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 Easy E wrote:

 hotsauceman1 wrote:
I just remember my Proffessor telling me how banks would give loans to people for houses they just couldnt possibly afford.

Yeah, that's what happened, but a lot of peopel still want to blame poor people for getting loans they couldn't pay back.

The interesting thing about Credit Scores in the US is that there are four credit bureaus. All of them are private businesses with little or no oversight. Each one has a different, secret method for calculating your score. So, when people tell you to do this, or do that, we are all really just making a best guess about thing sthat have worked int he past. All the actual formulas are top secret.

Well, yes, but you don't get credit based on your credit score. That is just an indicator of how good or bad the agancy views your file. Companies you are borrowing from will do there own credit scoring. They will buy the raw data from the credit agancys (All sorts of data, not just payment history) and then do there own scoring. They will build a scoring engine dependand on their own needs. If they are a bank they will link in there own infomation, which can be given more or less weighting dependand on the credit policy of the company.

Scoring engines/cards can be very complex and expensive. We were looking at implimenting one a little while back. Something very simple that just worked on our payment history data, how long we have been trading with the customer and a few other points. It was an off the shelf job, no customisation. They wanted £10k a year... I told them where to shove that (We had no real use for it due to the nature of the business I am in. We work in trade and most people work on the basis of trade refrances).

This will then be used to do a Yes/No/Maybe sort. Depending on the size of company and the size of loan it may be passed to an underwritter. Small loans it may be that Yes & No do not but Maybe are for them to take a look at the data and make a choice. Large things like mortgages will normaly all be passed to underwritters to have a look at (Although they will often not look at No's unless the borrower requests it. It is always worth asking). They would have to have a good reason to go against the score card, but they can if the feel they should.

Credit scores should just be a way of giving Joe public an idea of what all the numbers mean, although some very small lenders may use them as an indicator. We use them for some large lending just as an indicator as to wether we need to do more research or not, but never as the basis of a rejection/acceptance.

The basic concept of how to influence your credit score is sound (Keep your borrowing low, but have some. Pay it off on time). Whilst credit managers don't know the details of how the agancys do there scoring, or how other companies lend we do know the theory of credit scoring and how we do our own. We also have an idea of how other credit managers work and what they personaly want to see. The basis is always pay on time and don't have too much borrowing.

 Easy E wrote:
Yeah, that's what happened, but a lot of peopel still want to blame poor people for getting loans they couldn't pay back.

Well, it's like crack. Yeah, the guy shouldn't have been selling it on the corner, but that doesn't absolve you of all responsibility of being dumb enough to start smoking it.

 Dreadclaw69 wrote:

 Easy E wrote:
Yeah, that's what happened, but a lot of peopel still want to blame poor people for getting loans they couldn't pay back.

I blame them both. The people who couldn't do basic math to see that they couldn't afford it, and the banks who enabled them.

In the UK, in my last job before moving here, I worked with the Financial Services Authority and the Financials Ombudsman Service both. I was financially savvy, worked with contracts and insurance premiums, ensuring our business remained compliant with current law and protected against scrutiny, I was fairly good at it, keeping the business robust and receiving praise from both external regulators on fairness and clarity.

I had a loan with the bank, it had been running for years, since I took it out in my early 20s and was comfortably paying it off. I wanted a new computer and went to see the bank about another loan amount, just a few grand to give to my mate to build me a 'dream machine'.

****
'Not a problem sir, absolutely easy and what we'll do for absolutely making life easier for you is just amalgamate this loan with your existing payments, so it will all be one convenient payment and single amount.'

'Well that sounds great, so the 3 grand I'll owe for the 2 grand you're giving me today will just be added to my outstanding amount of 2 grand on my old loan and I'll have 5 grand owned to you?'

'Well, more or less.'

'Explain?'

'We'll add your current loan to the existing loan for one loan amount to pay off, mmmmkay?'

'Let me see this on paper please'

'Oh... erm, here's the contract we'd need you to sign, if you'd just...'

"what is this, you want me to actually take out 5 grand, 2 of which would pay off the interest I'm currently paying you, so that I end up owing you closer to 8 grand? You want me to pay off the interest gathered off the 'recalculated every day' loan you got me with before with more money I borrow from you that will, it's self, add additional daily recalculated interest, that's rather sly isn't it?'

'It's not sly, it's a way in which you can make things convenient for you by one simple payment'

'the money is removed from my account on a set date by direct debit, in what way is one payment more convenient to me than two?'

'erm...'

'how's about you just give me the second loan, separately, with a clear and separate contract, unrelated to the initial loan, or I'll write a letter of complaint to the FOS, with a copy of this contract and a statement to the effect that you used sales tactics that breached almost every one of the 6 expected outcomes of the treating customers fairly initiative?'

'certainly sir, I'll get right on that now'.
****

If I'd not caught it, I'd have been stiffed for several thousand pounds more in debt. I caught them out doing it, but I'd been trained to look this stuff over. The spin was good, she was even flirting with me (which made me suspicious, I have a face like a robber's dog...), making me coffee and lots of friendly talk and 'helpful' 'on your side' behaviors and explanation.

After that encounter, I was left in no doubt that someone not expecting to be fethed in the arse with a lawnmower would find themselves in a tricky situation and it was suddenly very clear to me just how so many are up to their necks in debt on both sides of the Atlantic.

People being sold mortgages they can't afford to deal with just have my sympathy, not any sense of blame, because the spin and the sale pitch is clever and desperately driven by commission. This should be better regulated and the punishments for businesses pushing the line too far should be far greater.

Why were you taking out a loan for a computer MGS? Was that a home business venture and needed it for that?

But yea, thats cheesy. Having said that, I've not heard of personal loans for computers outside of small business (maybe vendor financing). Interesting.

 Frazzled wrote:
Why were you taking out a loan for a computer MGS? Was that a home business venture and needed it for that?

But yea, thats cheesy. Having said that, I've not heard of personal loans for computers outside of small business (maybe vendor financing). Interesting.

Naw, my laptop was dying and I decided that I wanted a great computer for playing my MMO on. I gave the cash to a tech-savvy friend and said 'build me a monster' and indeed he did.

I think she listed the loan reason as 'home improvements'. /shrug

I had an excellent credit rating in the UK, no dependents, working for the NHS, Social Services and a financial business and making steady repayments on the previous loan.

Annoyingly, that excellent rating does not follow you 'over the pond', if I'd had a gak one, that would have tailed me to the ends of the earth, but I have to rebuild here it seems.

Sounds like a basic signature loan Frazzled. I tried to get one of those when I was 18, to buy a car, but lack of credit prevented it.

 MeanGreenStompa wrote:
Annoyingly, that excellent rating does not follow you 'over the pond', if I'd had a gak one, that would have tailed me to the ends of the earth, but I have to rebuild here it seems.

Yup, found myself in the exact same position

Automatically Appended Next Post:

 MeanGreenStompa wrote:

People being sold mortgages they can't afford to deal with just have my sympathy, not any sense of blame, because the spin and the sale pitch is clever and desperately driven by commission. This should be better regulated and the punishments for businesses pushing the line too far should be far greater.

Yeah, being a reformed salesperson myself, I have no doubt that I could dupe a lot of people into making really bad investments.

Since I wasn't a very good salesperson, I can only imagine how many people a great salesperson could screw over.

 MeanGreenStompa wrote:

 Frazzled wrote:
Why were you taking out a loan for a computer MGS? Was that a home business venture and needed it for that?

But yea, thats cheesy. Having said that, I've not heard of personal loans for computers outside of small business (maybe vendor financing). Interesting.

Naw, my laptop was dying and I decided that I wanted a great computer for playing my MMO on. I gave the cash to a tech-savvy friend and said 'build me a monster' and indeed he did.

Well I hope you had a good Sauron voice when you said it. "Build me a computer worthy of MorrrrrDorrrr..."

Thanks. I never did consumer lending. Don't have a clue.

 Easy E wrote:

Yeah, being a reformed salesperson myself, I have no doubt that I could dupe a lot of people into making really bad investments.

Since I wasn't a very good salesperson, I can only imagine how many people a great salesperson could screw over.

There's a cost - usually social, often financial, occasionally physical - to making stupid decisions without knowing what the hell you're doing. It's the way it should be.

I'm more bothered by Credit Card companies extending credit to 18yo college kids...

Except mine!

 Frazzled wrote:
Except mine!

Yours included!

Freaking pirates!

I haven't taken a single loan in my entire life. True story.

 Soladrin wrote:
I haven't taken a single loan in my entire life. True story.

Sol, you're also squatting in an old police station, married to your housemate, while a little Dutch lovin' on the side, and you work for a store that is... roughly the same as a dispensary here in the States... nothing about your life is normal, why would you need a loan?

Next you'll be telling us you lived in a van down by the river...

Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

For the poor it does because stuff like universal healthcare, socialized healthcare, higher minimum wage, better employee benefits, better welfare systems, etc will decrease financial strain and restrictions and increase the number of life chances for the poor (a lot these things benefit the

middle and upper class as well).

 Cheesecat wrote:

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

For the poor it does because stuff like universal healthcare, socialized healthcare, higher minimum wage, better employee benefits, better welfare systems, etc will decrease financial strain and restrictions and increase the number of life chances for the poor (a lot these things benefit the

middle and upper class as well).

Bah... none of those are necessarily socialism... but, that's not what we're discussing here.

 whembly wrote:

 Cheesecat wrote:

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

For the poor it does because stuff like universal healthcare, socialized healthcare, higher minimum wage, better employee benefits, better welfare systems, etc will decrease financial strain and restrictions and increase the number of life chances for the poor (a lot these things benefit the

middle and upper class as well).

Bah... none of those are necessarily socialism... but, that's not what we're discussing here.

Yeah, you're probably right but they are social programs though.

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.

He was talking about a better, higher minimum wage, something I've heard described here in America as 'hurting the job creators', 'forcing work overseas' and 'Socialist!'.

It's not accurate, but 'Murica, right?

It depends.

Raising the Minimum Wage only benifits those who are working minimum wage, but it does effect most employers.

And increasing Wages does not have a direct effect on the buying power of those who, supposedly, benifit.


By increasing wages, you also increase the expenses of the employers. Expenses which are passed on to their customers, which includes everyone. Both those working minimum wage and not working minimum wage.

 MeanGreenStompa wrote:

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.

He was talking about a better, higher minimum wage, something I've heard described here in America as 'hurting the job creators', 'forcing work overseas' and 'Socialist!'.

It's not accurate, but 'Murica, right?

'Murica... right on!

Also, most Union shops base their wages in part of the federal minimum wage... if they go up, they automatically get a wage increase.

News flash, most Union shops are paid well...

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

NO no that won't work. We need open borders and H1B visas for everyonez.

This can only work to a certain extent, like everything, it is a good idea to help to get the American Economy going, this would help the rest of the world (it's a sad day when the whole world depends on a few countries to do well), as long as the banks and Obama don't over do it it should be fine.



Although it would help if people got more money, higher minimum wage, for right now (most people know my political beliefs by now), all governments need to stop helping the employer and start helping the employee.

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.

Minimum wage comes to mind...

 Vulcan wrote:

Spoiler:

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.

Minimum wage comes to mind...

Go here... 1979 U.S. minimum wage adjusted for inflation: $9.38 /hr. So... has minimum wage been wrong all this time?

 Grey Templar wrote:
It depends.

Raising the Minimum Wage only benifits those who are working minimum wage, but it does effect most employers.

And increasing Wages does not have a direct effect on the buying power of those who, supposedly, benifit.


By increasing wages, you also increase the expenses of the employers. Expenses which are passed on to their customers, which includes everyone. Both those working minimum wage and not working minimum wage.

No, it only DIRECTLY beneifts those who are working minimum wage. It INDIRECTLY benefits EVERYONE - including employers - by increasing the amount of money available to spend on... well, everything. This means increased revenue, which leads to increased profit and (hopefully) pay for those making MORE than minimum wage.

EDIT: An interesting article here:http://www.ips-dc.org/blog/americas_skimpy_minimum_wage

How about $10.74 per Hour? $14.41? $26.96?

If the federal minimum wage had been updated since 1974 using the Social Security AWI, it would now stand at $10.74 an hour. That's quite a bit more than the $9.16 an hour it would be if it had been updated for inflation using the CPI. It's a whole lot more than today's $7.25 an hour federal minimum wage.

A very strong case can be made for a $10.74 minimum wage, which is only 50 cents higher than San Francisco's CPI-adjusted minimum wage.

But that's not the end of the story. The Social Security AWI is based on the changes in people's average annual wages over time. Wages, however, have not kept pace with rising economic prosperity.

Since the 1970s ordinary workers' wages have failed to rise along with the economy as a whole. The massive rise in non-wage income (dividends, interest, and capital gains) has made workers' wages a smaller and smaller slice of the overall pie. America's total personal income per capita — including income from all sources — has risen much faster than the Social Security AWI.

Between 1974 and 2011 the AWI rose a cumulative 17 percent (adjusted for inflation). Per capita personal income, on the other hand, rose 57 percent (adjusted for inflation). Had the minimum wage been indexed to per capita personal income growth starting in 1974, the minimum wage today would be $14.41 an hour.

That's a far cry from $7.25.

By today's standards $14.41 an hour might sound like a lot for a minimum wage, but it doesn't have to stop there. At the top 1 percent of the American income distribution, average incomes rose 194 percent between 1974 and 2011. Had U.S. minimum wages risen at the same pace as U.S. maximum wages, the minimum wage would now be $26.96 an hour.

The difference between $7.25 an hour and $26.96 an hour shows just how much inequality has increased in America over the past four decades.

In short, if minimum wage had increased at the same rate the averge, it would be $14.41.

Interest adjusted, the highest minimum wage has been worth was around $10.50 in the late sixites. And yet at that time, the average America could much better afford a house, car, and college education for thier kids then the average America can now. Why do you suppose that was?

 Vulcan wrote:

 whembly wrote:

 MeanGreenStompa wrote:

 Vulcan wrote:
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?

SOCIALISM!!!


J'accuse!

wat?

Socialism gives ya moar money?? how? o.O

@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.

Minimum wage comes to mind...

Which only effect a portion of the labor force in a positive way, but it does effect prices in a negative way by increasing the cost of anything that has minimum wage labor involved in its production. And most products are in some way related to minimum wage labor. So the cost for someone making above minimum wage to buy the same product has increased with no equivilant increase in wage, IE: that person has had his purchasing power reduced.

The people that did actually benifit from the wage increase will also have to pay more for products due to the increase. So the net gain of the minimum wage increase is very small or non-existant.

The only people not hurt are the companies themselves, they can simply raise the prices of their products to compensate.