Friday, August 15, 2008

Finally: PROOF one late payment does not a higher credit risk make

Finally: PROOF that one late credit card payment does not a significantly higher credit risk make, justifying credit card companies to jump interest rates from 2-5% all the way to 20-25% for one flub -- and maybe not just on card that was late.

Just how much does one late credit card payment lower your credit in the eyes of regular credit agencies, like Experian, etc? Ten points; five; none? Would the card companies wish the credit rating agencies to drop the bottom out of everyone’s credit score who make one late payment – for the purpose of weighing the worthiness of future applicants they know nothing about?

We all know the answer.

Congress should write a law restricting credit card companies to raising your interest rates only in some coherent scheme compatible with what well established credit rating agencies estimate of your credit worthiness still is. That would adequately cover the legitimate interests of both creditor and debtor – with no crocodile tears about over-protection diminishing the credit opportunities of new or risky debtors.

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