8 ms·

I suppose the problem is that if that becomes too prevalent, people will stop paying their bill in the hope that the credit card company will give them a discou

by RobinL 3y ago

I suppose the problem is that if that becomes too prevalent, people will stop paying their bill in the hope that the credit card company will give them a discount

b112 3y ago
Poor credit can cost you dearly. Higher rates on everything, and a .5% difference in a mortgate rate is massive. It's a way to burn your credit for years, at great personal cost, so not likely that people will take the out without desperation.
- standardUser 3y ago
  Higher rates on what exactly? Isn't it pretty much just mortgage rates? Plenty of people have no plan or desire to buy property within the next seven years.
  - Broken_Hippo 3y ago
    In the US, it also means things like getting denied for jobs and apartments. Car loans will be more: You might not be able to easily buy a new car. And that's not even getting into some of the other random things. You'll need to pay upfront to replace the washer that went out instead of financing - unless that financing is through one of the rent-to-own places (which still might be cheaper than going to the pay laundry). Same for, say, dental work: Some places used to let you pay in installments if you had adequate enough credit.
    - pjc50 3y ago
      How on earth can people be denied jobs for poor credit? You're not a creditor to your employer! Isn't this just the "social credit" system that people worry about in China, except privatised?
      - krapp 3y ago
        Someone with poor credit may be assumed more likely to commit fraud or steal from the company. Someone with poor credit might also be assumed to be personally irresponsible and lazy, and more likely to slack off, ignore necessary details or cut corners. It isn't fair but in the US money carries moral weight, and many people assume the less of it you have, the worse of a person you are.
        jiofj 3y ago
        >It isn't fair but in the US money carries moral weight, and many people assume the less of it you have, the worse of a person you are. This isn't about money, this is about debt. Owing money around really does sound like something a bad person would do.
        r2_pilot 3y ago
        >Owing money around really does sound like something a bad person would do. Why would this be your default assumption? People can end up owing money for any number of moral reasons. I'd rather someone have 10,000 in debt because they borrowed to help someone with medical debt who would have died otherwise, than for that hypothetical person to die because of a lack of money. From there, it's easy to posit someone losing their job to be a caretaker for said hypothetical person. Et voilà, there's your unpaid debt yet (IMHO) for completely moral reasons. My opinion on debt has substantially changed once I encountered "Debt : the First 5,000 Years".
        b112 3y ago
        Why would this be your default assumption I am not saying it is fair, or that I would make this assumption. However, car insurance is the same way. If some indicator shows correlation with a bad driver, eg age, birth sex, type of car, rates go up! Same thing with unpaid/delinquent debt. It is an indicator. If you have 10 good potential employees to hire, and one has bad debt....
        3y ago
    - no-dr-onboard 3y ago
      Bah. If you have no intention on purchasing a home then you're free to not care. - Buy a used car in cash and wait a couple years for the bankruptcy mark to fall off. - Your credit has to be absolutely thrashed to not get an apartment, even then there are plenty of private landlords that won't do a credit check. Its almost as though the presupposition is that you need financing for anything in life. You can save and pay cash, its possible. People have been doing this for generations and have been just fine. Businesses need to run off credit, individuals don't. Pay your way and live reasonably.
      - kelnos 3y ago
        I always find it weird when someone puts forth the attitude of, essentially, "you don't really need these things that other people have, so just deny yourself the things you want and it's all good!" I will certainly agree that "keeping up with the Joneses" is a very real phenomenon, and we are marketed to death to get us to want things we don't need, that actually won't make ourselves happier or our lives better. But there's a lot of wiggle room there. Debt is a useful tool, and it can measurably make our lives better if used wisely and responsibly. Should a few mistakes push you into a different class of people who don't have access to that? I would say no, that's unjust. And that's without getting into all the ways that a credit report often doesn't accurately reflect your ability to manage debt, either just because of its imprecision, or because of reporting errors and unaccountable businesses that don't care who gets screwed over.
  - astura 3y ago
    It's a factor in insurance in most states- auto, renters, and homeowners insurance. Good luck renting a halfway decent apartment with poor credit.
  - ace32229 3y ago
    Any sort of credit. Car loans, credit cards, overdrafts, phone contracts, personal loans, if you are a business owner they can affect your commercial loans. Rental agreements too.
- dkjaudyeqooe 3y ago
  Back in the early '10s I was reading a report from a guy who had stellar credit and the card limits to go with them. He ran up about $100,000 of debt on his cards on purpose and stopped making payments. He then approached his bank to settle the debt and negotiated a 60% discount. The account was marked "paid by customer" so it never appeared on his on his credit report as a default. He did get dinged for missing payments though, but was $60,000 richer.
  - joezydeco 3y ago
    Doesn't the IRS consider settled debt as income? Did he have to report that?
    - jjoonathan 3y ago
      Yes, but "defaulting on $100k as an income strategy" is a tier above the usual tax avoidance schemes in terms of risk, so I suspect he availed himself of those too and wound up paying very little tax on the $60k.
  - vikingerik 3y ago
    I have a family member who did something similar - perfect credit and defaulted on purpose. On a rental property, he was underwater on the mortgage at the time of the 2008 crash, so he simply stopped paying and let the bank foreclose and came out ahead that way. Trashed his credit rating but he never had any need for it, he had enough to buy his own house and car outright.
    - devnullbrain 3y ago
      AKA 'jingle mail'
    - LorenPechtel 3y ago
      aka Strategic default. There was a lot of that in states where the lender doesn't have recourse beyond reclaiming the house.
    - 3y ago

by RobinL 3y ago

I suppose the problem is that if that becomes too prevalent, people will stop paying their bill in the hope that the credit card company will give them a discount

b112 3y ago

Poor credit can cost you dearly. Higher rates on everything, and a .5% difference in a mortgate rate is massive. It's a way to burn your credit for years, at great personal cost, so not likely that people will take the out without desperation.

standardUser 3y ago
Higher rates on what exactly? Isn't it pretty much just mortgage rates? Plenty of people have no plan or desire to buy property within the next seven years.
- Broken_Hippo 3y ago
  In the US, it also means things like getting denied for jobs and apartments. Car loans will be more: You might not be able to easily buy a new car. And that's not even getting into some of the other random things. You'll need to pay upfront to replace the washer that went out instead of financing - unless that financing is through one of the rent-to-own places (which still might be cheaper than going to the pay laundry). Same for, say, dental work: Some places used to let you pay in installments if you had adequate enough credit.
  - pjc50 3y ago
    How on earth can people be denied jobs for poor credit? You're not a creditor to your employer! Isn't this just the "social credit" system that people worry about in China, except privatised?
    - krapp 3y ago
      Someone with poor credit may be assumed more likely to commit fraud or steal from the company. Someone with poor credit might also be assumed to be personally irresponsible and lazy, and more likely to slack off, ignore necessary details or cut corners. It isn't fair but in the US money carries moral weight, and many people assume the less of it you have, the worse of a person you are.
      - jiofj 3y ago
        >It isn't fair but in the US money carries moral weight, and many people assume the less of it you have, the worse of a person you are. This isn't about money, this is about debt. Owing money around really does sound like something a bad person would do.
        r2_pilot 3y ago
        >Owing money around really does sound like something a bad person would do. Why would this be your default assumption? People can end up owing money for any number of moral reasons. I'd rather someone have 10,000 in debt because they borrowed to help someone with medical debt who would have died otherwise, than for that hypothetical person to die because of a lack of money. From there, it's easy to posit someone losing their job to be a caretaker for said hypothetical person. Et voilà, there's your unpaid debt yet (IMHO) for completely moral reasons. My opinion on debt has substantially changed once I encountered "Debt : the First 5,000 Years".
        b112 3y ago
        Why would this be your default assumption I am not saying it is fair, or that I would make this assumption. However, car insurance is the same way. If some indicator shows correlation with a bad driver, eg age, birth sex, type of car, rates go up! Same thing with unpaid/delinquent debt. It is an indicator. If you have 10 good potential employees to hire, and one has bad debt....
        3y ago
  - no-dr-onboard 3y ago
    Bah. If you have no intention on purchasing a home then you're free to not care. - Buy a used car in cash and wait a couple years for the bankruptcy mark to fall off. - Your credit has to be absolutely thrashed to not get an apartment, even then there are plenty of private landlords that won't do a credit check. Its almost as though the presupposition is that you need financing for anything in life. You can save and pay cash, its possible. People have been doing this for generations and have been just fine. Businesses need to run off credit, individuals don't. Pay your way and live reasonably.
    - kelnos 3y ago
      I always find it weird when someone puts forth the attitude of, essentially, "you don't really need these things that other people have, so just deny yourself the things you want and it's all good!" I will certainly agree that "keeping up with the Joneses" is a very real phenomenon, and we are marketed to death to get us to want things we don't need, that actually won't make ourselves happier or our lives better. But there's a lot of wiggle room there. Debt is a useful tool, and it can measurably make our lives better if used wisely and responsibly. Should a few mistakes push you into a different class of people who don't have access to that? I would say no, that's unjust. And that's without getting into all the ways that a credit report often doesn't accurately reflect your ability to manage debt, either just because of its imprecision, or because of reporting errors and unaccountable businesses that don't care who gets screwed over.
- astura 3y ago
  It's a factor in insurance in most states- auto, renters, and homeowners insurance. Good luck renting a halfway decent apartment with poor credit.
- ace32229 3y ago
  Any sort of credit. Car loans, credit cards, overdrafts, phone contracts, personal loans, if you are a business owner they can affect your commercial loans. Rental agreements too.
dkjaudyeqooe 3y ago
Back in the early '10s I was reading a report from a guy who had stellar credit and the card limits to go with them. He ran up about $100,000 of debt on his cards on purpose and stopped making payments. He then approached his bank to settle the debt and negotiated a 60% discount. The account was marked "paid by customer" so it never appeared on his on his credit report as a default. He did get dinged for missing payments though, but was $60,000 richer.
- joezydeco 3y ago
  Doesn't the IRS consider settled debt as income? Did he have to report that?
  - jjoonathan 3y ago
    Yes, but "defaulting on $100k as an income strategy" is a tier above the usual tax avoidance schemes in terms of risk, so I suspect he availed himself of those too and wound up paying very little tax on the $60k.
- vikingerik 3y ago
  I have a family member who did something similar - perfect credit and defaulted on purpose. On a rental property, he was underwater on the mortgage at the time of the 2008 crash, so he simply stopped paying and let the bank foreclose and came out ahead that way. Trashed his credit rating but he never had any need for it, he had enough to buy his own house and car outright.
  - devnullbrain 3y ago
    AKA 'jingle mail'
  - LorenPechtel 3y ago
    aka Strategic default. There was a lot of that in states where the lender doesn't have recourse beyond reclaiming the house.
  - 3y ago