The 6 year rule

chilli_dog

Dont know if anyone can answer this but it got quite heated in a conversation at work.

If you default or get a CCJ on a credit agreement then you get a notice on your credit file. This lasts 6 years

How long before the banks or credit card companied start to ignore this?

ie. a freind has a CCJ that is four years old, now seems able to get main stream credit again easily, got a new mobile contract ok. I must point out that since the CCJ she has maintained a very good credit history. No missed payments.

I guess it depends on what the default or CCJ was for but just wondering how they are veiwed when they get older?

keith_lard

I am trying to get my head around what 'they' are looking for in your credit file???

Maybe those with a CCJ and NO MISSED PAYMENTS (24 months maybe?)since the CCJ was filed are better customers???

Once you have got a CCJ maybe it will make you a better customer?

Just a thought!

K.

chilli_dog

This got quite heated at work!!

I cant understand either people who dont qualify for an advertised APR because they may have a poor credit history but can have the same loan at a higher APR?

Surely you have the same risk of not paying back a loan at 6.5% as you do at 19.9%?

Perhaps it's a good job I dont work in Financial Services !!

I'd probably give everyone a loan.

keith_lard

I think maybe 'some' people who do fall off NEVER want to do it again (like me!)

I have learned alot since I fell off the ladder!

I would make a better customer now, but will have to wait 6 years untill I can show them!


Shame to spend so much time in the sin bin!

K.

Willsnarf1983

chilli_dog wrote:

Surely you have the same risk of not paying back a loan at 6.5% as you do at 19.9%?

The pt is that if ur a risk and they give u 19.9% ur gonna pay back the initial loan amount quicker (ie before u default) and then anything else the lender get is a bonus.

tr3mor

Willsnarf1983 wrote:

The pt is that if ur a risk and they give u 19.9% ur gonna pay back the initial loan amount quicker (ie before u default) and then anything else the lender get is a bonus.

It's how they group people. If you're a higher risk, they'll group you with higher risk people on their books, expecting maybe only 8/10 of you to pay back the loan in full. The extra interest everyone who's considered a higher risk pays covers the payments for the people who do default!

Willsnarf1983

tr3mor wrote:

It's how they group people. If you're a higher risk, they'll group you with higher risk people on their books, expecting maybe only 8/10 of you to pay back the loan in full. The extra interest everyone who's considered a higher risk pays covers the payments for the people who do default!

twas kinda what i was getting out, i just hashed at doing it

Will

fubar_2

Although I can understand these companies charging a higher interest rate for some who they consider a risk to replay the loan back, but I wish that at the end of your loan term if you had kept payments up to date then you had proven that you were not the risk that the company thought you were, then they should adjust the rate of the loan to reflect this and repay the difference back to the customer, its an unfair hike in interest rate just because they thought you would not keep up with the payments.

krakan

fubar wrote:

Although I can understand these companies charging a higher interest rate for some who they consider a risk to replay the loan back, but I wish that at the end of your loan term if you had kept payments up to date then you had proven that you were not the risk that the company thought you were, then they should adjust the rate of the loan to reflect this and repay the difference back to the customer, its an unfair hike in interest rate just because they thought you would not keep up with the payments.

Yes, but like Will and tr3mor say, it's basically so that the 'bad' credit people are the ones who subsidise the defaulters. It's no different than the way that frequent car-crashing types pay high premiums to cover those of their 'group' who claim a lot..

Basically, the credit companies lose a lot to defaulters and they pick on the people with a bad credit history to cover those losses..

*Louise*

fubar wrote:

Although I can understand these companies charging a higher interest rate for some who they consider a risk to replay the loan back, but I wish that at the end of your loan term if you had kept payments up to date then you had proven that you were not the risk that the company thought you were, then they should adjust the rate of the loan to reflect this and repay the difference back to the customer, its an unfair hike in interest rate just because they thought you would not keep up with the payments.

Ah....wouldn't that be great.....like being in the perfect world....