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I can assure you that no credit provider wants it's clients to default. You're confusing accepting the risks and cost of some defaults with desiring the defaul

I can assure you that no credit provider wants it's clients to default. You're confusing accepting the risks and cost of some defaults with desiring the defaults. The first is a reasonable decision based on risk-benefit analysis. The second will get your company into bankruptcy. Seriously rethink this preconception you have, because it's not in line with reality, and directly goes against the very interests (profit) you seem to think motivates them. The ideal borrower for these companies is one that always pays their debt on time, and comes back next month for more.

ParetoOptimal 3y ago
> The ideal borrower for these companies is one that always pays their debt on time, and comes back next month for more. I do not think that is true. I think they'd rather be taking whatever they can from as many borrowers as possible, milking them for all they are worth. If you limit your ideal borrower to "pays on time every month" you limit your income ceiling quite a lot. > You're confusing accepting the risks and cost of some defaults with desiring the defaults. The defaults can be desired if the late fees and penalties are high enough and a high enough portion of those get paid. This is the exact business modal of the almost universally predatory payday loan "businesses" for instance.
- johngladtj 3y ago
  Note how I said nothing about limiting lending to borrowers with no credit risk (that's impossible to start with) Indeed I specifically mentioned: >You're confusing accepting the risks and cost of some defaults with desiring the defaults. Defaults are always a bad thing, and those fees don't make up for it because there are costs involved with collecting from defaulting borrowers, if you can even collect in the first place. A company whose business model involves hoping their customers default will very quickly go out of business.
  - svnt 3y ago
    Your conception of this seems incredibly basic for all you’re going around telling others they don’t understand. There is a wide range of profitability of debtors and in unsecured loans such as credit cards people who pay their obligation monthly are not appreciated, because they are money losers for the credit card company. Credit card companies want people who carry a balance every month and then do everything they can not to risk their credit rating. Those are the ones paying hundreds of dollars a month in interest and covering their balances multiple times over. I’d love to see real profitability on clients who ultimately default on credit cards. I bet there is a large class of them that are profitable because of the long slow struggle making minimum payments and covering fees before they ultimately default. I’d also bet that class is among the most honest and hardworking you’ll meet.
    - johngladtj 3y ago
      Carrying a balance does not mean someone is in default.

ParetoOptimal 3y ago

> The ideal borrower for these companies is one that always pays their debt on time, and comes back next month for more. I do not think that is true. I think they'd rather be taking whatever they can from as many borrowers as possible, milking them for all they are worth. If you limit your ideal borrower to "pays on time every month" you limit your income ceiling quite a lot. > You're confusing accepting the risks and cost of some defaults with desiring the defaults. The defaults can be desired if the late fees and penalties are high enough and a high enough portion of those get paid. This is the exact business modal of the almost universally predatory payday loan "businesses" for instance.

johngladtj 3y ago
Note how I said nothing about limiting lending to borrowers with no credit risk (that's impossible to start with) Indeed I specifically mentioned: >You're confusing accepting the risks and cost of some defaults with desiring the defaults. Defaults are always a bad thing, and those fees don't make up for it because there are costs involved with collecting from defaulting borrowers, if you can even collect in the first place. A company whose business model involves hoping their customers default will very quickly go out of business.
- svnt 3y ago
  Your conception of this seems incredibly basic for all you’re going around telling others they don’t understand. There is a wide range of profitability of debtors and in unsecured loans such as credit cards people who pay their obligation monthly are not appreciated, because they are money losers for the credit card company. Credit card companies want people who carry a balance every month and then do everything they can not to risk their credit rating. Those are the ones paying hundreds of dollars a month in interest and covering their balances multiple times over. I’d love to see real profitability on clients who ultimately default on credit cards. I bet there is a large class of them that are profitable because of the long slow struggle making minimum payments and covering fees before they ultimately default. I’d also bet that class is among the most honest and hardworking you’ll meet.
  - johngladtj 3y ago
    Carrying a balance does not mean someone is in default.