No risk = not creditworthy?

dag_2

Are your comments just supposition or do you work in Credit Risk for a bank?

Why should that make any difference? No I don't work in a bank, but I did do a college course that included credit control once. So I know that you can't eliminate risk from a credit business without completely eliminating the business altogether.

If I was running my own lending shop, I would be trying to balance risk against profit potential too. Wouldn't you? So I guess the big banks do it too.

But like you say, banks only analyse it so far - and most of the analysis is done by computer. Why? Because it's cheaper.

A bank probably has statistics on previous lending, but only in so much detail. There's no point in trying to analyse new customers in any more detail than you already have on previous customers. I certainly don't believe they have clerks umming and arring about the what-ifs on every application form for hours on end, or that they have huge libraries of books and articles on consumer credit behavioural psychology.

But don't underestimate computerised modelling of debt risk. The algorithms can be pretty intricate. And they can be changed as time goes by, so that the computer gets more and more accurate.

Have you not noticed that some lenders ask for a lot more information than others?

Like student100 says, banks generally offer 0% promotions as an incentive, because they hope the balance will earn interest at a later date. They offer interest-free overdrafts to undergraduates for much the same reason.

Like you say, they can't know that you've stoozed cards before - but they don't really need to know. The computer can still see from your high income and low debt level that you're likely to stooze the card this time - and that's all that matters.