Comments on: Not Every Lender is Worthy

By: Diana

Diana — Fri, 20 Jun 2008 15:22:12 +0000

I just received unsolicited correspondence from HSBC Finance with respect to opening a line of credit and consolidating my debts into a single payment (instead of managing multiple bill payments). I am following Gail’s advice and am currently paying down my consumer debt and would not take this anyhow. BUT - for the sake of making one payment per month instead of multiple payments - they are charging an interest rate of 29.99% What are they thinking??? Unbelievable!!!!

By: Susan

Susan — Thu, 01 May 2008 15:02:08 +0000

Thanks Kelly and Wanda. Great help!

By: Wanda

Wanda — Wed, 30 Apr 2008 23:04:02 +0000

Susan, Practically every question you have is located somewhere on this site. The information is located at: http://www.gailvazoxlade.com/articles_f/article31-6.htm

By: Kelly

Kelly — Wed, 30 Apr 2008 19:29:23 +0000

Hi Susan,
Assuming you live in Canada, you just go to either http://www.transunion.ca/ or http://www.equifax.com/EFX_Canada/consumer_information_centre/overview_e.html .
There’s your credit report or your credit score plus credit report. I think the report is free, but you are charged for the score.
I believe both companies calculate the score differently, so you may not have the same score with both, but they will be really close.
Hope that helps! (But remember, the score only matters if you actually want credit… )

By: Susan

Susan — Wed, 30 Apr 2008 13:29:05 +0000

I know this is probably really baic but how do you check your chedit score? I have no idea. I have never had any porblem getting credit and have a few cards that I don’t use with $0 balances but it woudl be nice to know what the score really is.

By: Melaniesd

Melaniesd — Wed, 30 Apr 2008 03:02:27 +0000

I work for a major bank and it amazes me how many people give no thought to what they are borrowing or from whom. I am a loans officer and so many clients have loans with “last chance lenders” and when I ask them why they went to that company they don’t know why - it was convenient I guess.
I also see a lot of clients who have tons of credit with other lenders and carry no balances and then call looking for MORE credit from us. When I can’t offer them more they are so offended. People need to understand that credit isn’t so simple. Just because you don’t use the other cards, doesn’t mean they don’t matter. If you charge those other cards up - chances are you’re not going to be able to pay the other lenders if you have too much credit.
I think it’s so important to take the time to call your bank or advisor and talk about how you use credit and what would be the best products for you. Just because a card has rewards doesn’t mean it’s the right card for you etc.

Thanks for letting me vent! it was a tough day of lending today! : )

By: Marie

Marie — Tue, 29 Apr 2008 23:06:53 +0000

Credit card “benefit”: you qualify for a payment holiday, if you cannot make payment, there is no need to notify us … financing charges will apply!
I really don’t want to given them money! I hope nobody falls for it…

Angela: I capped and then some reincrease the limit later and some respect the cap. I don’t know how they decide to allocate credit other than possibly making the minimum payment on your salary …

I prefer the comment from the sub-prime crisis:
This crisis proved one thing, those you couldn’t pay before sub-prime was available couldn’t pay sub-prime was available!
(I forget where I read that)

By: kristin

kristin — Tue, 29 Apr 2008 22:34:58 +0000

my mother in law is on disability. growing up in communist hungary, she is thrifty and can stretch a dime into a dollar any day. but given the fact that she has $50 a month of disposable income after necessities are covered, she has been given a 10K limit on her visa, which she laughs at and is frequently harassed by the bank to give her an additional 10k LOC! we find this funny as given her background she never spends a penny more than she makes, but come on!!! of anyone they’ll give one to, seriously!
has anyone on the show ever received nothing? i can’t think of anyone now. where does the remaining money go? i suppose if someone deserved nothing, perhaps donating their share to a charity in their name would hit home a tad?

By: Angela

Angela — Tue, 29 Apr 2008 22:11:23 +0000

Marie, I have been debating the same issue, too. But how do we know the limit that we should be keeping? Now, my one and only credit card gives me a credit limit 3 times of my monthly salary after tax. My salary doesn’t justify that I should have such a credit limit at all. And I have been debating that I should call the bank and put a cap on the limit. But then, like you say, if we use the card carefully, it shouldn’t be a big concern.

I’m interested to know what factors would make banks increase your credit limit on your cards without asking? The last time my credit limit was raised was during the time I was between jobs (just graduated from school, worked for 3 temp agencies at the same time. No steady income at all!). What kind of risk they are taking?

By: Geoff

Geoff — Tue, 29 Apr 2008 21:58:10 +0000

Marie, basically you’re getting at the idea of available credit, it is a kind of peculiar math that credit card companies use that makes people who have access to credit appear more credit worthy than those who don’t, even if the reality doesn’t actually change. Here’s an example.

Let’s say you have two credit cards, each with a limit of $5,000 and on card 1 you have a balance of $4000 and on card 2 you have nothing. And then you decide to cancel card 2, so that you can be responsible and focus on card 1 payments. Sounds good? But here’s how the math would work:

Initially, you’d have a balance of $4,000 out of $10,000 credit, or have used up 40% of your credit.

However, if you cancel and be responsible, you will now be using up $4,000 out of $5,000 available credit - or 80%.

In reality, nothing has changed for you in your day to day living, but your credit rating may nosedive according to their math.

Personally, to answer your question, *I* live with a high credit card limit but typically spend only $1,000 on it (paid every month so far anyway) and have only one credit card. However, in my younger days, I kept my limit under $2K as I didn’t want to be tempted, and lived quite happily and got mortgages, etc without a lick of problems. Just my two cents. And if I wanted something that cost more than $2K for travelling or wanted points, etc, rather than call to have my limit increased, I’d just overpay my account so I’d get a credit, and then it would go through. (Yes, this would mean I’d be making an interest-free loan to the bank, but only for a day or two).

P.S. Gail — Please, please, please on your show give someone a cheque for $0.000 — the goose-egg. At least the dog people from last week — they deserved nothing. In fact, you should have billed them for your time!!!! g