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Post by Vypernight on Sept 21, 2011 16:06:42 GMT -5
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Post by Bezron on Sept 21, 2011 16:21:29 GMT -5
Basically, it means that the bank will have to pay slightly higher rates to borrow money from other banks to lend t you for whatever reason. Which they will damn sure pass down to the consumer. So people taking, for example, a mortgage from BoA will not be able to get the Prime rate, but will get Prime 2. So think 5.75% instead of 5.5%. It won't affect anyone who is currently in a contract that is not under default, those rates are locked. Credit cards are a bit different, in that they can change your rate even if you've had the card forever, but only on future purchases.
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Post by ltfred on Sept 21, 2011 17:02:48 GMT -5
I have no clue had bad that is. First up, what Bezron said. Secondly, don't listen to the ratings companies; they're one part fraudulent, one part incompetant. They're certainly the worst institutions for rating crediworthiness (since they're paid by banks to rate their financial mecahnisms well). A primary school would do a better job. Just look at the downgrading of US debt earlier this year; baseless and silly. In my view, people have no choice but to use their own discretion to work this out, perhaps cross-referenced with their favourite economist. You can't trust the ratings companies. |
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Post by discoberry on Sept 21, 2011 17:08:29 GMT -5
No credit rating agency on earth has ever opened up their formula for determining credit to the public.
(Might have changed since 2008) The credit agencies, give higher credit ratings to college kids with no jobs, over a high school grad who makes 40,000 dollars a year. How the fuck does that work?
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Post by Oriet on Sept 21, 2011 17:14:54 GMT -5
Simple, the college kids are more likely to overspend with the card, thus having to take a long time paying off the ever accumulating interest, and thus giving more money to the people that pay huge sums of money to the credit agencies that rate them.
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Post by sylvana on Sept 22, 2011 2:00:05 GMT -5
Simple, the college kids are more likely to overspend with the card, thus having to take a long time paying off the ever accumulating interest, and thus giving more money to the people that pay huge sums of money to the credit agencies that rate them. Pretty much this. I make a decent salary and can afford quite a decent loan. However, my credit rating is considered poor, because I pay off my debts too quickly. Banks love people who are drowning in debt but paying their bare minimum amount each month. The longer they can keep you paying off your debt and consequently its interest the better. Some banks are pretty evil in how they do things too. All payments first go to pay off interest earned on the capital amount. Now Credit laws forbid the total interest to exceed the capital amount. However if you only ever pay off the interest, your capital remains the same, and thus they just tack on your interest again next month and you are back where you started. Basically they let you try and pay off your debt forever because you never actually touch your original debt. (only really happens when you default on a payment though.) The credit industry is the scummiest, most evil industry ever. They go out of their way to hide things from you to keep you trapped in debt, or to make large financial decisions without all the information. |
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Post by Vypernight on Sept 22, 2011 4:52:42 GMT -5
Okay cool. Since I don't rack up my credit card, I was just concerned about my $ in my account. If it's just about debts, I'm good then. Thanks for all the info everyone!
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Post by Oriet on Sept 22, 2011 6:18:24 GMT -5
Further compounding this problem is you need to have a good credit score, which requires having built it, if you ever want to make a large purchase with a moderate interest rate, such as a house you can actually afford. And yeah, credit does seem to mostly be based on if you can provide the lender a reliable, long term profit, as opposed to being properly responsible with your personal finances.
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Post by N. De Plume on Sept 22, 2011 10:38:35 GMT -5
No credit rating agency on earth has ever opened up their formula for determining credit to the public. Yeah. How’s that for oversight?  |
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Post by Armand Tanzarian on Sept 22, 2011 12:16:09 GMT -5
Basically, it means that the bank will have to pay slightly higher rates to borrow money from other banks to lend t you for whatever reason. Which they will damn sure pass down to the consumer. So people taking, for example, a mortgage from BoA will not be able to get the Prime rate, but will get Prime 2. So think 5.75% instead of 5.5%. It won't affect anyone who is currently in a contract that is not under default, those rates are locked. Credit cards are a bit different, in that they can change your rate even if you've had the card forever, but only on future purchases. I will differ on that with you. Credit ratings affect BoA's stock prices and bond prices more than the prices they pay to consumers. So what this means is that Moody's thinks BoA has a higher chance of failure under a Baa rating than an A2 rating. Ultimately this means more for investors than customers, who now must expect a higher risk (and therefore maybe return) when holding BoA stock. In fact under logical reasons BoA's loan and deposit rates should not move much. A BoA Chapter 7 scenario means loans needn't be repaid, which is advantageous to the consumer. As for deposits, the most basic deposit accounts (i.e. those under $100,000 and not tied to commodities I think) are insured by the US government and therefore not susceptible to the risk of a BoA bankruptcy. But that is my opinion. Though unless you have BoA stock don't read too much into it. There's a million other ways Republicans can make this economy collapse in the name of the Free Market principles they so cherish. |
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