Comments on CreditMattersBlog.com: Credit Card Companies As Evil Villains? It's Not T...

And if anyone is really bored, there is this: Did...

2009-05-06T11:01:00.000-04:00

And if anyone is really bored, there is this:

Did Securitization Lead to Lax Screening? Evidence
From Subprime Loans

http://siteresources.worldbank.org/INTFR/Resources/VigSecuritize0808.pdf

Frank, this isn't from WSJ, but I found it interes...

2009-05-06T10:57:00.000-04:00

Frank, this isn't from WSJ, but I found it interesting:

FICO - The Late, Great Credit Score?

http://www.lendingsanity.com/index.php?option=com_mojo&Itemid=89&p=18

I went to a seminar on credit scores once, and the...

2009-05-06T10:47:00.000-04:00

I went to a seminar on credit scores once, and the presenter defined the FICO score as something like this: a rating of the likely-hood that someone would be over 90 days late within one year on a payment. They are basing your future performance based on your history.

But FICO was not designed even by them to be the sole decision maker, only one decision maker.It is the banks job to

Carnap / Frank: Aren't the credit reporting burea...

2009-05-06T09:46:00.000-04:00

Carnap / Frank:

Aren't the credit reporting bureaus barred from collecting information on personal income? I think some of the silliness with FICO scores comes from the fact that they can't take into account so meaningful a factor in creditworthiness as income.

Of course, lenders can request that information when underwriting a loan, but for unsecured credit they don't seem

"I think that issuing unsecured credit in excess o...

2009-05-05T17:37:00.000-04:00

"I think that issuing unsecured credit in excess of 5% of a persons gross annual income is going to be seen for the insanity that it is."
Only 5%? Someone with an income of $100,000 can handle more than a $5,000 credit limit. They are also likely to spend more than that now and than on something like a vacation.

"t's a two-way street, no? Great for the consumer when limits were

Pete you hit the nail on the head, I think we neve...

2009-05-05T14:52:00.000-04:00

Pete you hit the nail on the head, I think we never really recovered from 9/11, it has all been imaginary- based on inflated home values and credit usage.

I got in credit card debt due to career issues. My debt concerns me. I know so many other people who spent themselves to the same debt level I am at, and they didn't see any problem with it at all. They were taking vacation, had

Frank, I think that HELOCs above $50,000 are ignor...

2009-05-05T13:55:00.000-04:00

Frank, I think that HELOCs above $50,000 are ignored. TimothyPHX knows the answer definitively. But I believe it's $50K.

If you want to consider the broader socioeconomic ...

2009-05-05T13:00:00.000-04:00

If you want to consider the broader socioeconomic and political context, you have to consider the possibility that consumer credit (credit cards and home equity lines) have been used in the last couple of decades to "paper over" the stagnation in growth of real wages.

Robert Reich has spoken to this to some extent. Now that the credit bubble has popped, there is much gnashing of teeth

Anon, You are right, there is a special way that F...

2009-05-05T12:42:00.000-04:00

Anon, You are right, there is a special way that FICO handles home equity balances above a certain amount. I forgot exactly what happens, it could be that lines above a certain amount are considered revolving. I think it is 30K. Hopefully someone knows for sure?

Anon 9:16 I don't think that CC companies should finance their capitalization on the backs of credit card consumers, and I

I am not sure that we want to finance the capitali...

2009-05-05T09:16:00.000-04:00

I am not sure that we want to finance the capitalization of the banking system on the backs of consumers who happen to have credit card balances. Our financing measures of the banks should be assessed and chosen less arbitrarily. My guess is that a personal income tax on high earners, who tend to disproportionately benefit from the financial system, and hence its rescue, would be more fair than

Frank, I appreciate your take on that but Bank of ...

2009-05-05T08:30:00.000-04:00

Frank, I appreciate your take on that but Bank of America and Citibank did just that rececntly and stated I was over 50% on two credit card credit lines that only had about 1,500 out of 30,000 used. They said but you also have 35,000 of 40,000 being used with another company (my home equity line) which I explained it was, and they said "on your credit report that is revolving debt" so they used

Anon, your utilization is only computed on your re...

2009-05-04T21:54:00.000-04:00

Anon, your utilization is only computed on your revolving credit. Not on home equity, car, mortgage or personal loans. Your score is not affected.

I disagree that if you use credit responsibly the ...

2009-05-04T21:27:00.000-04:00

I disagree that if you use credit responsibly the credit limig cuts won't hurt you. What if the only revolving debt I have is my home equity line (which mind you is on a secured asset) However, the cut in limits to my credit cards that I do not use or rarely use effects my FICO score in a severly negative fashion. Now it is true I don't need any loans other than the one against my house

don't bail out banks with tax payer money, lower m...

2009-05-04T18:49:00.000-04:00

don't bail out banks with tax payer money, lower my taxes, and then I won't have to borrow so much in the first place.

High limits are good for everyone. People can ma...

2009-05-04T14:18:00.000-04:00

High limits are good for everyone.

People can make a large purchase and plan to pay it off over time.

Banks make money off interest. Banks make a profit.

Everyone wins.

and another thing. Isn't it ironic that we HAD to...

2009-05-04T13:54:00.000-04:00

and another thing. Isn't it ironic that we HAD to bail the banks out to "keep credit flowing" but now that we bailed them out writers like this guy think they should not lend money because that's prudent. The hypocracy can make your head explode.

...interesting use of analogies there. I especiall...

2009-05-04T13:53:00.000-04:00

...interesting use of analogies there. I especially liked the frat house paragraph....

Look, I understand scaling back limits. They got too high to begin with. I even understand raising rates on "at risk" customers. What I don't understand is raising rates as high as they did (29.99%) anyone for seemingly no reason and on their best customers! Or their timely limit lowering so people

South Texas yes you are paying twice. Even worse ...

2009-05-04T13:48:00.000-04:00

South Texas yes you are paying twice. Even worse is now that you "own" the banks you are supposed to cheer when they take excessive profits because you are an owner......it's just too bad you are also a customer.

Drew, I talked to an analyst who covers the card i...

2009-05-04T13:10:00.000-04:00

Drew, I talked to an analyst who covers the card industry. He told me that the card issuers know that some will default. No doubt about it. But they run the numbers across a big group of customers who get hiked. The payoff works in favor of the card issuers -- even though some will no doubt head to 1-800-Bankrupt.

The card issuers have crunched the numbers.

Maybe CM or one of the other experts here can enli...

2009-05-04T13:05:00.000-04:00

Maybe CM or one of the other experts here can enlighten me.

Don't the CC companies realize they are helping to cause these defaults by acting in this fashion? Someone who is already struggling and misses a payment can see his 9.9% interest rate go to 30%. Where that person had a hope of getting out of debt at 9.9%, there is no chance at 29.99% and that person is now on the phone to 1-

@Anonymous May 4, 2009 11:25:00 AM EDT So, I hav...

2009-05-04T12:58:00.000-04:00

@Anonymous May 4, 2009 11:25:00 AM EDT

So, I have to ask...why did you use credit?

I just took a look at my available credit as a % of my gross, and I don't know how to factor in Amex (no limit), but for the one revolving account I have, it's 12.5% of my gross income - and that's after I DECLINED the absurd limit they first offered me - 55% of my gross.

My

I have to admit that I don't pay very much attenti...

2009-05-04T12:43:00.000-04:00

I have to admit that I don't pay very much attention to politics. At the risk of sounding like a dumbass: am I confused? The banks got their bailout money from us (taxpayers), right? And now to pay that back, they are increasing our rates and fees, right? So... as a taxpayer and a person with cc debt, I am paying twice.

While I won't say you should ignore your FICOs, do...

2009-05-04T12:39:00.000-04:00

While I won't say you should ignore your FICOs, don't worry about them either. Know what they are just to have an idea. Plan out any purchase large enough to require a loan. Know your score ahead of time. If you're new to having lines of credit, you just need to concern yourself with building up a history. That isn't anything you can rush unless you are H.G. Wells.

Practice Prudent

Thanks Drewbert. So I am good then and shouldn't w...

2009-05-04T12:33:00.000-04:00

Thanks Drewbert. So I am good then and shouldn't worry about my FICO score either? I actually don't know my score and as I could read in previous comments, that score will just matter in case I would apply for any loans.

Anon, you don't need to worry if you always pay in...

2009-05-04T12:21:00.000-04:00

Anon, you don't need to worry if you always pay in full, the interest will never affect you. The CC companies have already shown that prudent spending and payment habits are no factor in a rate increase.