Slashdot Mirror
35% of American Adults Have Debt 'In Collections'
New submitter meeotch writes: According to a new study by the Urban Institute, 35% of U.S. adults with a credit history (91% of the adult population of the U.S.) have debt "in collections" — a status generally not acquired until payments are at least 180 days past due. Debt problems seem to be worse in the South, with states hovering in the 40%+ range, while the Northeast has it better, at less than 30%. The study's authors claim their findings actually underrepresent low-income consumers, because "adults without a credit file are more likely to be financially disadvantaged."
Oddly, only 5% of adults have debt 30-180 days past due. This latter fact is partially accounted for by the fact that a broader range of debt can enter "in collections" status than "past due" status (e.g. parking tickets)... But also perhaps demonstrates that as one falls far enough along the debt spiral, escape becomes impossible. Particularly in the case of high-interest debt such as credit cards — the issuers of which cluster in states such as South Dakota, following a 1978 Supreme Court ruling that found that states' usury laws did not apply to banks headquartered in other states.
Even taking into account the folks who lost a parking ticket under their passenger seat, 35% is a pretty shocking number. Anyone have other theories why this number is so much higher than the 5% of people who are just "late"? How about some napkin math on the debt spiral?
Oddly, only 5% of adults have debt 30-180 days past due. This latter fact is partially accounted for by the fact that a broader range of debt can enter "in collections" status than "past due" status (e.g. parking tickets)... But also perhaps demonstrates that as one falls far enough along the debt spiral, escape becomes impossible. Particularly in the case of high-interest debt such as credit cards — the issuers of which cluster in states such as South Dakota, following a 1978 Supreme Court ruling that found that states' usury laws did not apply to banks headquartered in other states.
Even taking into account the folks who lost a parking ticket under their passenger seat, 35% is a pretty shocking number. Anyone have other theories why this number is so much higher than the 5% of people who are just "late"? How about some napkin math on the debt spiral?
is a pyramid scheme.
One reason that I'm sure is a factor in the difference, is that companies are less inclined to bother reporting the "past due" status. It's overhead for them to do it, and there's not really any benefit, but when someone hits the collections threshold, they'll go ahead and take the time to report it.
Given the trend of income inequality it would be no surprise of any sort of abrupt riots to the magnitudes of some civil rights leader got killed
This was discussed on Fatwallet today, and most of the sensationalism was debunked quickly.
http://www.fatwallet.com/forum...
A few juicy tidbits:
More details: "An alarming 35 percent of people with credit files have debt in collections reported in these file s . This percentage is nearly identical to results from a 2004 analysis of credit bureau data by the Federal Reserve, which found that 36.5 percent of people with credit report s had debt in collections reported in their file s (Avery et al. 2004). Note that consumers themselves may not realize they have debt in collections. Some consumers report becoming aware of this debt only when they review their credit report (CFPB 2013)"
...and...
The actual source: http://www.urban.org/publicati...
Only 5.3% are currently past due on a bill. "5.3 percent of people with a credit file have a report of past due debt, indicating they are between 30 and 180 days late on a nonmortgage payment"
So most of the people have old debts which could be up to 7 years old.
So there you go. A lot of us have an outstanding medical bill on our credit reports, and we should check them more often.
Once you have something go into collections it is always there until you pay it. (medical bills/school debt probably drives a lot of this)
You're only 30-90 days lat for a short period.
"Many consumers were burned for relatively small amounts -- about 10 percent of the debts were smaller than $125, Ratcliffe says"
This kind of thing probably drives the numbers way up too. That late fee from blockbuster, etc.
1) find popular stories of the day on other news sites
2) copy and summarize to slashdot
3) ????
4) (Hopefully) profit!!
The whole point of a "credit score" is horribly broken. In order to get approved for debt, you must have debt. If you have money in the bank and no monthly debt payments you have a reduced score. It's a SCAM! A scheme to make sure that you are constantly in debt, and yet it's perfectly legal. Living in debt constantly costs you money, and for what? So that you can have more debt? Wow!
The fact that people don't get this, or simply don't care, is very telling.
Personally I have almost no debt, just my car payment. I don't have a lot of debt so have a laughably low credit score. If I don't have cash I can wait to buy something. Actually since I manage my personal finances very well purchasing something I want is never an issue.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
Not something relatives or acquaintances brag about I suppose.
What are the odds of this happening if I know 400 people and zero out of 35%? Must be at least 6-sigma!
The Middle Class didn't.
The Poor got taken to the cleaners.
Thank god my investments in Guillotine and Pitchfork franchises are proving to be fruitful.
-- Tigger warning: This post may contain tiggers! --
2-3 months ago I got a notice from the State (CA) collection agency stating I owed them $200 from 2007, along with warnings they could garnish my salary, garnish an incomtax refund, take my firstborn, etc. First I've heard of it. They have a number to call to ask questions. Half the time the phone isn't answered, the other half I leave voicemail that is never returned. So I'm prolly in collections, along with the credit ding, for a 7 year debt I knew nothing about and can't get any information on.
I'm about to spend the money for a registered letter to ask WTF, but I'll bet they don't respond to it.
Farking asshats.
i have to pay day care for one kid and after school for another
add mortgage, HOA dues, taxes, food, car, mass transit and some other expenses
when school is out you have to pay for camp which in NYC for most people is like $4000 for the summer, although i got a deal MUCH CHEAPER
for a lot of people they also pay for tutoring for their kids or test prep
sometimes you have to use the credit card instead of paying cash and sometimes you have to juggle bills
get a credit card and charge $100 a month and pay it off. or charge your living expenses and pay it off
simple
What about last-bills from phone companies, or cable companies, etc? I have debt that is "in collections" with both Comcast and Verizon. And it'll be a cold day in hell before they get another dime out of me. It's only like $100 each, but fuck them and fuck their bullshit. I wonder what % of this are people like me?
In order to get approved for debt, you must have debt.
No, to get approved for debt you need one of two things:
1. A credit history. That's not necessarily debt, it is a history of handling small debts that you've paid off.
2. Belong to a demographic that the credit companies are chasing.
When I was in college, the stores were deluging me with offers of credit cards because of my age/college while the credit union followed rule 1 and repeatedly denied me a credit card. In recent years, the largest flood of credit card offers were when I had no debt at all, but had a paid-off car loan.
It's a SCAM! A scheme to make sure that you are constantly in debt,
Nobody can force you to go into debt.
Over 1/4th of Americans are retards.
I did the buy 8 get 8 free CD's deal from columbia house in the 1990's... but then I only bought 7 CD's after getting the 8 free. There is a collection agency still chasing me for $15 20 years later.
in college i literally lived on ramen and did not have "the best" college experience but i made my way into a successful career. conversely i know college students who lived it up, went away for every spring break (because come on, you just *have* to!), here i wondered how on earth could they afford it!? then a few years later they filed for bankruptcy.
all paid for by (other) taxpayers. nice!
it's amazing, really.
Unsecured debt may often be ignored when times are tight. I've a fair number of friends who have done that.
Fedex sent me to collections for a debt I didn't owe. Now I was very feisty with it and made sure to check that it didn't go on my credit history, but many people wouldn't. It was only $20. So maybe they just ignore it, it gets on the credit record. That would be "in debt collections" but wouldn't really reflect on the rest of my finances, it would just be something I decided to quit fighting.
There's a difference between someone with a small debt in collections because they don't agree they owe it and someone with a bunch in collections because they truly are financially underwater.
Twice I've had problems with phone companies making a billing mistake, working it out with me over the phone, waiving it from my bill and THEN selling it to a collections agency.
They're double-dipping it as a write-off AND making back 10% or whatever they sell it for.
I have excellent credit and pay my bills on time, but nothing can convince a collection agency that they were sold bad debt. Why would they ever listen to or trust the person they're hassling? Not like they care anyways, say they know I'm right, why would they stop bothering me when they can hassle family and shame me into paying a debt I don't owe? It's extortion.
Cwm, fjord-bank glyphs vext quiz
The simple fact of the matter is, if you are in collections, most companies get the ability to rape you. They will be as harsh as possible when talking to you so that you don't want to negotiate. This equals more money in interest.
Student loans threatened me into work I couldn't physically do, and was relying on medicaid to keep my fake leg working. The threats forced my work over what I could do and pushed me into homelessness for a time.
I tried calling the collectors with the last of my money and all they could do is tell me to pay $14,000 in student loans in 3 monthes. Despite their threats causing me $100k in medical bills, multiple suicide attempts, and lost work time.
Since I have stabalized financially and I have been talking to them more, you soon realize the system was made to rape you from the beginning. It's a lot easier to face when you realize you aren't necessarily the evil one.
You can ask specific questions, but the department of education will refuse to give any specifics. The best I had gotten was a letter that read, "We have investigated your claims [what was investigated specifically was not stated], and we have found no issues. We have no departments that can handle this matter and if you would like to pursuie this it will have to be through litigation."
This is the US of A. I'll hang myself at a college before
I'm threatened into [work I can't do] -> [homelessness]. I'll do my best, but when the interest is $700 a month, you know the company you were working with had no serious intension of helping to pay back any dept, but only to cause you new ones.
I've heard a lot of people rack up weird charges when moving/switching internet/cable providers, unreturned equipment, final charges etc. The customers are often completely unaware that they were charged or owe anything and don't discover it until they check their credit reports years later.
I had gene testing for cystic fibrosis at Georgetown during my wife's pregnancy. A year later I had not seen a charge on my insurance and had already moved to another location. The testing was done by a 3rd party who was also supposed to send the insurance claim. After calling the hospital many times no one could tell me the name of the company or even had a clue what I was talking about. No one replied to e-mails. Of course, around 1.5 years after the test it shows up on my credit report.
A similar incident happened with a dentist. They sent me a bill a few weeks later, but apparently there was still $15 they forgot to include on the initial bill. They send me another bill more than 6 months later and at that point I was living in a new place and never got it and never knew to expect it. About a year later it ends up on my credit report. That dentist actually had my phone number, but they never bothered to call...
For some reason many many people I know have had similar experiences, so I think most of this statistics has to do with many companies being absolutely brain dead.
I am of the opinion that if the typical person is hit by lightening and we add up the liabilities and assets that we will find most people are worth less than zero. Outstanding mortgages, car loans and other loans are only part of the issue. the cost of dying and the costs of burials as well as the cost of settling estates add to the issue but then there are a pile of other issues. The support of your kids, their education, your widow's needs all are considerations. So when you sell off the house and the car and everything else you can bet that it is rare to have enough life insurance to cover it all. Got three teens? How about college for them? Does your pension die with you or does it stay alive for your widow? As a nation America can not afford itself. As individuals we can not afford ourselves and the exceptions are sort of rare.
Just having one is sufficient. If you owe nothing on it, each month it'll be marked as "pays as agreed" on your credit report. Also it shows up as unused credit, which helps your score. Getting one and not using it works just fine. Having more than one and not using it works even better.
Anyone have other theories why this number is so much higher than the 5% of people who are just "late"?
The first window lasts from 0.08 years to 0.5 years, while the second window lasts from 0.5 years to 7.0 years. The relative window width is (7.0 - 0.5) / (0.5 - 0.08) = 6.5 / 0.42 = 15.47. So if each person only had zero or one debts, and no debt was ever paid off, you'd expect there to be 15.47 times as many debt holders in the second window as in the first. 15.47 * 5% = 77%. So the fact that it is at 35% means that there is some combination of people being in both categories and people paying off their debt while it is "In Collections." If it was 5%, or 77%, you'd be able to make a pretty solid guess that something was hinky, but 35% is in the "could be perfectly reasonable" range.
I'll also echo the sentiment that some creditors do a horrible job of billing. I had a large outstanding debt for years before finding it on my credit report. The company had a typo in my address from the original signup, but had been getting copies of my credit report which had my correct address. They sent all the bills to the incorrect address they had on file, never once contacted me at the address on file with the credit reporting company they had been contacting.
Stop-Prism.org: Opt Out of Surveillance
I don't get that either.
I pay for everything cash, so I have a low credit score.
How the fuck does that work?
I paid for my car cash, I pay my rent cash, I pay the cable company cash.
I have over $30k in the bank and I have monthly paychecks.
So I should have a much higher credit rating than someone who is constantly paying with credit cards in my opinion.
I wouldn't even mind so much, except that when renting a house they do a background check, and they expect to find a credit history, which I don't have.
Went to a hospital for treatment. Hospital got my recently changed address-- which didn't get forwarded to the doctor doing the treatment. Got and paid the bill from the hospital. The doctor bill went to the old address-- which also don't get forwarded.
Only found out about the bill when the collection agency did the research, found my phone number and called. Got that bill paid once I found out...
Where republican values prevail.
I remember I posted a few weeks back that you should never own a credit card. I got modded troll and flamed pretty heavily.
And that's the problem with the publics modern perception of credit. Because I do not have a credit card and suggest that you shouldn't either, I'm considered a quack. I buy just as much useless garbage as anyone that modded me down does. I go on vacations, I order things online, I buy soda at the gas station. The only difference is I don't pay a 7% to 30% fee to do all of those things. And that is exactly what a credit card does. It doesn't help your credit. That's a lie driven by marketing campaigns of credit card companies.
The Michigan teachers union sics bill collector on former members after they legally opted out of the union:
http://poorrichardsnews.com/po...
And yet most of these fools keep spending massive amounts of $$$ for smartphones and other unneeded toys!
I ran into this a few years ago. Basically, I got a random call saying I owed about $1k. After asking for the debt verification letter to be sent, I was able to figure out that the debt in question was for some daycare provider in 2009, 3 years before receiving my first collections call. Problem was, we had moved out of that area when this supposed debt occurred, meaning it shouldn't have been charged in the first place. The daycare provider couldn't produce any documentation to support their claim, saying that it happened 3 years ago and they can't find anything. I then called the debt collection agency back and asked for the debt to be discharged as a result, but they said the daycare center claims the debt is valid and won't reverse it. I then opened a ticket with TransUnion (where the collections was listed) and explained the situation. 30 days later I got a letter saying the looked into the debt and determined that it is valid, despite having no documentation to back the debt up, and my documentation showing I wasn't even living in that area. Best part is, I followed up with TansUnion to find out how they validated the debt, and was told they called the daycare center and simply asked them if it was valid; no proof or documentation or anything provided. The whole system is a racket, and there's basically no way to get collections reversed unless the debt involves identity theft. The original creditor has no interest in the truth because they already sold the debt. The collection agency has no interest in the truth because they have already bought the debt. The credit industry has no interest in the truth because it's their core business. The only reason this whole thing hasn't bothered me too much is because since I basically went 4 years before realizing the debt existed, I can just wait for it to fall off my report.
Personally I have almost no debt, just my car payment.
We opted out the debt economy years ago. We froze our credit reports and paid cash for our last house, car and motorcycle. We could have some dinky medical bill or something that slipped through the cracks in collections and not even know it. We might not even find out about it until we update our address when the credit freezes expire and we need to renew them.
You don't need credit cards, car loans, or mortgages. We're living proof. We fly, stay at hotels, rent cars all the things people think they need credit to do. We don't pay more for car insurance, though we do have the occasional utility deposit.
Nothing you can buy with credit feels as good as opting out of the debt economy.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
I pay for everything cash, so I have a low credit score. How the fuck does that work?
Sure, you might be independantly wealthy and just buy everything with cash... or maybe you live day to day off the money you make turning in aluminum cans. In other words, your score is low because they can't tell you from hobo.
I paid for my car cash, I pay my rent cash, I pay the cable company cash.
I have over $30k in the bank and I have monthly paychecks.
None of which is reported to a credit scoring agency.
So I should have a much higher credit rating than someone who is constantly paying with credit cards in my opinion.
You are probably more credit worthy, and probably deserve a higher score, but you aren't playing the game to get one.
I wouldn't even mind so much, except that when renting a house they do a background check, and they expect to find a credit history, which I don't have.
So get one. Apply for a card, buy some stuff you were planning to buy anyway, pay it off... costs you NOTHING. And you get a higher score on the credit rating game, for when you need it.
There is some truth to this. I have lived essentially debt-free for 10 years now. I have a few credit cards with no balance on them, and occasionally will finance a car, which gets paid off in 50-60% of the term of the loan.
Over this time, all other things have been equal with my credit history, but each time I take out an installment loan, my FICO score goes up 20 - 30 points over 3-4 months. Once the loan is paid off, it drops down again over about a year.
I bought a new motorcycle over the winter, and financed part of it. FICO score is on the rise again! But in a year, it will be falling again, as the loan will be paid off.
Also, a few years ago, during the rash of bank bailouts, I had several credit cards cancelled for 'lack of activity'. I'm sure it was the banks trying to improve their balance sheets to make it look like they did something with the bailout money other than steal it.
When you're dead, you don't know you're dead. It only affects the people around you. Same thing when you're stupid.
Presumably mine has fallen off everything finally. Sprint* chased after an ETF fee on a month to month account for 10 years from the 90's.
*Only people to ever actually ask for it OR report it were the collection agencies NOT Sprint as they probably knew they were unlikely to get it. They should all be dismantled. Make one prove you owe the debt per the rules and they just sell to another when they can't. Rinse and repeat until you eventually miss the 30-day or whatever window for something :/
I'd have actually felt sorry for the 1st collection company as Sprint didn't disclose the dispute status if they hadn't sold it on to someone else. They admitted they weren't having much luck on some of their latest collections...mine wasn't they only bad one by far.
Yes, it's going to cut down on the number of people who are in collection for medium-large debts because they got medical services they couldn't afford at the time and haven't been able to pay off (either yet, or ever.)
But it's going to significantly increase the number of people who are in collection for small debts because doctors or insurers paid the wrong amount. I've got one doctor's office that usually doesn't charge me a copay, but after the insurance gets around to paying them, there's an amount of money left over that's within a dollar or so of the amount the copay would have been, so their medical group gets around to sending me a bill, and it's extremely difficult to keep track of which of those bills are actually correct and final or which ones are rolling totals of insurance confusion in progress. Usually those get straightened out after a while, but sometimes they've called me and there's $20 that's going to go to collection if I don't pay right away. There's an X-ray lab that has a negotiated rate with my insurance company that's a lot lower than their rack rate; I went to them one January, and insurance didn't pay them anything because I hadn't reached my deductible for the year yet, and the lab billed me the rack rate, not the negotiated rate (I paid them the correct amount, and explained why, and the rest eventually ended up in collection because they couldn't figure out how to deal with it.)
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
The whole point of a "credit score" is horribly broken.
The idea isn't bad. The implementation is okay, though it can be gamed to some degree. The biggest issue most people actually have with it comes down to a serious lack of financial education. It isn't the easiest or most intuitive system; it's the one that's worked well for a long time thanks to a lot of trial and error.
In order to get approved for debt, you must have debt.
Now that's just untrue. If it were true, you'd have a chicken and egg problem with debt. The reality is that certain types of credit/debt (e.g. student loans) don't care whether you have other credit/debts or not. Some types of credit/debt (e.g. credit cards) are rate-sensitive to whether you've demonstrated - through your behavior with previous credit/debts - the likelihood that you'll stick to the terms of the new credit vehicle. Some types of credit/debt (e.g. a mortgage) are much more difficult to get at all without a demonstrated ability to manage credit/debt responsibly. That's due to the fact that different types of credit have different risk profiles. A credit card company can set a ceiling on how much the issuer can lose if you're a high or unknown risk. When it comes to a mortgage, you're talking about tying yourself to the borrower for a very long time with an asset that could tank in value anywhere during that time. Since student loans survive everything up to and including the end of the world, they're easy to get.
If you have money in the bank and no monthly debt payments you have a reduced score.
The first part is another myth. The amount of money you have in the bank means absolutely zero to a FICO score. It means something to a mortgage company, but that's it. FICO scores are completely unaffected by money in the bank. The second is somewhat true, depending on circumstances. Cracking 800 is going to be very tough without some sort of installment loan (vehicle or mortgage). That said, you can hit top-tier rate scores (740+, even 760+) without either of those. You can have credit cards you pay off every single month and hit the scores you need to secure the best available rates. No debt required. It's just tougher.
It's a SCAM! A scheme to make sure that you are constantly in debt, and yet it's perfectly legal.
Wait, what? People with the highest FICO scores typically have little to no debt, aside from perhaps a mortgage, maybe a car loan. It's rare that they'll have any serious credit card debt or other revolving accounts with any substantial balances. In fact, having substantial balances on your revolving credit accounts hurts your score. The point isn't to keep anyone in debt, it's to provide a score that tells potential lenders how likely it is that an individual they've never met before will stick to the terms of their agreement if they're granted credit.
I don't have a lot of debt so have a laughably low credit score.
If your credit score is "laughably low", it isn't because you don't have enough debt. In reality, what drives your score is 5 simple things. The largest component is payment history. Don't pay back debts? Bad history, bad score. A perfect score here is no delinquencies or bankruptcies. Any accounts listed should be "paid as agreed" or something to that effect. If you have no debts, pay your utilities and medical bills (things that report delinquencies to the credit reporting companies), and pay that car loan on time, you should have a perfect score here. The second is the balance of all your revolving accounts. No balances on credit cards? Low balances relative to total available credit? Perfect or near perfect score. That's 65% of the total score right there. More info here: http://www.myfico.com/credited... (bank balance isn't listed because it doesn't apply).
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
It's a SCAM!
It's not a scam, but you do have to look at who the score is for. It is not for you, it is for lenders. They want to know how good of a risk you are, and to establish that you need a track record. It is trivial to maintain a good track record - simply use a credit card and pay it off. It will cost you nothing, or even make you money if you game the system like those Fatwallet acolytes.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Unless they identify themselves as the State of California Franchise Tax Board, they're not.
At least for Federal taxes, you and they can only go back 3 years, unless they're alleging significant underreporting of income (which $200 isn't), in which case they can go back 6 years, or fraud, in which case you're on the hook forever. I don't know the FTB's time limits, but I'd be surprised if they're more than that (or at most one year more.)
Also, their name is pronounced "fran-chi-zi", because they're a branch of La Cosa Nostra, and yo, they don't mess around. If they wanted to take $200 from you, they'd have taken it by now. But if this really is the Franchises, you do have a way to get help in working with them, which is to contact the office of your state assembly representative. And if it's really not them, they'll probably also appreciate having you reporting the fraud (though unfortunately, you doing them a favor doesn't mean they'll do you a favor later.)
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Not necessarily. A credit rating is an estimate of how well you can manage debt - which is not necessarily the same thing as how well you manage money when you have it. Just because you normally live well within your means and pay for things up front doesn't mean that if you were suddenly saddled with a $200,000 mortgage that you would be willing and able to service that debt in a timely fashion for a decade or two. Maybe in 5 years you realize the debt is ridiculous and you don't really want the house after all, and just walk away from it instead of paying your debt - then instead of collecting monthly payments the the bank is stuck owning a house, a situation rather outside their normal business operations, which they'd rather not have to deal with.
There's also the fact that all those cash purchases don't leave a paper trail in the usual debt-management archives, so lenders have no way of telling if you've actually made such purchases responsibly, or are just feeding them a line of bull.
When I was young my father gave me some good advice for building credit history: Get a credit card and make most of your purchases with it, then pay it off in full every month. That way you avoid paying interest while still establishing a history of being willing and able to pay your debts. For maximum benefit leave a few bucks on it from time to time and pay the interest: The only thing lenders like to see more than someone who pays their bills on time is someone who also lets debt ride and pays interest on time.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Credit scores are okay but involving credit history is a strange fetish of US banks, never understood why. I remember reading a story about a European that found a US girl and they were looking to buy a place for both of them in the US. He was like I got this much equity, this much income, we should be able to manage a mortgage of this size. The bank said: No credit history (that we can find anyway) whatsoever? No loan. So they went out and got him a credit card, maxed it and paid it off on time. Big credit, perfect payment history and though short he now was eligible for a loan. WTF.
To me, having a credit card history - not home and car loans - means you've not had the money to pay your bills. If you didn't have to take up credit, you've always had the money to pay your bills. Why on earth wouldn't I then be able to pay my bills now? Before I rented an apartment and paid rent. Now I own an apartment and pay on my mortgage. They look stunningly similar in that each month I need to pay up to keep on living where I live. You balance your income and expenses, if you do it with $1000 left on the bank account or $1000 in credit card debt at the end of the month is exactly the same.
Live today, because you never know what tomorrow brings
Four-Corners area Indian triibes (one of the worst areas on the map is where those reservations are) are so VERY Republican, right?
You're just a troll
It's sad to see so many people across the nation being so reckless with money and debt, but the idea that you can take a coarse colored map and presume that it's all Republicans simply because there are large bad areas in the south (which tends to lean Republican) is idiotic. For all you know, it's the Democrats, the vegitarians, the rastafarians, etc in those areas who have money problems. The map contained NO political, ethnic, religious, educational or other content but you ran right to "those bad Republicans". This was exactly as valid as if some Klansman had posted noting that it was "where black values prevail"... or if some feminist professor had posted that it was "where male values prevail" ... congrats on your idiocy.
It is a *credit* score, for how well you handle *credit*.
It is not a *financial IQ* score. That is what a *net worth* evaluation is.
Note that you may score highly in both.
It is up to the individual to determine which is more valuable and when.
It sounds like you have do a fine job with your net worth but that does not directly translate into credit (how you handle debt).
You may find may people who have very fine credit scores and yet never manage a positive net worth.
How it's supposed to work (conceptually) is that making steady payments on debt indicates that you are responsible. You make your monthly payments for your car, house, credit cards, medical procedures, etc. all on time and in full, so the bank trusts you with another payment. If you just pay for everything in straight-up cash money, the banks have no idea if you can keep a schedule reliably. You seemingly work on whims instead of tight schedules and repeated patterns. And of course, the more debt you can balance, the less flighty you seem, so the more trustworthy you seem.
In reality, however, banks know that the more debt you have, the more likely you are to only make minimum payments, which means more interest for them. If you buy things straight-up cash, banks don't get their cut. In fact, they probably paid YOU a little bit while you had that money in their vaults (not nearly as much as you'd pay them to borrow the same amount, of course, but still...) and that's just bad business.
It's really just a modern day protection racket. You give the banks a little cut of your money every month (interest) and they'll let you borrow some big cash when you want to buy a house or car. Of course you'll have to increase that monthly protection money, in addition to paying back all the money they let you borrow.
This signature is false.
medical services need a billing time limit that after it's up they can't bill the patient will fix a lot of that BS.
My only debt is my house payment and I might pay that off as the tax deduction stuff isn't that great of a benefit in the USA. I use a gas card and pay it every month. When I use a credit card the balance is paid when the bill arrives.QED.
Here here. While there are a lot of people who miss bills, there are also a *lot* of companies who simply screw the pooch on them.
My wife cancelled her old phone and still had to deal with their billing department multiple times to get the bills they sent us "afterwards" cleared up.
My ex moved and asked the gas corp what was owed, but after paying it somehow still ended up at collections (her # never changed but they never even called).
get a credit card and charge $100 a month and pay it off. or charge your living expenses and pay it off
simple
And make sure it's a cash back card ;) I've made thousands back in rewards and never paid a single dime of interest. Credit cards are a scam; make it a game to see how much you can scam out of the scammers!
Nobody can force you to go into debt.
Hospitals can by rendering treatment for you without your permission.
Cities can by implementing ordinances.
The justice system can by laws.
Private clubs or other organizations can using bylaws.
The IRS can by fiat.
Scammers do it frequently for piddly amounts expecting you to pay them to go away.
Funny story (well, that wasn't fun for me):
I'm paying everything on time, credit cards are even paid in full every month. Never late on any SINGLE payment.
About 2 month ago, I got a letter from a credit collection agency and I had no idea why the company to whom I was apparently owing money (they told me when I left I didn't owe them anything, the insurance covered it. Apparently not, the insurance came back to them later with less than $100 to pay) didn't call me or sent anything in the mail. It turned out the clerk didn't do a good job entering my phone number, so they couldn't call me and the postman did a bad jab by returning the mail and marking it as 'address non-existent' even though I receive a lot of mail every day (and the credit collection agency was successful sending me a letter to that address, what a surprise).
And what's wrong is that those agencies know that happens very often, they told me. And they're rude, even though that's not your fault.
So, my point is that, since it happens often, that percentage is wrong.
I find that there are more benefits to using a credit card and paying it off every month than just plain cash. For one thing, I earn bonuses and have flown for free all over the country using them. Second of all, if there is a dispute it gives me far more leverage. Third, in a number of cases it offers me a better warranty. There is nothing inherently wrong with credit cards as long as they are used responsibly. I ALWAYS pay it off every month so I never pay any interest or fees to use it. It saves me from always hitting the ATM machine, many of which charge an obscene amount of money to use. I can get reimbursed for the fees through my credit union but it's always a pain to have to always enter in the amount of fees I pay for a transaction. I can also use my ATM card, but the protections on credit cards are far better than those of ATM cards. It's a lot easier to deal with someone getting my credit card number than if someone somehow steals my ATM card number and PIN, which has happened at a number of places in my area. One of the big grocery stores in my area had someone running a scam where they were stealing the ATM card numbers and PIN numbers and it's also happened at a number of gas stations and even ATM machines.
The few times I have had my credit card number stolen and used I never paid a cent in fees or anything else.
The credit score is based on credit. My score was quite high even though I never carried a balance and did not have any outstanding loans. Credit scores, sadly, do not look at savings. Years ago when I went to buy a house I had no problems getting a rather large loan at the time even though I had never had any other loan before in part due to my credit card usage because I always paid cash for my cars.
In time I eventually paid off my house. When I went to get my new car I ran the numbers and with the insanely low interest rates it was far more economical for me to get a loan for the car than to pay cash. Since the loan is at around 2% all I have to do is see if I can do better than 2% with my savings. If I can do that then I'm ahead and it makes more sense to get a loan.
Even though I have a lot of savings I use my credit card for most things. By paying it off every month I get all of the benefits without the downsides. Debt is not always bad. I could pay off my debt in an instant but it makes more economic sense not to as long as my savings is growing at a faster rate.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
There is nothing wrong with using credit and loans as long as they are used responsibly. All of my cars up until my latest one were paid with cash. When I could get a 2% interest loan for my latest car it made a lot more sense to get a loan than to pay cash. If I can earn more than 2% on my savings then I am ahead. That's easy to do today. In the case of my house I did everything I could to pay of the principal as fast as I could. I also use my credit card for most things but I always pay it off in full every month. That way I get all of the benefits and protections it offers and none of the downsides. While I may have a car loan I certainly do not feel that I am in debt, especially when my savings exceeds my debt and is earning more than the debt is costing me in interest. I could pay off the loan any time I want to but it is in my best interest not to.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
Can force you into debt. School cloths. Food. Medicine. A toy for the birthday.
Losing a job and not being able to find another can force you into debt. You need to eat. We've been dismantling the Safety Net for 40 years. If you think you're protected and you're not already rich then your nuts.
It's also ridiculous to say you're not "forced" into debt when you need medical attention. Experience the pain of an infected tooth or a Kidney Stone you can't pass and tell me about the "choices" you have then.
Christ, what the hell is wrong with this world. Human beings need certain thing to survive. I've said this before and will again: If we can put a man on the moon why the hell can't we feed our kids?
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
I have no debt. None. I have a good job and have had it for nearly a decade. Because I have no debt, I'm considered an extreme credit risk. I can't get lending for a house, which I can afford to front 50% of the cost of. They told me to get two credit cards and call them back in a couple years when I have a credit history.
So I should have a much higher credit rating than someone who is constantly paying with credit cards in my opinion.
Not necessarily. There's a reason it's called a "credit" score, not a "cash" score. You need to be able to demonstrate that you can handle credit responsibly. Believe it or not, MOST people who pay cash all the time are forced to, because they don't have reliable enough income or reliable spending methods, and no one would give them a credit card, even if they applied (or certainly not a good one).
So, you need to prove to banks who might lend you money that IF you go into debt (or even have the possibility of going into debt, like having credit lines you don't necessarily use) that you will make regular payments and be able to handle the debt. Frankly, I'd view you as a risk too if you had no payment history. It's great that you pay in cash, but lots of other people do who aren't as responsible with you and would not be a good loan risk.
So get one. Apply for a card, buy some stuff you were planning to buy anyway, pay it off... costs you NOTHING. And you get a higher score on the credit rating game, for when you need it.
Yep -- this isn't rocket science. Get a credit card, use it to buy stuff, wait for the statement, and pay off immediately. You will pay no interest, but since you received a statement with a balance, your report will show records of credit utilization and regular payments. You might need to apply for a crappy card at first if you really have NO history, but just always pay it off every month. In a couple years, you will even be able to move up to a rewards card and earn money off of your credit card, all while paying no interest AND establishing a credit history.
Your credit score is a measure of credit worthiness -- how responsible you are with your debts. The money you have is not credit and not reported to anyone. Likewise, your paycheck is not credit, and it's contents are not published to anyone.
Big credit, perfect payment history and though short he now was eligible for a loan. WTF.
You surely understand that they are playing the numbers? For every wealthy guy from Europe with no credit score, there are probably 100 deadbeats with no credit score, and far more with a very poor score.
means you've not had the money to pay your bills
It certainly is not that simple! I could cash out my retirement accounts and be debt free. But that would be silly because the government only lets me hide a certain amount of income each year, and so I'd be losing a whole lot more to taxes then I currently do to interest. Similarly, a home loan at 3.25% is more like a 2% loan after the tax deduction. Surely you can imagine that it does not make sense to pull all of your investments when the S&P is on a record run just to avoid a 2% interest rate?
My car loan - they were offering a zero... that is 0.0%... interest rate for the car. Why the heck would I use all of my cash up? Yes, I understand that I essentially bought points when I purchased the car, but it still amounted to a very, very low rate.
T-Mobile did the same thing with my last phone - the price after financing was cheaper than the price on Amazon.
Look at it from another direction - debt can be used as leverage. Businesses do this all of the time. Since people aren't businesses, that leverage can buy a better lifestyle instead of simply improving income.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
To me, having a credit card history - not home and car loans - means you've not had the money to pay your bills. If you didn't have to take up credit, you've always had the money to pay your bills.
Shortsighted. I've been having to make business trips overseas recently (I'm not in the US, so "overseas" is fairly close), and, unfortunately, I have to pay for everything up-front, and then get reimbursed later. I don't want to have to spend my own money on that, and given that I've sometimes had three return flights in a month (plus accommodation), I'd have to dip into savings to pay for that. Or I could just take out a credit card, put everything on that, and make sure I'm reimbursed by the due date. Works pretty well.
" In order to get approved for debt, you must have debt. "
" A scheme to make sure that you are constantly in debt"
A scheme to keep you in debt by not approving you for any debt?
1. A credit history. That's not necessarily debt, it is a history of handling small debts that you've paid off.
This is what I said. If you pay your phone bill every month, you don't get extra points. If you pay your phone bill with a credit card, you will get extra points IF and only IF you pay just the minimum payment (mostly interest to prolong your debt). If you pay it off in full, you may receive negative points. If you don't pay your bill on time you can be reported for negative points as well. Doing the right thing and paying on time the full amount to the company will not help your credit.
Your item 2 has a hell of a lot to do with item 1. If people want you indebted longer, they will target you for additional debt. Banks can somehow take back any property you gained, get insurance money for losses, and receive handouts from the Government for doing just that.
Nobody can force you to go into debt.
True. At the same time if a bank forces you to have a particular credit score to get a loan (as most do) the only way to get the credit score is to live in constant debt paying interest payments. Go ahead and try buying a house with a low credit score. Even if you don't need to be in debt people use credit cards for this exact reason. Hence, why I claim it's a scam.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
Anyone have other theories why this number is so much higher than the 5% of people who are just "late"?
The insurance industry - who received the greatest corporate handout in the form of the "health care bill" in 2010 in the history of the world - has an exceptional racket here. They have the ability to not only delay payments in "processing" for so long that they automatically go to collections by the time they decide not to pay, they can also undo payments after the fact for any reason.
Don't believe me? I had exactly that happen to me when I was a college student. The insurance I had (through my parents) decided over a month after paying my doctor's office that they wanted to un-pay it, so they did. By the time they took their money back the debt was considered overdue (relative to the date of service). I knew nothing of this until I started getting debt collections calls from various bad actors at 3am under assumed celebrity names. They threatened to garnish everything imaginable and impound my measly car (which was not worth anywhere near the debt) to seek payment.
I eventually got through to the insurance company directly and got them to go back and re-pay the un-paid bills. They never apologized for their little experiment or gave a reason why they chose me. Even better I had to promise to never, ever, use that insurance policy again in exchange.
Thanks a lot blue cross-blue shield. I hope your CEOs enjoyed the additional cruise amenities that they got in reward for destroying my credit.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
There is nothing wrong with using credit and loans as long as they are used responsibly.
Funny that you believe you should have to pay a bank money, just for the "privilege" of spending money. You already earned your pay, but you think you should pay a bank so that you can spend it? This is exactly what I was referring to about people not understanding the scam.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
Hows that hope and change working for you?
The game isn't rigged you aren't playing the right game. It's like being a good athlete and expect to be drafted high in the NFL draft while only playing a few games of football in your life. If borrowing money is something you wanted to be rated high at, you actually have to do it and do it well. It's not that complicated.
Apparently you've failed to understand "credit and loans". That's when I spend the bank's money, and pay them back later.
I've had two doctors' offices try to turn my account over to collections. Both times it was because there was a problem with the insurance billing. I have health insurance but it doesn't help me any if there's a problem at the point of data entry. If a billing code is wrong, insurance won't pay. Both times I called the doctors' offices, spoke with the business managers, and told them I wouldn't pay until insurance did. Insurance won't pay to collections, so it magically got fixed. I'm sure I'm not the only person this happens to.
For the longest time I didn't even have a credit score because I had no credit cards or loans. I lived entirely off a checking account which never went overdrawn and I had savings accounts that were quite healthy. Despite this I couldn't finance a new bed because my credit score was crap - the bed was a couple grand. I ended up just dropping cash for it right there and then. I was kinda hoping to use the finance purchase as a way to build credit but having no credit score means you can't do anything to build a credit score either. As for cars, I have to buy those outright as well. Now I'm having to use a secured credit card to build up a credit history and the only reason is because I'll probably want to buy a house at some point. Almost everyone is going to need that score to get a house - very few people can ever afford to buy one outright.
I guess you never buy anything online. Online purchases and motel reservations are the main reason I got two credit cards but now charge a lot of things for the convenience.
By paying off a credit card every month I am not paying any fee to use my money. In this case the seller is paying the fee and I collect on the benefits. On one card I earn cash back and on the other I earn airline miles which I have used to fly all over the country with very little out of pocket for the tickets (mostly various airline fees and taxes). I don't pay one cent for the use of my credit card. I don't pay interest or fees. In my case, the sellers are paying the credit card fees, not me. I'm basically getting all of the benefits at no cost to me being paid by the companies I purchase from.
The scam is when you end up paying fees to use a credit card or when you don't pay it off and pay obscene interest rates. I could see someone doing that on a rare occasion like an emergency, but it should be paid off as soon as possible. Carrying debt for the sake of carrying debt on a credit card is stupid. I have never done this and always had a very high credit score.
All of my regular banking is through my credit union where I do not pay any fees to use my money. I don't pay ATM fees at any other credit union (and they'll reimburse me for any). The more I hear about banking through the big banks the more disgusted I am.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
My son died in early April 2013 without a will. Sufficient funds to pay his bills remained in his bank and credit union accounts, but no one could touch them. I sorted through all his bills and contacted all his creditors, informing them of the situation -- that they would indeed be paid if their bills were legitimate but that they might have to wait a few months for me to access his funds.
I finally got a court order to access his funds seven months later. In the meantime, three bills had already been sent to collection -- bills from creditors that I had previously contacted.
One bill in collection was for a major balance on a Discover credit card. By the time I got the collection notice, I had already sent a check to Discover. That problem was quickly resolved with no further problems.
Another bill in collection was for Time Warner Cable, for TV, phone, and Internet. I notified them shortly after my son died that they had to discontinue his service. They had billed him for the entire month of April, including the weeks following his death. I sent a check for a lesser amount to the collection agency with a cover letter detailing how I computed a pro-rata amount of the bill for the short part of the month before my son died. The collection agency returned the check with a letter informing me that they had returned the account back to Time Warner Cable. I never heard again from either the collection agency or Time Warner Cable.
The third bill sent to collection was for a medical group that supplies emergency room doctors to a local hospital. The explanation of benefits from my son's health insurance indicated that they had paid the medical group and that no further payment was due from my son. My further investigation revealed that, while the hospital and its emergency room were in-network for my son's health insurance, the hospital had out-sourced their emergency room doctor service to a medical group that was out-of-network for ALL insurance plans except Medicare. The medical group wanted payment for the difference between what the insurance allowed and what they billed. I wrote a letter to the collection agency (having already sent a similar letter to the medical group) informing them that the hospital chose my son's doctor and, since my son had no choice in the matter, they would have to deal with the hospital for any further payment. I also informed the the credit agency that my son's estate was not large enough to require probate and, if they insisted on payment, they would have to initiate probate at their own expense. I never heard again from either the collection agency or the medical group.
While all this was being resolved, we received several phone calls from the collection agencies. They insisted on knowing where my son was, so my wife gave them the address of his cemetery.
We also received insurance explanations of benefits indicating several medical providers were not being paid because they submitted their claims too late (more than 6 months after the dates of service). I have not heard directly from any of those providers. If they do send me a request for payment, I will reply that I am not responsible for their failure to submit timely claims. In any case, my son's estate is now "closed". All remaining funds were transferred into a blocked guardianship on behalf of my grandson. It will take a court order -- at the creditor's expense -- to unblock the accounts.
I am quite sure that my son is well beyond caring about black marks on his credit history. It seems, however, that no black marks have appeared. More than a year after his death, offers of new credit cards for large credit limits still keep arriving in the mail for him.
I have no debt. My credit score is >750. I have a few rewards credit cards (>25k limit) I use every month to pay monthly living expenses and rack up free miles; the credit cards get paid at the end of the month so no interest is paid.
I used the racked up miles for my trip to Europe last year, it was great!
It doesn't sound like you've figured out how the system works.
I wonder how many of these are from people cancelling their Comcast service?
Not a fan of banks, but you are welcome to start your own bank...all while not relying on a credit score...just make sure to have your bankruptcy lawyers on speed dial.
It's zero sum. You are just churn for transaction fees, where the real scam is.
i make 99.999% of my purchases on credit cards and always pay them off monthly. for 20 years now.
oh, and my credit utilization is around 8%
(unrelated side note: never - ever - ever - ever get a debit card!)
I don't know if I'd call the whole credit scoring system a scam, but it's certainly flawed - especially for people just starting out. Basically, they're saying that if they have no history on you and how you handle loaned money, they have no way to assign you a meaningful score. You're a ghost in the system. So anyone considering offering you credit checks the score, finds you basically have no score yet, and is afraid to be the first to take a chance on you.
I remember having this problem when I tried to get my first car loan. Basically, I couldn't do it without getting my dad to co-sign on the loan, even though I'd purchased 2 cars before that with straight cash.
I think once you're off and running with things like credit cards or a loan, though, the scoring system is generally pretty effective. A lot of people complain about all the oddities of what boosts your score or hurts it. But the flip side of that is, if they used a static formula, people would easily figure it out and it would making gaming the system much easier. That's why I suspect they regularly change things up in certain ways, deciding that a certain financial move will penalize you more for a while, and then less than something else for a while, etc.
I'm in that 35% - I had an overdue library book that got sent to collections (for a whopping $80 - where are they buying their paperback books?). I'm now in the weird situation where it's actually better for me NOT to pay it. If I pay, the mark stays on my credit report for an additional 5 years from the date I paid. If I don't do anything about it, it will drop off my report next year.
Now I should note everything I'm going to say here applies to FICO credit score. Banks are certainly welcome to delve deeper and look at individual account performance and make a determination that way. So maybe, and there's no way to know this, the bank would evaluate that pattern more favourably when looking at the account and considering an upgrade to an unsecured account.
However for credit score what matters is (in order of importance):
--Payment history. Paying as agreed (meaning not more than 30 days late) is the biggest thing. Having no delinquencies, collections, defaults, etc is the prime thing. A long history of "pays as agreed" is what matters most.
--Debt burden, meaning how much you owe. For revolving accounts that is the amount of credit available vs the amount used. So having a number of high limit unused credit cards helps your score. For installment/mortgage accounts it is more about how much has been payed off.
--Length of credit history. The longer you've had a credit history, the better it can be. Also the longer you have specific accounts, the more they help.
--Types of credit. The more kinds of credit you've had, the better. This means revolving (like credit cards), installment (like a car loan), and mortgage. If you've multiple categories, that helps more than just having one.
--Credit inquiries. Each time you seek credit, it hurts your score a little for a short while. It isn't much and it doesn't last long, but is has an effect.
That's it. That's how it is calculated. Of those, payment history and debt burden are by FAR the biggest part. So if you have accounts that show you always pay as agreed, and you don't owe much, you'll have good credit.
As an example: I have a mortgage on my primary house, also a paid off mortgage on file since I refinanced (which is technically a new loan so the old one shows as paid off). I have a bunch of credit cards, probably $40,000 in credit, most of which don't get used, I got them because they offered a bribe and then never made use of them again. I have a primary card that I use for pretty much all purchases, and pay off in full each month. My credit score was 820, last time I checked.
The reasons are I have a perfect, lengthy, payment record, two kinds of credit, and I owe very little in relation to my available borrowing power. Hence, good score.
Also when I did a secured card, which admittedly was like 2 decades ago, I paid it off in full every month, and after the prescribed period, 6 months I think, they gave me an unsecured card no issue.
what this really means is that an overdue debt is never cleared off your credit report, because "fuck you, we don't want to spend the time/money to report that you actually repaid us", courtesy of the banks and every major collection agency. Hell, I'm in the "in collections" category over a 45 dollar bill I missed while deployed. I paid it more than a decade ago, but I'm still "in collections" according to the credit reporting frauds.
You have no idea how it works, do you?
Debt collectors are nearly always separate companies. So what happens is you get way behind on a payment, the company you owe tries and tries to get money, but they fail. Finally, they just write it off. They then sell your debt to a debt collector. These debt collectors buy it cheap, usually 10% or less of the original amount. The company takes the loss and goes on with it. The collector then tries to get money so that they make a profit on the debt, and not a loss.
Companies do not want to sell a debt because there's no way they can sell it for what it is worth. They'd much rather have the money.
Student loans are a little different, since Sallie Mae does both loans AND collections, and student loans they offer are usually government insured (so they get their money no matter what) and you can't discharge student loan debt. Also they are a complete cluster fuck of stupidity since they are basically the worst combination of private enterprise and government agency (they were originally government, now private, but have something of a special status). They are currently under investigation regarding their practices.
Normal consumer debt though, they don't want you to default on. What they would like is that you run up a lot of debt and they pay it off slowly, paying a lot of interest, but pay it on time and completely. They would not like you to default.
I was told by people who work and train at a university hospital to actually just ignore the tab. Happens all the time he said. I just ignored it and I haven't heard back in like 4 years. Probably not the best policy. But it has been a non-issue. Ignore it.
Early in my legal career, I got a job with a law firm that did collections. There are a few good liar stories, like the contractor with "no money" but a Rolex and top shelf car...his wife owned a nail salon..cash business...and she owned everything. I also learned a lot of folks WILL buy stuff with no intent to pay for it. I also learned what "Judgement Proof" meant. (no assets, so they don't care) Reverse directories and skip tracing, prior to google-stalking, were an art form, one I learned well-that part helped me later in my career many times. Most seriously broke people have medical bills, not a desire for widescreen TV sets. Most of them worked, saved, and were basically normal before they got snowed with six figure invoices. Unlike the scammers, they had stories that rang true. The staff HATED when the boss would buy old credit card debit, because it was always bitch collection and always stale. He'd pay 10 cents on the dollar, so if we got a third of it, he still made out. We just got extra abuse, and he was extra interested to make sure we worked the "old cards". One day, my wife said "we can pay the rent on my income...you'll find another job-just quit-you are miserable" . I can negotiate. I can face down tough adversaries, Judges, and run a business. I just wasn't cut out for debt collection.
Even worse, there are sometimes even deceptive statements made about how much you will have to pay, and business arrangements you enter into without even knowing that the other party exists, much less that you're getting their services.
I didn't see a doctor for ten years because I couldn't afford insurance, and when I finally got covered through a decent job and went to get my first general checkup in my adult life, there was a big sign up front saying "ALL CO-PAYS DUE AT TIME OF VISIT". I figured that meant what it said: anything I owed, that was not getting billed to my insurance, was going to be billed to me before I left. When they let me walk out without paying anything, I figured that meant I must not have had a co-pay, which made sense to me as it was just a general physical exam, and a blood draw for some basic general-health lab tests (cholesterol, blood sugar, STDs, etc).
Then I got a bill in the mail a month later. Called and complained, why am I getting billed, didn't my insurance cover this, and THEN they tell me that that bill is for the remainder that's left after what my insurance paid (IOW my copay). I argued about the sign saying all co-pays were due at time of visit and they said... I don't even remember what now, exactly, but something to the extent that that's no excuse and I have to pay the bill. Not knowing what else to do, I did.
A month later I got a different bill for the blood tests, from a different company. I called and complained that I already got a bill for that visit and paid it and even that was unexpected and what the hell is with two different companies trying to collect for the same fucking service. They explained that they are the lab that my doctor sent the blood off to for the tests, and they they bill separately, and that paying my doctor for their service doesn't get me off the hook for the lab service. I had no knowledge that I was even buying services from this lab company: the only entity I interfaced with was my doctor, they hired the fucking lab, let them pay the lab and roll the cost into their bill, I figured. But no, and lab insisted I owed them money, and not knowing what to do, I paid up.
A year later, my second doctor's visit in my adult life, different doctor in a different town as I had since moved. They at least had the decency to say up front how their billing works (without me even asking), and that they will send me a bill for the copay after they process it through my insurance. And they don't do in-house blood draws and send out to a lab, they send you to the lab of your choice with orders for what tests to run. So that's better, much more clear. But the lab itself also has a "ALL CO-PAYS DUE AT TIME OF SERVICES" sign... and this time, they actually billed me at time of services! Awesome. So far, I was liking the medical establishments in this new town a lot better.
Until a month or two later I got a bill from the lab. When I called to complain that I already paid them at the time of services as their sign said, they told me then that that was only an estimated copay, and that after they put the bill through insurance, there was still a balance remaining on my copay, which is what that bill was for. Again, no idea on what grounds to dispute it, so I paid up... but ugh, what the hell
For emergency services where the patient may not have the time or awareness to evaluate the costs and benefits, I can understand you just do the service and bill later. But for a motherfucking general checkup and routine bloodwork? Jesus fucking christ, how can you not just say what it will cost up front and bill before I accept your services?
It's only one step removed from the homeless guy who washes your windows without your consent and then demands you owe him money. "Hey man you need some medical services?" "Yeah uh I guess how much?" "Can't tell you yet now turn your head and cough." "Uh... [cough]" "Aight you cool man, that'll be $100." "WTF no you didn't say it would be that much" "Too late you got the work now you pay the bill man... don't make me go get my collections posse to shake down yo ass, pay up sucka."
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."
You might need to apply for a crappy card at first if you really have NO history
Getting a credit card with no history whatsoever might be tricky unless you're really young. But even in that case, pretty much any bank will happily give you a credit card if you place a security deposit with them (the credit limit will then be tied to the amount of said deposit). That still counts as credit and lets you build up credit score - and eventually they will release the deposit. I had to resort to that when I moved into US from another country - given my age and employment, combined with the complete and utter lack of any credit score records whatsoever, that's the only arrangement that I could find. I got my security deposit back on the second year of using the card, and started getting more card offers from other banks at about the same time, which I assume coincides with crossing some threshold on the credit score.
Interest, and the broader phenomenon of rent (interest is just rent on money), is the thing that breaks a free market and turns it into capitalism.
There would be no cause for forcible redistribution of wealth if only this mechanism by which wealth becomes concentrated was removed.
Without rent and interest, wealth would naturally redistribute from those with more to those with less, as those with more traded their excess capital for the labor of those with less; for what use is that excess if you're just sitting on it, not getting anything for it?
But when you can lend it out, and not only get it all back but more on top of that, and keep repeating that process, then you can spend that extra you get back to buy the labor of those with less than you, without ever losing any capital in the process. Capital becomes a free money machine, if you can charge usury on it (that is, charge for the mere use of it, without actually selling it).
And conversely, those who have to borrow from you, the same working poor whose labor you're buying, get to keep less of the product of their labor because they have to pay you that same little extra that you turn turn around and pay them with. The "free money" you get out of your free money machine is actually money out of their pockets; money that they would otherwise use to buy, rather than merely borrow, the things that they need.
In short, with rent and interest in existence, those with more wealth can perpetually extract labor from those with less wealth without ever losing anything in the process, perpetuating and even exacerbating the wealth gap between them.
While without rent and interest, that wealth gap would naturally close without any forceful intervention just by natural market forces.
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."
Why isn't it considered slander if a credit agency reports that you have a low FICO score based on erroneous information?
So get one. Apply for a card, buy some stuff you were planning to buy anyway, pay it off... costs you NOTHING. And you get a higher score on the credit rating game, for when you need it.
Except, no, it costs you. The whole point of a credit card is to obtain credit. To obtain credit (money), interest is charged. You will be charged interest for credit you don't need to build a made-up score.
True story. Last year I had a credit score of 817. I then sold my home (installment debt), HELOC(home equity line of credit(installment loan) - which by the way has to be paid off for you to close on your house) and during that same week I closed on land that i sold that I was paying on (also an installment loan). We were moving and it all kinda happened around the same time. The NEXT month my credit score dropped to 787. Thats right...30 points.
See it turns out that your credit score is made up of a number of different factors and one of them is the kind of debt that you hold. So even though I havent been late on any of these installment loans my score still dropped because part of your credit score is based upon the right "mix" of debt that you have. Thats right friends. IF YOU PAY YOUR BILLS YOU ARE PENALIZED.
The whole thing is a scam. Let's get this through our thick skulls right now. Banks want to lend money to people that pay their bills on time but at the same time generate interest income. It's not really even, to a certain extent, based on whether you have a good enough job to pay the loan off that you are applying for. It's based on how much money the creditor thinks they can make off of you. I guess none of this really matters unless you need to purchase a new vehicle or buy a home. Smaller purchases like big screen tv's and laptops you can get credit for at your local brick and mortar for 0% for 18-24 months and thats easy to get even if you dont have perfect credit.
The difference between 787 and 817 however can make a difference in interest rates(i will be looking for a new home in the next 2 - 3 years). Since my credit score dropped to 787 back in November its now back to 800 but its been there now for 4 months without budging. I am not complaining about that - i just thought i would share my experience. I wonder what my score will be like once i am debt free by December?
Bullshit. They want to start charging interest from day zero on new purchases, bypassing the usual 30 day grace period you get when you pay in full each month. Carrying a balance DOES NOT HELP YOUR SCORE. Total debt to credit limit ratio is a much bigger part of it. Fire your credit union.
If you need a loan for a car payment you are doing something wrong, probably in your 20s, or most probably doing my mistakes and in your 20s. People tend to undersell themselves earlier on.
The treatment "true" cost in no way whatsoever the 7000$ price tag. Simply hospital and insurance are in a feedback loop leading to an increase of the price way over the production cost. That's why by the way governmental social insurance is better than private one, the private one and the hospital have all itnerrest into increasing treatment cost and premium cost, so there might be a few dispute , but in the end it is about who get which slice of the pie, NOT about making price lower. I am not saying it is a conspiracy , I do not think hospital and insurance are accomplice, but the environment and the fact they both profit from increased medical cost, lead to the situtation and pie splitting. A government social insurance does have all interrest into making sure price is lower. In this specific example rabbies emergency cost my neighbor 15 euro total, and rabbies vaccine and anti serum are actually massively produced by governmental institute.
C. Sagan : A demon haunted world:
http://www.amazon.com/gp/product/0345409469/
visit randi.org
"news for nerds" Cowboy Neil would never have let this post get up there....
now if it were
"35% of American Adults Have Debt 'In Collections' and an army of robo debt collectors are hunting them down"
I could see that
sigh
Except, no, it costs you. The whole point of a credit card is to obtain credit.
Actually no.
To obtain credit (money), interest is charged
Again no. There are all manner of no-annual fee cards, that will not charge you any interest provided you pay off your monthly balance in full, each month.
The business model is that VISA etc still make 3% give or take from every transaction, in merchant fees, so they really don't need to charge you interest to make money... of course, if you fail to pay your bill in full, that's just gravy for them, but the interest is entirely avoidable, if you are disciplined. (And if you are able to live off cash, then using a cc occasionally for stuff you were going to buy anyway, and then paying it off right away, really, and truly costs you nothing.
You will be charged interest for credit you don't need to build a made-up score.
Not if you use the strategy above.
" then instead of collecting monthly payments the the bank is stuck owning a house, a situation rather outside their normal business operations, which they'd rather not have to deal with."
BOO FUCKING HOO!
You made a great post, but I absolutely disagree with your apologist attitude regarding the bank and your mortgage.
In the situation you describe (guy walking away) the bank gets: all the repayments, all the interest, and the house. Even with reasonable downturn in the housing sector the bank is still going to make a killing on that.
And, in addition, even *if* the housing market bombs, then it is completely unreasonable for a bank that loans money to buy houses to not have a) administrative and management machinery in place for dealing with the inevitability of owning houses at some point, and b) accept some risk.
Fuck the bank.
I agree with this!!!
I graduated with thousands of dollars in irresponsible credit card debt. It took me four years of busting my ass at the bottom of the stack to pay that shit off.
I'll never forget the day I paid off that final loan, and the feeling of relief that I felt. Fuck. That. Shit. Never again.
Been debt free for 15 years and absolutely loving it. Have been racking up the cash in the bank and plan to buy my first home for cash. Granted, it won't be anything special, but there is no way I'm going into debt again. My plan is to buy something small and cheerful first, live in it for a while and then upgrade as I get older. If I'm really smart I'll put a tenant in the first place and get enough cash together for another.
No negative gearing. No concerns about the property market. No stress or risk of foreclosure. And best of all, 100% freedom to quit my job at any time. You guys busting balls for debt have no idea what true freedom feels like. It's sweet-as and I highly recommend it.
I propose to you here the "volunteering test". You are living a free life if you could walk out of your job tomorrow and go volunteer in Africa for at least 3-6 months and not give a damn about what you owe to who. Think about it. Who's really in control of your life? YOLO baby!!!
Interestingly even in places where companies are allowed to charge extra for taking credit cards to the customer very few do.
So you are getting the cost of taking credit cards rolled into the price whether you use them or not. May as well take the benefits.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
You are probably more credit worthy, and probably deserve a higher score, but you aren't playing the game to get one.
IOW, they are rewarding irresposible behaviour.
So get one. Apply for a card, buy some stuff you were planning to buy anyway, pay it off... costs you NOTHING. And you get a higher score on the credit rating game, for when you need it.
Now, you are recommending irresponsible behaviour.
I never looked at it that way.
I guess it makes sense.
Assuming the balance needs to be paid exactly 1 month after spending, we get 1.03^12 ~= 1.42. Ie. that 3% amounts to the same as a 42% annual interest.
The debt discussion quickly moved to a health insurance discussion, as that is clearly one of the major contributors of this issue.
Slashdot has always been a mostly US centric site, but also has a significant world wide group.
As a European reading this discussion, but i recon it is so for Canadians and some larger parts of Asia as well: I'm laughing my ass off!
Oh man, you guys have seriously fu****ed up your system.
All this spastic anti-socialism, american dream, Obamacare and your corporate controlled democracy have made you end up with this monster.
Believe me, our systems are also far from perfect, but no where near the level of idiocy described here.
for me, 500 $ max own risk, rest 100% insured. no limit. 98% of the population is insured. regardless of income, age or job. I worry over other stuff. Not my health bill.
Why are other peoples sig's always more witty ???
... the article might want to explain the fact that 97% of the money in existence is 'bank money', and was created only when people took out loans - and therefore, astoundingly, 97% of the money in existence is OWED TO BANKS, and they created that money OUT OF THIN AIR.
You don't have to be in expensive debt. Use a credit card for your normal living expenses (groceries, fuel etc) and pay it off in full every month. You'll pay no interest that way or other charges (unless the credit card has an annual fee). You'll have a record of repaying.
Oolite: Elite-like game. For Mac, Linux and Windows
A lot of bills these days are fraudulent in nature. Some are subscription mentalities, eager to charge like municipal taxes, instead seem to miss the concept of delivering satisfactory service or goods. Others may be generational changes in perception as to what constitutes adequate completion and quality for final payment.
Medicine is a wasteland of overcharges and ineffectiveness. We are able to reduce major medical costs 90-99%(!), with better results, through cheaper overseas providers AND our own applications of medical freedom from FDA and US med mafia.
Overall, incompetence and grossly overpaid nobodies eat a lot of time on bad bills. They may aggressively report bad payment for false bills, while it takes time to settle anything fairly or correctly, if ever. May not even be worth it. F'em, we can do cash or not buy at all.
Sorry for you loss. Thanks for your insights.
The thing is the way it works with mortgages in Europe (at least the bit I'm from) is my bank didn't look at my credit history because it turns out I don't have one.
They looked at my income and expenditure and the deposit I was putting down on the house, and decided whether the amount I had to pay would be affordable, and that was it. (The good thing is I got a standard variable rate mortgage, and with interest rates so low I'm paying something like 0.75% interest at the moment)
Oolite: Elite-like game. For Mac, Linux and Windows
Being rich and bragging that you paid for everything in cash is hardly an accomplishment. Try being working or lower middle class and doing the same thing. When you can only save a few hundred a month for a house due to rent costing over 1.5 times a typical mortgage payment by the time you can afford to buy a house in cash, you'll be waiting 20-30 years and have lost a good chunk of your life. Your landlord will be thanking you for making his mortgage payments for him for all those years with you getting zero equity in return.
Meanwhile your peers who gone into debt will have their homes nearly paid off, and not have to pay a landlord 1.5 times their mortgage payments for all those years. If they invested the difference they be well very far ahead of the sucker who kept paying the landlord for all those decades while saving up to buy a house with 100% cash.
Sometimes getting into debt makes good financial sense.
Example:
I had a bone-marrow transplant in late 2012.
Over the next year, the Hospital and Insurance companies went round and round, churning out bills and checks.
In one case, the insurance company needed some information from the hospital to process the claim. SNAFU at the hospital left the insurance company without the info for about six months.
Soooo, the hospital sent the bill to a collection agency, which started sending me letters demanding payment. I was, therefore, among the 35%.
The next month, the hospital sent the info to the insurance company, the insurance company cut a check, and the collections agency sent me a "never mind" letter.
So, I never really had any overdue debt, but I would have counted under the methodology of this article as part of the 35%.
Which leads me to wonder what fraction of the 35% might have had debts referred mistakenly to collection agencies....
"I do not agree with what you say, but I will defend to the death your right to say it"
180 days?
The public library system I work for sends patrons to collections after 45 days if they don't return materials.
This is a country of the rich, for the rich and by the rich. The banks are the militant arm of the wealthy. How better to control the unruly unwashed masses than to keep them perpetually in debt? We did away with the concept of a debtor's prison in this brave new world.. and replaced it with the concept of debt as a commodity that can be sold off to the highest bidder. All hail the endless mind-numbing auto-calls and foreign call centers that call and harass you about debts you don't owe or even remember!
If I sound stupid, it's not me talking....
Yep, I've got ~725 credit and have never (to my knowledge) paid interest on a credit card. Actually they pay me since my two cards are cash back so I rarely use cash, just watch every charge like I was spending cash from my bank.
I've just recently w/in the last year dealt with exactly the same situation. Wife was in a very serious accident and even though her medical coverage was excellent we still have a bunch of little bills that are in collections. All of it is covered or in error, but trying to clear it up, you almost have to hire a bounty hunter to find and kill the bastards.
In my household it's policy not to discuss anything with a bill collector other than to try and get the name of the original debtor. I pay what I owe, but trying to discern what that IS will drive you insane.
If I sound stupid, it's not me talking....
I have no idea, so I'm totally speaking out of my ass here, but I suspect there is a reason Europe does it that way. In the US there are a few credit rating companies who have data on the entire population of the US, thus creating a de-facto system for determining credit. I'd bet dollars to donuts that Europe has a far more Balkanized collection of credit agencies.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
>> To me, having a credit card history - not home and car loans - means you've not had the money to pay your bills.
Need a credit card to buy things from the US if you live outside the US.
Any time I buy something on my credit card, I wait for the charge to appear on online banking (which I check every day), then immediately transfer the full amount to the card. The whole process takes about 4 to 5 working days, no need to wait to the end of the month to pay the card like some people advise.
Sibling poster here:
Maybe my post did not make the message absolutely clear: LIVE WITHIN YOUR MEANS!!
I have not flitted away my money on rent either. If you are doing this then take a good long cold hard look at yourself and have a think about where your priorities are. There are lots of options for low cost housing, and at some points I have made the sacrifice and been homeless, even living in a car for six months.
I come from dirt poor working class background and have never received a dime from my parents. The Government helped me through college, and allowed me to escape the bullshit near-ghetto community that I grew up in. I will be eternally grateful for the help I received through those support programs, and do not regret a single penny that I pay in taxes. If they're giving someone else the same opportunity then that's fantastic.
In case it isn't amazingly obvious, I did not grow up in the US. I've visited many times, even lived there for a while, and know many people from there, so I feel I have a good understanding of the culture and community. I doubt that anyone would have much luck doing what I've done if they lived in the US. The student debt situation alone would be crippling.
Where I did grow up, Australia, my story is not particularly uncommon. I know a lot of people from poor and working class backgrounds who had fantastic opportunity to get their shit together, earn a quality higher education, and work hard to achieve something. Even friends who didn't go to uni are doing quite well, having focussed on skilled trades and, most importantly, been good at what they do, honest* and hard working.
So I do take your point that saving to buy a house for cash is potentially a bad idea, yet when you compare the two side by side: "wasted money renting" vs "wasted money buying" it doesn't actually work out too different. The major problem here (and the reason I'm not going to put down some numbers to try and convince anyone that I'm right) is that people's perception of lifestyle and what they want, where they want to live, and how they spend their cash, is so distorted in any which way, that quantifying this is going to be impossible.
To invoke the myth of the "reasonable person" let's agree that living within your means is the key message here. For me it means I am debt free and I enjoy a freedom that is meaningful to me. For others, perhaps yourself, the benefits of having the house up front, combined with knowing that you're not helping someone else make their mortgage payments, carries more weight.
Good luck with life everyone, you only get one shot. Don't accept the default options on anything!
*ensures continued employment and happy customers means you're always in demand.
Nobody can force you to go into debt.
Except if you need medical help and aren't poor enough to have title 19, lucky enough to have medical coverage or rich enough not to need it.
blindly antisocialist = antisocial
Hold on a minute, you think that people want to live there because you pay taxes and that makes it a nice place ?????? No dude no. People dont go there for the nice infrastructure or the good healthcare.
AFAIK if you don't overdraft and pay on time, a credit card does cost you nothing while improving your credit score. To be fair, the score's rules sometimes seem illogical: if you take credit and returns it ahead of schedule, your credit score gets lower. That's because the banks get less money from you and they don't like it.
I have two credit cards, one is tied to a deposit the other one is a "true" credit card, both cost me nothing. Actually, I make some money when I use it. If I buy something with a "true" credit card, I have up to a month to actually transfer the money. For this time I still get interest. It's not much even if I buy something very expensive, but it's better than nothing. Besides, both cards have a cashback program: one gives 10 cents for each transaction, the other one 0,5% of the spent amount. It's not much either, but you can't expect much from cards that don't require any regular payments.
Granted, these "free" cards have horrible interest rates if you choose to take credit. Well, I'm just not doing this. I'm not buying anything I cannot easily repay.
P.S. This is Germany, US experience may vary.
Yes ... you scammed them, except you didn't.
Since the company you're buying things from has raised its rates by 3 to 5% in order to cover the charges the credit card company charges them on transactions.
At no point does the credit card company not make extra money from your transaction, you're just not smart enough to realize you're paying for that case back yourself in the cost of the items you're buying.
Product A costs $1.00 to make a proper profit, company raises the rate to $1.05. You use a credit card to buy it and think you're awesome for getting $0.02 back from the purchase.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
That's not true - someone can force you to go into debt - get hurt, go to the Emergency Room, go into debt
Not a fan of banks, but you are welcome to start your own bank.
You think a regulator would approve you if you didn't play the game? Come now, you know better.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
Try being working or lower middle class and doing the same thing. When you can only save a few hundred a month for a house due to rent costing over 1.5 times a typical mortgage payment
I moved out of poverty and into the upper middle class over time. There is no silver spoon or handouts for the overwhelming majority of people that move out of poverty to a better income.
Being debt free gives me more cash than a person that has lots of debt. Their money goes to interest payments, mine stays in the bank. It's not being "rich", it's being debt free.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
I bet about 30% of them are ex Sprint customers lol
How about as a way to cancel a Dish TV service? When "I want to cancel the service" doesn't work,
closing the bank account they billed was 100% effective. I am sure that the balance will show up somewhere
but that is not my problem.
Apologist? Hardly. I'm simply explaining WHY the banks act the way they do - they're in the business to make money from money - and if you walk away before even paying off the full interest, much less the principle, (which is almost certainly the case if you're only 5 years in to a 20 year mortgage) then they take a loss on expected profits, even if by some miracle they manage to sell the house for enough to fully recover the principle (and as a party with no interest in managing real estate they'll probably take a loss selling the house).
Now I'm fine with that - you place your bets, you takes your chances. But banks aren't in the business of gambling, they're in the business of making money. So they'll turn around and screw over everyone borrowing money by jacking up interest rates enough that, on average, they'll still make money hand over fist despite the inevitable deadbeats. And they'll do so at least partially based on how big a chance they think you have of being a deadbeat. But of course they don't actually know you, which is where your credit rating comes in - they want to know how responsibly you've managed debt in the past, so that they can make an informed estimate as to your chances of being a deadbeat this time around.
And that brings us back to the original point - if you're super-responsible and only ever spend cash you already have, then you've never used credit. And without having seen you exercise credit the banks have no idea how well (or badly) you'll handle it and so, to cover their own ass, they'll assume you're a deadbeat until proven otherwise - a.k.a. your credit rating will suck until you start using credit.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
I managed to build my credit without ever getting a co-sign, mainly because my Father hates the whole credit rating system and so refuses to participate. I remember going to get a cell phone and because I didn't have a credit history at all being required to pay several hundred dollars as a deposit, that happened a couple times in a five year period. At some point in there I took out a small, $2000, 18 month personal loan from my credit union to buy a used car with a 12% interest rate again because I had no credit history to speak of. That interest rate while ugly on the face of it wasn't all that bad as 12% on a couple grand that gets paid off fast isn't really much of an issue. So five years after first discovering I had no credit rating I wanted to buy a house. I went and spoke to a mortgage lender and as it turned out I now had a great credit rating, 780 or so. My only history was a couple cell phone contracts, that personal loan, my landline/DSL bill, and a steady job for 3 years. Getting a good credit rating isn't really very difficult it just takes some time and stability.
I carry a single credit card now with a relatively low limit for unforseeable circumstances. For example I've encountered at least one rental car place that would not accept a debit card no matter how high of a balance it had but insisted on a credit card instead. And a couple times I've tried to pay for something with my check card and had it fail because the credit unions system was down briefly.
Just because you aren't forced into it doesn't mean it isn't a scam, and the government DOES indirectly force people into debt with inflationary economics. We've created a huge incentive for lending and then blame the people for all the ill effects of excessive lending.
The Merc article pointed out that credit cards were not the big issue here. One very significant one was medical bills that were assumed to have been paid by insurance but were not.
Having experienced the volumes of paperwork received from hospitals, doctors, surgeons, anesthesiologists, nurses, and so on for a two day hospital stay, two ER visits, and an outpatient surgery, I can believe that people tend to assume that the insurance is taking care of it, but that may not be the case.
I had to make several calls to the hospital billing department because they kept sending claims to the wrong insurance company. I was only aware of this by actually reading every stinking bill and realizing that something was wrong. It would have been easy to have had two very large bills drop to collection before all of the billing and insurance negotiations had completed and I saw that the hospital still wanted a few thousand dollars.
The article made it clear that many people were totally unaware of the debts, often lodged in error to someone with a similar name, even existed until the first contact from the collection agency.
Kevin Oberman, Network Engineer, Retired
I'm curious if that 35% includes stupid old collections accounts. When I was a teenager I had a card that I didn't manage well but finally paid off. Got the statement that said it was paid off and everything. Cut up the card and moved on. A couple of years later I got a call from a collections agency saying I owed a few hundred on that card. According to them it was from a roughly $20-$30 balance and then late fees, penalties, etc. I never kept copies of the statement saying it was paid off, and at the time I could afford the few hundred they wanted anyway so I felt justified in ignoring them. The statute of limitations on credit card debt in my state is 4 years. I just got a collections call about that debt a couple of weeks ago. 21 years after the fact. O.o I laughed at them and hung up, but seriously, they're trying to collect on a 2 decade old debt... You've gotta wonder how many people give in and make payments not knowing there's no way for that old of a debt to ever hit your credit.
I skimmed a lot of comments and didn't see one directly addressing the question posed in the summary.
Basically, 35% of Americans have debts in collection status because it's easy to have an account go to collections and then linger there forever. You can imagine people's "debt responsiveness" as being exponentially bound to the time since the last payment. A debt that recently had a payment made is almost certain to have its next payment made. A debt that's a few months late has a decent chance of getting a payment made soon. A debt that is 6 months (or more) late has a very low chance of ever being paid again. This is why debt collectors buy/pursue old debts. The original creditor will likely accept pennies on the dollar just to get something out of it, while the collector wants to obtain the whole amount. If they can even get half, they come out way ahead. It's a profitable business.
I used to work in this industry (wrote software) so I could tell you some things about it.
Check out my world simulator thingy.
I'm fairly sure that my current house could *not* be rented for cheaper than my mortgage payments, and I'm making bigger payments than strictly necessary because I want to pay it down fast and minimize interest costs.
Also, around here (Canadian prairies) housing prices were pretty stable for decades. Recently they took a jump due to more demand in the market, but that's because people want to move here.
I would consider a car payment as an acceptable way of doing business. I wouldn't recommend a brand new car, but a good used car is a great option. I would rather accept the extra cost of a little interest on a $15000 purchase than take that much money out of investments of savings. The savings of course isn't going to be earning nearly as much interest as the loan but the point of savings is having an immediately available supply of cash in cash of emergency or job loss, I like to keep a six months supply. The rest goes into market indexed investments which for me have averaged nearly 20% in the last twelve months, and around 10% per year over the last decade. Both my car payment and mortgage are under 5%, paying for them in cash would be foolhardy.
Is the data here any better than the accuracy rate of Transworld/Experian/Equifax? Separately, every few years I get a letter demanding payment on a debt that I settled years and years ago, from a debt acquired decades ago. I now have a form letter which disputes the debt, states it was already settled, requests confirmation of the debt from the originating entity and a justification as to why they think it is still collectable in any event as it is well outside timely filing to request payment. I have yet to hear back from any of them. But it wouldn't surprise me at all if I'm counted in that bitbucket somehow.
So if you have a credit car or a loan you get nagged if you are late on a payment. Most companies won't report you until the 60-90 day late range. It works for both of you to avoid going to collections. Things like medical bills, and parking tickets are sold to collection companies at times don't even know how to inform you they own your debt. There only chance of getting the money back is to go to collections.
but nothing can convince a collection agency that they were sold bad debt.
Having to explain to the judge why they're collecting when you can prove you paid it often works, and can put *their* money in your pocket to boot. Small claims court is great for this, especially when they don't bother showing up and you get a default judgment.
Please stand clear of the doors, por favor mantenganse alejado de las puertas
Fuck you for being a proponent of it. God, I despise people like you so much there is no describing it.
(1) For some people, living with another person is quite simply not an option, even when they want it.
(2) Living like sardines in a can is not the American way.
This isn't most of the world, this is America. Get the fuck out.
For me the threshold is around 2.5% and not 5%. As for the car, the problem is brings earlier on is because it is a source of expenses and not an investment per se. Obligatory insurance, frequent maintenance, 90%-80% probability of big accident on the first year of driving, tire use, very expensive gas, the tear and wear of using it (which translates into money), the car depreciation...Once you buy a car, you can count on saving less around 400-600 dollars per month. So if you are single, live in Europe with abundant means of transportation, the longer you get to buy a car, the longer you manage to save more. I really am not that fond into buying a car by credit. First, because of its fast devaluation and second, because many people do it, and once they end up paying the credit much longer after they dont have that car. Nevertheless I agree with you that if by now you have managed to put aside six months of earnings, that the best policy is pretend they dont exist.
I pay for everything cash, so I have a low credit score.
How the fuck does that work?
Your credit score is the calculated chances that you'll stick to the terms if credit is offered. It's based on past performance and present (credit-based) circumstances. If you have no history, they can't score you. That's how the fuck that works.
I paid for my car cash, I pay my rent cash, I pay the cable company cash.
I have over $30k in the bank and I have monthly paychecks.
None of this hits your credit report, so it can't be used to score you. Money in the bank isn't reported and isn't scored. Paychecks and income aren't reported and aren't scored.
So I should have a much higher credit rating than someone who is constantly paying with credit cards in my opinion.
I wouldn't even mind so much, except that when renting a house they do a background check, and they expect to find a credit history, which I don't have.
Someone who is paying with credit cards and is keeping those accounts paid as agreed has a demonstrated history of responsibly managing their credit. You don't have that. That's why they score higher. You seem to want a credit score that's based on some personal knowledge of you, or your handshake, or a magic 8 ball or something. But that isn't how it works because we no longer live in villages of 20 families. Various items related to how you've handled credit/debt are reported to credit reporting agencies. Other companies (okay, pretty much just FICO) have developed various scoring models that take the information reported to the CRAs and turn that information into a single, simple number which represents the chances that you'll stick to the terms of credit is offered. Since they don't have any information about you, you don't get scored.
I pay for everything with credit cards, pay them off every month so there's no interest, and then I take free vacations with the reward points and cash back money. I have a long credit history showing that whenever someone provides me credit, I manage it responsibly and pay them on time as agreed. If someone is thinking about offering me credit, they can look at that long history (or just the number) and see that I'm a pretty safe bet. They can look at someone else who has a long history of failing to pay back everyone who lends them a dime and see that person is a huge risk. They look at you and they see a mystery box. What exactly would you expect to happen?
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
I don't pay interest on my credit cards and they pay me cash back. I use the reward points and cash back for free vacations. I financed my last car at below the rate of inflation. Adjusted for inflation, the bank paid *me* for the privilege of buying me a car.
It isn't a scam; it's a game. And rule number 1 is understand basic mathematics.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
get a credit card and charge $100 a month and pay it off. or charge your living expenses and pay it off
simple
And make sure it's a cash back card ;) I've made thousands back in rewards and never paid a single dime of interest. Credit cards are a scam; make it a game to see how much you can scam out of the scammers!
You're right that its a scam. But you're wrong about scamming the scammers.
Banks are set up to extract the most money out of you without you even noticing. Cashback and other rewards schemes are the best form of operant conditioning, so much so many people will defend the banks trying to rip them off.
Banks make an absolute shitload when you use your credit card but they know if they charge you, you'll just use cash or debit (or another means that doesn't cost you) so instead of charging you for having or using the card they charge the merchant for accepting it, this is called the Mercant Service Fee or Interchange Fee (sometimes both). The merchant must now pass this cost onto you in either fees or higher prices. The merchant cant use fees because the banks have conditioned you to use your card (the aforementioned operant conditioning) and conned you into believing it's free so the only option left open to the merchant is to build it into the price.
When I ran a business, my costs for accepting credit cards would often outstrip my staffing costs... In Australia. Let me say that again, in Australia. People don't know, don't want to know and really don't care how much it costs a merchant to accept credit cards.
It doesn't matter what rewards you get, the bank still makes a lot of money. This is Machiavellian brilliance, people will actually support being ripped off because they've been conditioned to get the reward and don't know about or will actively ignore the punishment. It's the ideal mixture of operant conditioning and Stockholm syndrome.
Calling someone a "hater" only means you can not rationally rebut their argument.
The problem is that this doesn't work. You can use debt for investment and then pay it back from the profits. You can't use debt to increase your quality of life because that doesn't increase your income, so any extra you spend today you have to make up by spending less tomorrow.
The problem with US economy - and increasingly the EU economy - is that they get this exactly the wrong way around: the Government is prevented from investing by austerity measures while households are expected to upkeep demand by going ever deeper into debt. The result is crumbling infrastructure and stagnant economy that can't recover due to small incomes keeping demand down and crippling debt eating any upward fluctuations.
At this point, it might be best to just double mininum wage, cancel all debt and nationalize any financial institutions that collapse as a result. This quagmire isn't going to dissolve until its causes - wages too low to keep up demand without going into debt - are solved and the detritus cleared.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
Don't pay taxes. Tell your regime to go and PRINT dollars for its Extravagance.
Casteism
The problem is that this doesn't work. You can use debt for investment and then pay it back from the profits. You can't use debt to increase your quality of life because that doesn't increase your income, so any extra you spend today you have to make up by spending less tomorrow.
That is true, but irrelevant for most people. In general, people's income increases as they get older. So yes, they are "robbing" themselves of future cash flow, but they are also likely to have more cash flow in the future. In addition, for something like a fixed-rate mortgage, they are locking themselves into a fixed cost for a very long period of time for housing. If they were renting, they would almost certainly pay more as time went on. At the end of a 30 year loan, a mortgage payment that once seemed onerous will look almost trivial as the cost inflates away and real income increases.
the Government is prevented from investing by austerity measures while households are expected to upkeep demand by going ever deeper into debt.
I agree, and think that the government should be held to the same standards that they apply to businesses (and especially banks) in their finances. I'm not sure personal debt is actually getting worse - I think in the US it is actually improving - but agree that it remains a problem. There is smart and dumb debt... Rent-A-Center is probably never smart debt, but a 30 year mortgage is often a great idea.
This quagmire isn't going to dissolve until its causes - wages too low to keep up demand without going into debt - are solved and the detritus cleared.
Well, they are currently attacking the debt problem by printing money. This will probably work in the short term, and maybe even the long term if the banks stay de-leveraged. But color me skeptical. But for now, indications seem to suggest that QE is less disruptive than your proposal.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
While I agree this is possible, I will also submit that it's only a partial truth because not all banks and credit cards are the same. Many credit card companies will provide negative scoring for paying off a debt completely every month. I have had 2 credit cards cancelled for exactly that reason (years apart mind you, not simultaneous). The reason I got the cards was for the same reason you claimed worked, to build a score by making small purchases and paying it off each month. Except that credit card companies can cancel your cards for any reason, and in my case did after a few months of purchasing small goods and paying off the balance every month.
American Express has worked this way for as long as they have been in business, but you pay an annual fee to have the card so it's still not "free" and you are not being paid to have the card.
As the old saying goes, if something appears too good to be true it probably is. That said, I'd be interested in looking at your actual monthly statements to see how much you actually pay for credit card use. Call me cynical, but nobody rides for free. Perhaps if your "company" is contributing more, you would appear to pay less, etc...
I will grant you that big banks are worse than credit unions, and perhaps your credit cards are both through your credit union. Doubtful that you would get frequent flier miles that way, but surely possible.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
I actually have a credit card through Citibank and another through Discover. I have maintained the Citibank card since around 1990 (I got it my first year in college and it was my first credit card) and the Discover card for over 15 years. The reason it's basically a free ride for me is because of the fees they collect from the sellers. The credit cards are paid off automatically through electronic fund transfer from my credit union checking account (again, no fees). I have never had a credit card canceled on me and I maintained a credit rating of around 800 with no loans and never an outstanding balance.
You need to research the different cards that are available.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
Assuming the balance needs to be paid exactly 1 month after spending, we get 1.03^12 ~= 1.42. Ie. that 3% amounts to the same as a 42% annual interest
That 3% is charged to the merchant, and is built into the list price in virtually all cases, so you are "paying" that whether you use a card or not.