Posts Tagged ‘credit rating’

Payday Lenders Under Fire

Monday, January 23rd, 2012

Payday lenders are out to exploit those hit hardest by the domestic slowdown, welfare bodies are warning.

The South Australian Council of Social Service has spoken out against payday lending companies after receiving a volume of complaints from concerned consumers.

Borrowers are being unfairly lured into taking out loans which, in some cases, appear to be interest-free, but which instead incur massive fees.

Cash Converters is one firm that has come under particular scrutiny for this practice. Despite their claims that no interest is payable on their loans, the charges often result in huge return rates for the lender.

The Advertiser reported that a desperate mother who took out a loan of $1,500 from the Cash Shop faces repayments totalling $2,600 in just four months – 73% interest.

Consumers turning to payday loans because of their struggles against the increasing cost of living are finding their problems exacerbated by interest rates and/or fees in excess of 100%.

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Bank-rupture

Friday, December 16th, 2011

It hasn’t been a particularly good year for banks across the globe.

Many are still being downgraded by credit ratings agencies. Standard & Poor’s, addressed in the last post here, upset leading European figures when it issued a threat of widespread sovereign downgrades on the eve of the European summit.

Many banks and governments alike are struggling to raise funds or to find manageable rates at which to borrow. Those that can, on the other hand, are exploiting every drop of political advantage they can muster.

Many banks are commiting various kinds of atrocities. Many are simply finding ways – even unwittingly – to frustrate their customers.

Scandal-Struck

A number of UK banks have been caught up in scandals involving the elderly. As reported on our sister blog in the UK, a succession of banks have been caught and fined for mis-selling risky investment products to vulnerable consumers. Pensioners of 83 years on average were pressured into investing six-figure sums of their inheritence into long-term risk-heavy products, often when they were not even expected to survive the investment term. Collectively, banks have faced compensation payments approaching £150 million ($233 million).

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Debunking the Credit Score Myths

Thursday, September 8th, 2011

When it comes to personal debts, banks and credit card companies have devised a numerical and statistical analysis of the consumer’s creditworthiness through the implementation of credit scores. This rating is based upon the credit report and data mining information gathered by credit bureaus (like Veda Advantage in Australia, Experian in the United States, and Equifax in the United Kingdom) on stores, financial institutions, and other businesses where consumers have made small to big transactions. FICO and other prominent credit scoring systems are used to evaluate the financial risk posed by lending money to consumers. Therefore, a low-income consumer with a history of delinquent paying of bills may get a low credit score as compared to a high-income individual.

Aside from banks and other financial institutions, mobile phone providers, insurance firms, real estate agencies, and other businesses use credit scoring to determine approved credit and set credit limit. Even though paying the bills on time would mean better credit scores, many of us don’t know how the scoring system works. Besides, we don’t know all the factors involved in determining credit score. Some consumers get bad credit scores especially if they can’t identify fact from fiction. Here are the common myths on credit score: (more…)