The part the analysts are missing is: The mere fact the person has an iPhone and cell plan (assuming that they do), automatically means that they have some financial means. So, when they give them a very low credit line, their risks are minimized.
To equate this to the subprime mortgages -- where people with rotten credit and little or no income were given huge mortgages - is a false equivalency.
Well, a $200 iPhone 7 and $35/mo plan from Cricket doesn't mean they are all that financially capable.
Since they're credit limit is likely only $750, it is likely that they are financially capable enough.
A smartphone is virtually a necessity anymore. I have seen homeless people with smartphones because they need it to apply for jobs, get their disability checks, etc. Owning a smartphone really says nothing about your financial situation.
The part the analysts are missing is: The mere fact the person has an iPhone and cell plan (assuming that they do), automatically means that they have some financial means. So, when they give them a very low credit line, their risks are minimized.
To equate this to the subprime mortgages -- where people with rotten credit and little or no income were given huge mortgages - is a false equivalency.
Well, a $200 iPhone 7 and $35/mo plan from Cricket doesn't mean they are all that financially capable.
Since they're credit limit is likely only $750, it is likely that they are financially capable enough.
A smartphone is virtually a necessity anymore. I have seen homeless people with smartphones because they need it to apply for jobs, get their disability checks, etc. Owning a smartphone really says nothing about your financial situation.
If you say so….
It's very true. All socioeconomic classes can own a smartphone or a tablet. Just go to a coffee shop. You don't even need a cell phone plan for your device be connected with all the fast, public WiFI available. Even phone calls can be done with Google Voice, but I assume that many will have at least a prepaid voice plan for calls.
I love how these articles always make it sound like the bank is the one taking on the risk by offering credit cards. In reality, it's the card user that's taking on the vast majority of the risk. That's the reason why banks are in the credit card business.
of course the bank is taking on the risk, i dont see your point. Credit card debt has no collateral. Of course the bank can send people in to grab the debtors stuff and sell it, but the debtor may not have anything worth taking....
Apple really has no business getting into this business, they are a tech company, not a financial company. What's next, the Apple Payday Lender Service?
Apple just take their profit from each transaction and pass the risk on to the banks. Seems like easy business, particularly if Apple can get all iphone users replacing their wallets.
I love how these articles always make it sound like the bank is the one taking on the risk by offering credit cards. In reality, it's the card user that's taking on the vast majority of the risk. That's the reason why banks are in the credit card business.
of course the bank is taking on the risk, i dont see your point. Credit card debt has no collateral. Of course the bank can send people in to grab the debtors stuff and sell it, but the debtor may not have anything worth taking....
How does the user take on a risk?
My guess is that he probably sees it as the user being responsible for paying back what they owe for the purchase, which likely means they haven't been very responsible with their finances in the past.
I presume they’re not taking people with bankruptcy on their credit history…
There's more to it than your credit score, but a bankruptcy usually isn't a detrimental factor. Perhaps most notably is that once you have a discharge you have to wait 8 years before you can file again. It really doesn't take a long time to regain a Good or Excellent credit rating after a discharge if you've actively worked to build and maintain a credit history in good standing.
It’s been about 8 years. Still getting rejected for credit cards and car loans. Haven’t missed any payments on anything, but it’s all just service bills and I don’t get credit for my mortgage anymore. I kept the house and mortgage, but the debt itself was discharged, so they don’t report my payment history. I’d have to literally re-file the bankruptcy to change that.
We once ran the workforce through test applications, and found that contractors with higher pay and no debt were less likely to get an approval.
Several years ago I paid off my car and student loans early within a month of each other which caused my credit rating to drop from well into the Excellent range with an 800+ score to around 740–750 range which only Good. Within a couple months I had gone back up to Excellent, but I would've been hurt had I tried to secure a great interest rate during that time.
Wow, that’s awful and insanely abusive. It’s also entirely counterintuitive. I paid off my first new car early too (back in the day; I’m poor as shit now), but never thought it would have anything but a positive impact on my credit. This economy is horrific.
These folks should be working on rebuilding their credit/financial lives instead of applying for more credit cards.
Hey do you say the same to the entire construction and commercial development industry, which is based entirely on credit? Huge swaths of corporate America is run on credit, not cash. They do the exact same thing people do. And guess what happens when they fail or file bankruptcy? Creditors lose out. But you know what happens to the actual people running those corporations? The executives? Nothing. Absolutely nothing.
In reality it is normal citizens, non-corporate people, who suffer in lending. Corporations aren't people and as such do not experience suffering. Irresponsible executives continue to become personally wealthy.
This is the nature of the rigged economy. Corporations don't suffer failure the way small fry do.
It's a little bit different taking out a loan to build a house or skyscraper vs. a loan to go on a vacation or pay for dinners out. One is way more secured and lower risk than the other. Don't take out loans and you'll never have any issues about not being able to pay. Studies have shown 100% of bankruptcies are on those with loans.
Because everyone can get by in life without taking out loans...[rolls eyes]
We once ran the workforce through test applications, and found that contractors with higher pay and no debt were less likely to get an approval.
Several years ago I paid off my car and student loans early within a month of each other which caused my credit rating to drop from well into the Excellent range with an 800+ score to around 740–750 range which only Good. Within a couple months I had gone back up to Excellent, but I would've been hurt had I tried to secure a great interest rate during that time.
Mine dropped from 845 to 805 when I paid off my student loan. Unfortunately it stayed there.
I'm considering obtaining a loan for an airplane purchase. Because aircraft last so long and retain their value fairly well a 20 year loan under 6% APR is common for this type of transportation equipment. I'd do it because my investments have a better average return than that interest rate; hell, my dividends are over 3% and would pay for this investment right now. I would hope that my credit rating would increase with a record of on-time payments over the next couple decades.
What type of aircraft are you considering if you don't mind me asking?
That's a good question. I really don't know outside of a single piston engine plane that seats four. My needs for this first aircraft are pretty tame so even an old Cessna would be fine. I'd even consider partial ownership at this point. I mainly want it to go North and South while avoiding the excessive traffic LA and the Bay Area force on commuters, as well as being able to go East and West in a more direct route between cities and towns over the Sierras.
We once ran the workforce through test applications, and found that contractors with higher pay and no debt were less likely to get an approval.
Several years ago I paid off my car and student loans early within a month of each other which caused my credit rating to drop from well into the Excellent range with an 800+ score to around 740–750 range which only Good. Within a couple months I had gone back up to Excellent, but I would've been hurt had I tried to secure a great interest rate during that time.
Wow, that’s awful and insanely abusive. It’s also entirely counterintuitive. I paid off my first new car early too (back in the day; I’m poor as shit now), but never thought it would have anything but a positive impact on my credit. This economy is horrific.
I don't think it is. You have to prove it to have it. It's like if I said that Usain Bolt isn't the fastest runner in the world. Statistically it's very likely there are people who are faster that have neither the inclination nor the opportunity to spend their life training for the Olympics, but who have the genetic makeup to be world's fastest runner, but we don't talk about the potential of those that can't prove it and we don't know exist.
I presume they’re not taking people with bankruptcy on their credit history…
There's more to it than your credit score, but a bankruptcy usually isn't a detrimental factor. Perhaps most notably is that once you have a discharge you have to wait 8 years before you can file again. It really doesn't take a long time to regain a Good or Excellent credit rating after a discharge if you've actively worked to build and maintain a credit history in good standing.
It’s been about 8 years. Still getting rejected for credit cards and car loans. Haven’t missed any payments on anything, but it’s all just service bills and I don’t get credit for my mortgage anymore. I kept the house and mortgage, but the debt itself was discharged, so they don’t report my payment history. I’d have to literally re-file the bankruptcy to change that.
You should get copies of your credit reports and then submit forms to get any negative data that is over 7 years old removed.
Note: That doesn't means that creditors will not look at old reports they have on you when making decisions. The FCRA (Fair Credit Reporting Act) does not stop them from using older data when making a decision.
We once ran the workforce through test applications, and found that contractors with higher pay and no debt were less likely to get an approval.
Several years ago I paid off my car and student loans early within a month of each other which caused my credit rating to drop from well into the Excellent range with an 800+ score to around 740–750 range which only Good. Within a couple months I had gone back up to Excellent, but I would've been hurt had I tried to secure a great interest rate during that time.
Mine dropped from 845 to 805 when I paid off my student loan. Unfortunately it stayed there.
I'm considering obtaining a loan for an airplane purchase. Because aircraft last so long and retain their value fairly well a 20 year loan under 6% APR is common for this type of transportation equipment. I'd do it because my investments have a better average return than that interest rate; hell, my dividends are over 3% and would pay for this investment right now. I would hope that my credit rating would increase with a record of on-time payments over the next couple decades.
What type of aircraft are you considering if you don't mind me asking?
That's a good question. I really don't know outside of a single piston engine plane that seats four. My needs for this first aircraft are pretty tame so even an old Cessna would be fine. I'd even consider partial ownership at this point. I mainly want it to go North and South while avoiding the excessive traffic LA and the Bay Area force on commuters, as well as being able to go East and West in a more direct route between cities and towns over the Sierras.
One week after my sister filed for bankruptcy she received a new credit card in the mail. Unfortunately debt is how most Americans live and that is by design of the banks. Many countries do not allow people to carry credit card debt. I am bothered by the pretty graphic user interface of the upcoming Apple Card's debt and payment feature. Debt is not a game and just like the Activity App candy colored rings most people will find it near impossible to "close the rings" or bring their debt down when 40% of Americans are living paycheck to paycheck.
The part the analysts are missing is: The mere fact the person has an iPhone and cell plan (assuming that they do), automatically means that they have some financial means. So, when they give them a very low credit line, their risks are minimized.
To equate this to the subprime mortgages -- where people with rotten credit and little or no income were given huge mortgages - is a false equivalency.
Well, a $200 iPhone 7 and $35/mo plan from Cricket doesn't mean they are all that financially capable.
Since they're credit limit is likely only $750, it is likely that they are financially capable enough.
A smartphone is virtually a necessity anymore. I have seen homeless people with smartphones because they need it to apply for jobs, get their disability checks, etc. Owning a smartphone really says nothing about your financial situation.
If you say so….
It's very true. All socioeconomic classes can own a smartphone or a tablet. Just go to a coffee shop. You don't even need a cell phone plan for your device be connected with all the fast, public WiFI available. Even phone calls can be done with Google Voice, but I assume that many will have at least a prepaid voice plan for calls.
Having an iPhone and having "a smart phone" are not the same (refer to any developing nation for examples...) -- especially if you have already been approved with a cellular plan. No, it's doesn't guarantee a good credit risk -- but it eliminated most of the bums.
These folks should be working on rebuilding their credit/financial lives instead of applying for more credit cards.
Hey do you say the same to the entire construction and commercial development industry, which is based entirely on credit? Huge swaths of corporate America is run on credit, not cash. They do the exact same thing people do. And guess what happens when they fail or file bankruptcy? Creditors lose out. But you know what happens to the actual people running those corporations? The executives? Nothing. Absolutely nothing.
In reality it is normal citizens, non-corporate people, who suffer in lending. Corporations aren't people and as such do not experience suffering. Irresponsible executives continue to become personally wealthy.
This is the nature of the rigged economy. Corporations don't suffer failure the way small fry do.
It's a little bit different taking out a loan to build a house or skyscraper vs. a loan to go on a vacation or pay for dinners out. One is way more secured and lower risk than the other. Don't take out loans and you'll never have any issues about not being able to pay. Studies have shown 100% of bankruptcies are on those with loans.
Because everyone can get by in life without taking out loans...[rolls eyes]
The borrower is slave to the lender. It's called only buying what you can afford. Except for a house (and only because it goes up in value) there is nothing else you should take a loan out to buy.
These folks should be working on rebuilding their credit/financial lives instead of applying for more credit cards.
Hey do you say the same to the entire construction and commercial development industry, which is based entirely on credit? Huge swaths of corporate America is run on credit, not cash. They do the exact same thing people do. And guess what happens when they fail or file bankruptcy? Creditors lose out. But you know what happens to the actual people running those corporations? The executives? Nothing. Absolutely nothing.
In reality it is normal citizens, non-corporate people, who suffer in lending. Corporations aren't people and as such do not experience suffering. Irresponsible executives continue to become personally wealthy.
This is the nature of the rigged economy. Corporations don't suffer failure the way small fry do.
It's a little bit different taking out a loan to build a house or skyscraper vs. a loan to go on a vacation or pay for dinners out. One is way more secured and lower risk than the other. Don't take out loans and you'll never have any issues about not being able to pay. Studies have shown 100% of bankruptcies are on those with loans.
Because everyone can get by in life without taking out loans...[rolls eyes]
The borrower is slave to the lender. It's called only buying what you can afford. Except for a house (and only because it goes up in value) there is nothing else you should take a loan out to buy.
These folks should be working on rebuilding their credit/financial lives instead of applying for more credit cards.
Hey do you say the same to the entire construction and commercial development industry, which is based entirely on credit? Huge swaths of corporate America is run on credit, not cash. They do the exact same thing people do. And guess what happens when they fail or file bankruptcy? Creditors lose out. But you know what happens to the actual people running those corporations? The executives? Nothing. Absolutely nothing.
In reality it is normal citizens, non-corporate people, who suffer in lending. Corporations aren't people and as such do not experience suffering. Irresponsible executives continue to become personally wealthy.
This is the nature of the rigged economy. Corporations don't suffer failure the way small fry do.
It's a little bit different taking out a loan to build a house or skyscraper vs. a loan to go on a vacation or pay for dinners out. One is way more secured and lower risk than the other. Don't take out loans and you'll never have any issues about not being able to pay. Studies have shown 100% of bankruptcies are on those with loans.
Because everyone can get by in life without taking out loans...[rolls eyes]
The borrower is slave to the lender. It's called only buying what you can afford. Except for a house (and only because it goes up in value) there is nothing else you should take a loan out to buy.
We once ran the workforce through test applications, and found that contractors with higher pay and no debt were less likely to get an approval.
Several years ago I paid off my car and student loans early within a month of each other which caused my credit rating to drop from well into the Excellent range with an 800+ score to around 740–750 range which only Good. Within a couple months I had gone back up to Excellent, but I would've been hurt had I tried to secure a great interest rate during that time.
Wow, that’s awful and insanely abusive. It’s also entirely counterintuitive. I paid off my first new car early too (back in the day; I’m poor as shit now), but never thought it would have anything but a positive impact on my credit. This economy is horrific.
Not for the banks.
In in the UK, there was a credit card called Egg. I had one and after paying If off at the end of the month for about four years, I received a letter that my card was being withdrawn. Me and a few thousand other people. Egg realised that people who don’t incur interest by paying off loans early are bad for business because they don’t earn interest.
And not having any debt means that I haven’t been able to get any credit card outside of my regular bank.
That’s right. The money market is now so unpredictable that banks have decided joe public is a safer bet. They will actually pay you to hold their money for them.
So if you’re looking for a section of tech-savvy well-off people to look after your cash for free, but with the possibility of earning interest that might actually get paid back, then GS might be thinking there’s one company that has a customer base who’re a fairly safe bet.
Comments
How does the user take on a risk?
Note: That doesn't means that creditors will not look at old reports they have on you when making decisions. The FCRA (Fair Credit Reporting Act) does not stop them from using older data when making a decision.
I am bothered by the pretty graphic user interface of the upcoming Apple Card's debt and payment feature. Debt is not a game and just like the Activity App candy colored rings most people will find it near impossible to "close the rings" or bring their debt down when 40% of Americans are living paycheck to paycheck.
Not for the banks.
In in the UK, there was a credit card called Egg. I had one and after paying If off at the end of the month for about four years, I received a letter that my card was being withdrawn. Me and a few thousand other people. Egg realised that people who don’t incur interest by paying off loans early are bad for business because they don’t earn interest.
And not having any debt means that I haven’t been able to get any credit card outside of my regular bank.
i read an article yesterday which explained why one of Denmark’s largest banks is offering ten year loans at -0.05% interest.
https://www.businessinsider.com/danish-bank-offers-mortgages-at-negative-interest-rates-2019-8
That’s right. The money market is now so unpredictable that banks have decided joe public is a safer bet. They will actually pay you to hold their money for them.
So if you’re looking for a section of tech-savvy well-off people to look after your cash for free, but with the possibility of earning interest that might actually get paid back, then GS might be thinking there’s one company that has a customer base who’re a fairly safe bet.