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Risk factors of credit cards

Date: Sat, 08/13/2005 - 14:17

Submitted by roxette
on Sat, 08/13/2005 - 14:17

Posts: 4009 Credits: [Donate]

Total Replies: 7


Creditors look into the credit report of an individual periodically to know if the credit card member has become a higher risk. Thus, if you were never late in making payments to a particular bank, you may have to pay a higher rate of interest because you were late in making payments to some other bank.

The creditors watch the following risk factors:

  • The creditors primarily look for any late payments no matter if it is one day late only.

  • Keen observation is done on any sudden drastic change in the spending and payment patterns. They look out for any credit carrying high balances and making minimum payments.

  • Be cautious if your credit report is showing many open accounts with high balances.

  • Attention is required if your carrying balance is over 30% of the credit limit for long periods.

  • There is a risk if your credit report is showing a lot of enquiries for additional credit.


Regards
Roxette


Roxette--I posed this scenario with my daughter and her friend's when they were first establishing credit. I tried to explain that to establish credit you charge something and then make on-time payments, thus establishing a credit history. Both my daughter and her friend were of the belief that they were better off paying the entire purchase off the next month. What do you think?


lrhall41

Submitted by Lorri on Wed, 05/03/2006 - 20:54

( Posts: 1721 | Credits: )


The best way to handle credit is to pay it off completely within the due date. This increases not only your credit scores to the maximum but you also hold a prestigious financial identity in front of the future lenders.

Lorri, you are teaching good lessons of credit to your daughter and her friend. This awareness will definitely help them all through out their life.


lrhall41

Submitted by david on Thu, 05/04/2006 - 12:31

( Posts: 1229 | Credits: )


Hi Lorri

Everyone goes through some financial troubles in one stage. It's good that you have been able to set up a good example to your daughter from all the mistakes you did in the past. Hopefully, she will have a prestigious financial identity in the future.


lrhall41

Submitted by david on Fri, 05/05/2006 - 12:42

( Posts: 1229 | Credits: )