Where's the justice in letting insurance companies charge high rates to people with a bad health history that's not their fault, but then to bad mouth creditors for charging high rates to people who do have control over their credit history and who are fully to blame for having a poor credit rating.
Can you blame a car insurance company for charging twice the rate to a customer with a long history of at-fault accidents? Of course not. So how is it that a credit card company gets bad press for charging twice the interest rate to a person who has habitually defaulted on balances and paid late the few times any payment was made? There are definitely legislative injustices against creditors.
But lets forget all that for now. Let's assume creditors are evil and need government control. What will bad credit people do once the government eradicates all financiers of sub prime products (bad credit loans and credit cards)? Where will they get credit? How will they have the opportunity to rebuild credit and improve their lives? Will the government loan them money? Not likely.
Put yourself into the shoes of creditors. You have two customers desiring a loan. One you've dealt with in the past and who has paid timely. The other you've never done business with, but the last bank that person borrowed from claims an outstanding, unpaid balance. Which of the two would you likely grant loan approval? The one with a good credit history or the one with a bad high risk history? Naturally, you'd approve the one with a good history of repaying. But let's say you go out on a limb and offer a loan to the poor credit person, and that person defaults on you. Years later, that person asks for a second chance. Would you give it? Wouldn't you be inclined to protect yourself by charging a higher interest rate to recover more of your principal during the payback period? Of course you would.
As you can see, at least creditors; for now, offer you a second chance even if at a higher rate. But what will happen once the government stops allowing creditors to offer subprime, bad credit credit cards and loans? Consumers likely won't get a second chance. Many may argue that it's best to restrict those consumers from obtaining additional credit in the future since they had proven irresponsible. Do we really need government acting as our parents?
If you desire to continue having a free trade, open credit market whereby credit card companies and loan lenders can compete for your business and offer you lower and lower interest rates, let your legislatures know you do not desire government intervention.
Opinion by a CreditFederal.com visitor
Federal legislators are expected to solve the problems of their constituents, even if there really aren't any problems. Otherwise, they won't get elected or re-elected. So often legislatures will actively seek a crusade that will make them appear heroic and win votes.
Case in point: Bad Credit Financing
Fact: There are many Americans with bad credit, and the reasons are many. And many of those reasons have nothing to do with lenders and credit card issuers. Some have bad credit because they live beyond their means. Instead of saving money to make a purchase, they put the purchase on plastic and worry about repaying later. Although they had good credit which rewarded them with a super low interest rate, they still failed to repay the debt. They either lost their jobs, suffered a pay cut, had other unexpected emergencies, etc, and simply couldn't repay the debt. Now they have bad credit, and it wasn't the fault of some evil empire of financiers. It was their own impatience and poor planning.
But now march in the champions to correct a problem that doesn't even exist. How could an evil empire of financiers exist in a capitalist environment of competition? In order to attain and keep customers, banks, credit card issuers and other lenders are forced to offer competitive products (credit cards and loans). Otherwise they would lose customers to other banks, credit card issuers and lenders.
So how have so many Americans buried themselves in debt and subsequently been branded as bad credit consumers? Who should be blamed for this travesty? The financiers (banks, credit card issuers and lenders)? The lawmakers for not taking action or for stirring up trouble that didn't actually exist? Or is it the consumers?
There are indeed injustices, even in a free trade society. Health and life insurance companies offer different rates to different people based upon their past health history, just as creditors do based upon individual past credit history. What's truly unfair, is that other companies; such the health and life insurers previously mentioned, can legally discriminate on issues that people cannot control. Where's the justice in letting insurance companies charge high rates to people with a bad health history that's not their fault, but then to bad mouth creditors for charging high rates to people who do have control over their credit history and who are fully to blame for having a poor credit rating.
Can you blame a car insurance company for charging twice the rate to a customer with a long history of at-fault accidents? Of course not. So how is it that a credit card company gets bad press for charging twice the interest rate to a person who has habitually defaulted on balances and paid late the few times any payment was made? There are definitely legislative injustices against creditors.
But lets forget all that for now. Let's assume creditors are evil and need government control. What will bad credit people do once the government eradicates all financiers of sub prime products (bad credit loans and credit cards)? Where will they get credit? How will they have the opportunity to rebuild credit and improve their lives? Will the government loan them money? Not likely.
Put yourself into the shoes of creditors. You have two customers desiring a loan. One you've dealt with in the past and who has paid timely. The other you've never done business with, but the last bank that person borrowed from claims an outstanding, unpaid balance. Which of the two would you likely grant loan approval? The one with a good credit history or the one with a bad high risk history? Naturally, you'd approve the one with a good history of repaying. But let's say you go out on a limb and offer a loan to the poor credit person, and that person defaults on you. Years later, that person asks for a second chance. Would you give it? Wouldn't you be inclined to protect yourself by charging a higher interest rate to recover more of your principal during the payback period? Of course you would.
As you can see, at least creditors; for now, offer you a second chance even if at a higher rate. But what will happen once the government stops allowing creditors to offer subprime, bad credit credit cards and loans? Consumers likely won't get a second chance. Many may argue that it's best to restrict those consumers from obtaining additional credit in the future since they had proven irresponsible. Do we really need government acting as our parents?
If you desire to continue having a free trade, open credit market whereby credit card companies and loan lenders can compete for your business and offer you lower and lower interest rates, let your legislatures know you do not desire government intervention.