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Subject:  Re: Ever heard of the 30% rule? FICO Date:  8/22/2019  2:04 PM
Author:  aj485 Number:  312606 of 313006

While easy credit does have huge benefits to society, draconian punishments have enormous negative consequences to that same society.

Please identify the 'draconian' punishments you are citing. Credit card companies aren't asking for people's children, sending people to debtor's prison* or chopping off people's heads - those would be draconian punishments. And, as already stated, the ability for lenders to impose penalty rates was greatly curtailed by the CARD Act. Additionally, the CARD Act required lenders to provide information to their customers information on how long it would take them to pay off their debt if they only paid minimum payments, therefore encouraging customers to become more responsible borrowers.If someone gets in too deep, they can declare bankruptcy and rid themselves of potentially all of their debt, possibly even student loans.

I will say that the student loan mess is a problem - but that is not credit card debt, and it's the Federal Government who is setting the draconian terms, not the credit card issuers. So if you have a problem with the way that student loan debt is being handled, you need to take it up with your Federal Government representatives, not blame it on the credit card issuers.

Just look at the fear that CC debt is going to precipitate a recession.

Please cite your source for these fears. I have not seen anyone forecasting a recession because of credit card debt. I have seen some concerns about overall debt - but that includes things like student loans, mortgages, car loans and business loans, not just credit card debt. But even those concerns don't cite debt as the only potential cause for a recession - they also cite issues with corporate profits and trade.

FICO, as it's currently set up, gives lenders draconian power and magnifies those negative consequences to society. FICO is a tool of the lenders, there is nothing on the consumer/borrower side to balance it.

Huh? Yes, credit scoring (not just FICO, but Vantage, too - among others) is a tool to help lenders determine whether someone is likely to pay back the money that they are borrowing. Again, what 'draconian power' are you citing that the lenders have? If they choose to not lend to someone because that person is unlikely to pay back their loan, how is that 'draconian'? It helps keep people out of those 'debt structures that they can't get out of' if they don't get to borrow. If the lender does choose to impose a penalty rate, it's not just because someone's FICO score went down - it's because the person missed a payment, or because someone's FICO score went down AND, when the card is up for renewal, the person chose to accept that penalty rate, rather than having the account closed. That's not 'imposing' it on the consumer. That's the consumer making choices.

Naive users accept FICO at face value. They do not realize FICO is not there for the borrower, but rather for the lender.

In this day and age, after the first time someone who applies for a loan, anyone who remains a 'naïve' borrower has chosen to be one. Any time someone has a harmful impact, such as being turned down for a loan, or not getting the best rate for a loan, they get a notification from the lender about what factors were used in making that decision. If the borrower chooses to ignore those notifications, and chooses to not fix those issues, they are choosing to be naïve.

FICO is legal, but it's also a SCAM on borrowers.

Again, you have cited no facts for this - just your opinion. You, of course, are welcome to that opinion, but until you can cite facts to back up your opinion, you are the one who is spreading FUD.


*There are local governments that are jailing people who don't pay fines or fees for things like traffic tickets and parking violations. That does seem draconian to me, but, again, it's not credit card issuers who are doing that, and if your local government does, you need to take that up with them.
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