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Author Topic: The economic turmoil thread  (Read 460 times)
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Isgrimnur
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« on: July 29, 2014, 01:56:35 PM »

I checked my FICO score through my Discover Card (one of the best perks ever), and have moved into the "very dependable" bracket with my score of 747.

Which makes me much better off than one-third of everyone else:

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More than a third of the country is in trouble when it comes to paying debts on time; 35% of Americans have debt in collections, according to a study out Tuesday from the Urban Institute, which analyzed the credit files of 7 million Americans.

That means the debt is so far past due that the account has been closed and placed in collections. This typically happens after the bill hasn’t been paid for 180 days. It also means the debt has been reported to credit bureaus and can affect someone’s credit score.

Southern states especially stand out with the highest concentration of people delinquent. In 13 states — Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Texas, Nevada, New Mexico and West Virginia — and Washington, D.C., more than 40% of the population with a credit file has debt in collections. Nevada, one of the states hardest hit by the housing crisis and recession, has the highest share, at 46.9%.

The 77 million Americans with debt in collections owe an average of $5,200. That includes debt from credit card bills, child support, medical bills, utility bills, parking tickets or membership fees.
...
At the same time, a significant number of people with debt in collections aren’t aware of the bill and may otherwise have great credit, especially when it comes to medical bills that patients often think were picked up by insurance, says Greg McBride, chief financial analyst for Bankrate.com.
...
The research only draws on data from Americans with a credit file, so the researchers say lower-income consumers are underrepresented, and alternative forms of debt such as payday loans aren’t included.
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Lassr
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« Reply #1 on: July 29, 2014, 03:58:57 PM »

I'd be curious to see mine these days. I remember about 10 years ago when I was buying a car from Nissan and I told them I wanted their 1.9% interest deal, they said that was reserved for people with excellent credit ratings, which I thought was kind of an asshole-ish thing to say to your customer but when he checked my rating I had an 815 score and was offered 0% interest.  Tongue
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« Reply #2 on: July 29, 2014, 04:15:41 PM »

Quote from: Lassr on July 29, 2014, 03:58:57 PM

I'd be curious to see mine these days. I remember about 10 years ago when I was buying a car from Nissan and I told them I wanted their 1.9% interest deal, they said that was reserved for people with excellent credit ratings, which I thought was kind of an asshole-ish thing to say to your customer but when he checked my rating I had an 815 score and was offered 0% interest.  Tongue

Same here. I had an 800'ish rating last time we bought a car (2 years ago), and I assume it would be the same.

Having 35% of the population with debt in collections is a staggeringly high number.  The more interesting question to me is how and why folks are in so much debt.  Catastrophic bills (i.e. medical)?  Unemployed or underemployed?  Simply not living within their means?  What's the largest culprit?

I'm amazed at how many people just in my neighborhood have the nice house, the new cars, the boat, the ATV's, do yearly cruises, etc...then you find out they have multiple maxed credit cards, are in collections or foreclosure, or rely on payday loans to make ends meet.  Folks that you would never suspect are in that 35%.
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« Reply #3 on: July 29, 2014, 05:08:52 PM »

Quote from: Isgrimnur on July 29, 2014, 01:56:35 PM

I checked my FICO score through my Discover Card (one of the best perks ever), and have moved into the "very dependable" bracket with my score of 747.

Which makes me much better off than one-third of everyone else:

You're actually better than 50% of the people according to this article.

Quote
A FICO score can range from 300 (very bad) to 850 (very good). The median is 723, according to Fair Isaac statistics.

Some reassuring news: The majority of consumers still have good credit. Forty-five percent of consumers have a score between 700 and 799, and 13 percent score above 800, according to statistics from Fair Isaac.

Just like the SATs, perfect scores are rare. Even though 850 FICO scores do exist, high scores taper off around 825, says Sweet. "You can't get much better -- that's pretty much walking on water," she says.

Now for the rest of the population: 27 percent rank above 600, and 13 percent weigh in above 500. Only 2 percent have 500 or below, according to Fair Isaac numbers.
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Isgrimnur
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« Reply #4 on: July 29, 2014, 05:13:48 PM »

I'll take better than median.  I've never wanted to be a complete front-runner.  I'll take being in the front half of the peleton.  It keeps the wolves from trying to pick me off and the hunters from wanting to mount my head.
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stessier
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« Reply #5 on: July 29, 2014, 05:18:46 PM »

Which report does Discover check?  Or does it average all 3 numbers?
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Isgrimnur
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« Reply #6 on: July 29, 2014, 05:33:45 PM »

TransUnion
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« Reply #7 on: July 29, 2014, 05:40:52 PM »

Seemed timely


The middle class is 20 percent poorer than it was in 1984

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Nostalgia is just about the only thing the middle class can still afford. That's because median wealth is about 20 percent lower today, in inflation-adjusted dollars, than it was in 1984.

Yes, that's three lost decades.

Now, as you might expect, the middle class has been hit particularly hard by the Great Recession and the not-so-great recovery. It's all about stocks and houses. The middle class doesn't have much of the former, but it does have a lot of the latter. And that's bad news, because, even though the crash decimated both, real estate hasn't come back nearly as much as equities have. So the top 1 percent, who hold more of their wealth in stocks, have made up more of the ground they lost. But, as the Russell Sage Foundation points out, the slow housing recovery means that, in 2013, median households were still 36 percent poorer than they were a decade earlier.

In fact, the housing bust was big enough to erase all the gains the middle class had made the past 30 years—and then some. As you can see below, median households didn't add much wealth between 1984 and 2007. That's what happens when real wages don't increase, and the cost of a middle class lifestyle—housing, healthcare, and higher education—does. So, as Dean Baker points out, when the crisis did come, it devoured these meager gains and left the middle class with 20 percent less wealth than they had when it was "Morning in America."
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coopasonic
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« Reply #8 on: July 29, 2014, 05:42:54 PM »

Quote from: Isgrimnur on July 29, 2014, 01:56:35 PM

I checked my FICO score through my Discover Card (one of the best perks ever), and have moved into the "very dependable" bracket with my score of 747.

...and this is why credit ratings are crap. smile

The major negative on my credit rating (Capital One uses TransUnion and breaks it down into letter grades in categories) is credit utilization.  I only have one open credit card and utilization is fairly high on that card, but I pay it off in full every month. Because of the way the due date lags, the balance overlaps and it looks like I carry a high balance, but I don't and haven't paid credit card interest in 13 years. I have >50% equity in my house and my car is worth more than the loan. My credit rating is dragged down because I don't have lots of credit cards I don't use.

They also have a simulator that tells what would happen to your credit if you make specific changes. According their simulator I could get a 30 point bump in credit rating by getting another credit card with a $20k limit.

Then again it's not very relevant to me as I don't actually need credit for anything. The only impact I can imagine is insurance costs.
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Isgrimnur
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« Reply #9 on: July 29, 2014, 05:46:00 PM »

Tongue

In short, you don't have to play the game for which they've developed the scoreboard.  It's not crap, it's just not useful to you.  For other people, this score determines a good portion of how major life decisions play out and how much they cost. 
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« Reply #10 on: July 29, 2014, 05:55:30 PM »

Quote from: Isgrimnur on July 29, 2014, 05:33:45 PM


Interesting.  When I pull my score from all 3, TransUnion is always the outlier - usually on the high side by 10-15 points. 
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coopasonic
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« Reply #11 on: July 29, 2014, 06:04:11 PM »

The terrible thing is that I am considering reopening a credit line so I can move past you on the scoreboard.  saywhat

Oh, the original purpose of this post is to argue the point about it being crap. It indicates that I am a higher credit risk than you are. I find that difficult to believe (for those playing at home, I am not being a jerk - well more of a jerk than normal - this is based on Isg's post history). If I lost my job today, I'd be good for years without income or unemployment. It seems like net worth ought to be a factor in some way.

That credit score ought to serve you well when it comes time to mortgage yourself through retirement.  icon_twisted
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Isgrimnur
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« Reply #12 on: July 29, 2014, 06:14:50 PM »

That's already happened.  There's no reason for me to pay down my student loan debt, the majority of my debts, any quicker than the 20-30 year remaining term, as it's the lowest permanent rate of debt at sub-4%.  Of course, I'm looking at probably quadrupling my debt load next year through a mortgage acquisition.
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Lee
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« Reply #13 on: July 29, 2014, 06:24:31 PM »

Quote from: coopasonic on July 29, 2014, 05:42:54 PM

Quote from: Isgrimnur on July 29, 2014, 01:56:35 PM

I checked my FICO score through my Discover Card (one of the best perks ever), and have moved into the "very dependable" bracket with my score of 747.

...and this is why credit ratings are crap. smile

The major negative on my credit rating (Capital One uses TransUnion and breaks it down into letter grades in categories) is credit utilization.  I only have one open credit card and utilization is fairly high on that card, but I pay it off in full every month. Because of the way the due date lags, the balance overlaps and it looks like I carry a high balance, but I don't and haven't paid credit card interest in 13 years. I have >50% equity in my house and my car is worth more than the loan. My credit rating is dragged down because I don't have lots of credit cards I don't use.

They also have a simulator that tells what would happen to your credit if you make specific changes. According their simulator I could get a 30 point bump in credit rating by getting another credit card with a $20k limit.

Then again it's not very relevant to me as I don't actually need credit for anything. The only impact I can imagine is insurance costs.

I am curious to what your credit score is then, if you want to say of course. I am kind of similar, I have 3 credit cards that pay for everything. Every bill and expense I have is paid through those credit cards (for points, figure it's time to make money back from the banks). I pay them off in full every month and repeat the process. Until fairly recently I paid for a credit watch service through my bank, I think it was with TransUnion. My score has stayed at, or slightly above, 780 for three years, even when I had a car payment with 3 years left on it. I can make a large purchase, move, lose my job, pay off my car, etc, and it stays around 780. The credit watch service's only comments on how to improve my credit was to buy a house.

If it matters to you, couldn't you just pay the card at different date? Or get some credit cards with good a good cash back system to lower your utilization and get you some money back from them. I just applied for that Capital One card that is 1.5% on all purchases which seems to be the best out of there for cash back without categories (of course it looks like they are going to deny me because lack of income).
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« Reply #14 on: July 29, 2014, 06:54:30 PM »

Quote from: Gratch on July 29, 2014, 04:15:41 PM


Having 35% of the population with debt in collections is a staggeringly high number.  The more interesting question to me is how and why folks are in so much debt.  Catastrophic bills (i.e. medical)?  Unemployed or underemployed?  Simply not living within their means?  What's the largest culprit?



I would guess living beyond their means. I know numerous people that have a LOT of stuff and nice cars and nice house and I know they probably do not make much more than me. I wonder how they do it and can only imagine a good portion of their income goes to monthly payments of debt.
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« Reply #15 on: July 29, 2014, 06:58:00 PM »

Quote from: Lee on July 29, 2014, 06:24:31 PM

I am curious to what your credit score is then, if you want to say of course. I am kind of similar, I have 3 credit cards that pay for everything. Every bill and expense I have is paid through those credit cards (for points, figure it's time to make money back from the banks). I pay them off in full every month and repeat the process. Until fairly recently I paid for a credit watch service through my bank, I think it was with TransUnion. My score has stayed at, or slightly above, 780 for three years, even when I had a car payment with 3 years left on it. I can make a large purchase, move, lose my job, pay off my car, etc, and it stays around 780. The credit watch service's only comments on how to improve my credit was to buy a house.

If it matters to you, couldn't you just pay the card at different date? Or get some credit cards with good a good cash back system to lower your utilization and get you some money back from them. I just applied for that Capital One card that is 1.5% on all purchases which seems to be the best out of there for cash back without categories (of course it looks like they are going to deny me because lack of income).

I think it was 726 (TU). As far as paying the credit card bill earlier, I'd rather squeeze the pitiful bit of extra interest out of having my money until the due date. I already have the Quicksilver Rewards card so I am good on rewards. I used to be one of those 800 guys but I got rid of some old cards and apparently that was a triple whammy: lowering my total credit, increasing my utilization and lowering the age my oldest open line.
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Isgrimnur
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« Reply #16 on: July 29, 2014, 07:08:47 PM »

I was forced into taking a hit when the CARD legislation went through.  I went from several open lines, a couple dating back to the age of 18, to having no open lines, as the feds gave them 9 months in which to have their last hurrah at modifying rates for no reason.  Since every last one of them wanted to change my low fixed rates to higher, variable rates, I took the door available to me to tell them to sod off, cancel the line, and they could keep the line at the current terms until such time as I paid them off, which they were legally obligated to do.

I fear it's going to be a long-to-never-again time coming before credit card companies see fit to give anyone a fixed rate ever again.
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« Reply #17 on: July 30, 2014, 04:29:22 AM »

Quote from: coopasonic on July 29, 2014, 06:58:00 PM

I think it was 726 (TU).

Heck, anything over 700 is good, doubt you have anything to worry about, especially with interest rates this low for at least another year.

I am like you on getting every last bit of interest. Except I only get .87% APR so we're probably only talking pennies. Still, I will take every cent I can get.

For credit cards I was looking at what to do with my AmEx which has an annual fee. I didn't want to cancel it because of the credit hit, but I found out I can downgrade it to the free version. I will just use it where the categories are beneficial.
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« Reply #18 on: July 31, 2014, 02:54:43 AM »

Quote from: coopasonic on July 29, 2014, 06:04:11 PM

The terrible thing is that I am considering reopening a credit line so I can move past you on the scoreboard.  saywhat

Oh, the original purpose of this post is to argue the point about it being crap. It indicates that I am a higher credit risk than you are. I find that difficult to believe (for those playing at home, I am not being a jerk - well more of a jerk than normal - this is based on Isg's post history). If I lost my job today, I'd be good for years without income or unemployment. It seems like net worth ought to be a factor in some way.

That credit score ought to serve you well when it comes time to mortgage yourself through retirement.  icon_twisted

Couldn't you just ask for a raise in credit limit on your current card(s)? I don't think quantity of open lines matters significantly, its just where you are relative to your total credit.

I only have three open credit cards, but my combined limit is like $60K. I, like you, put literally everything on one of two cards a month (airline and hotel miles are worth a lot to me) and pay the balance in full every time its due, but no sooner. My credit score is in the 820s.
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« Reply #19 on: July 31, 2014, 03:12:05 AM »

I don't know my credit score. It would be perfect if not for my wife, a charge-first-and-worry-later type who's now on a short leash after having dug herself a deep grave some years ago. My credit probably took some splash damage from that. Visa keeps trying to sell me a black metal credit card with a ridiculous price tag so I guess it can't be too bad.
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« Reply #20 on: July 31, 2014, 04:41:47 AM »

Quote from: Ironrod on July 31, 2014, 03:12:05 AM

Visa keeps trying to sell me a black metal credit card with a ridiculous price tag so I guess it can't be too bad.

Haha, I got an offer for one of those in the mail the other week as well.  I'm not sure whatever "VIP Benefits" they come up with is worth $500 yearly fee.  Purely a goofy status symbol credit card.
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