Why Finance Companies Benefit From High Risk Borrowers

Why Finance Companies Benefit From High

Risk Borrowers

Leaf Credit SolutionsLeafcreditsolutions.com

What is credit score and credit risk?

Your credit score is a 3 digit number that lenders,

employers, Insurance companies use to gauge how

much of a risk that you are

Leafcreditsolutions.com

Your credit score is used to determine if you will pay

back a loan on time, be a responsible employee, or

be a high risk to an insurance company.


The lower the credit score, the higher the risk

The higher the credit score, the lower the risk


How do creditors make money from loans?

The extra interest is where the lender makes their

profit from the loanLeafcreditsolutions.com

The profits are only made when you go late and now

you become liable for a higher interest rate.

On a zero percent interest loan, the lender stands

to make no profit


Studies show that credit card companies make 3

times more money from sub prime borrowers than

prime borrowers


The Fed recently pointed out that credit card earnings

from banks have been consistently higher than all

other bank activities.


The majority of credit card companies profits are

made from the interest charged on outstanding

balances.


The lower your credit score is, the more money a

lender will make off you through higher down

payments and higher rates which ultimately cost

you more money.


Yes, not only do they prefer them, but they go out of

their way to ensure that most people have a low

credit score so that they can charge higher fees.

Do lenders prefer people that are high risk?


Many creditors make minor negative adjustments to the

information that they report to the credit bureaus about

you to ensure that your credit is negatively impacted,

so that they can adjust your rate and fees.


One common way is that they change the date of last

activity to a more recent date so that the negative

account will report to your credit longer than the

statue of limitation

How do companies alter the information that reports

to your credit report?


Another common scheme that creditors use is to report

the same account multiple times so that it has more of

a negative impact to your credit.


Although the system should be fair, unfortunately

that’s not the reality. These are just a few of the

tactics that are used by unethical lending companies

to hurt your credit and lower your scores.


You need to directly challenge the creditors that are

reporting negative information to your credit


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Date post:	14-Jul-2015
Category:	Economy & Finance
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Why Finance Companies Benefit From High Risk Borrowers

Economy & Finance