Is the interest rate worth the credit history?

[scootr]

Also - note for returns and refunds the merchant who paid 3% to take your money does not get that fee back when you get your refund. $30k in refunds annually is not unheard of for small businesses these days. The cost of handling returns, refunds, shipping damage or loss, and consumer fraud all have to be built into the product cost. So we all pay for this.

 

[Jstpssng]

We all have our opinions. Here's mine.

He plans to go into the service, so likely won't be buying a house right off, so having a high credit score doesnt mean much. The only thing it might do is get him a reduction with his insurance. You want to help him out, and he is responsible enough to pay you back as arranged. Help him save the interest. To establish credit, get a gas card and pay it off every month.
That will help reinforce habits which you have already instilled in him.

 

[Torvy]

Also - note for returns and refunds the merchant who paid 3% to take your money does not get that fee back when you get your refund. $30k in refunds annually is not unheard of for small businesses these days. The cost of handling returns, refunds, shipping damage or loss, and consumer fraud all have to be built into the product cost. So we all pay for this.

The merchant gets considerably more sales by accepting cards. It more than pays for the processing fees for them. It costs them money to handle the cash, too. Cash puts their money at risk from theft (from employees or hold ups).

I avoid stores that offer cash discounts. Forcing me to carry cash is a higher risk to me, too.

 

[Jstpssng]

It more than pays for the processing fees for them. It costs them money to handle the cash, too. Cash puts their money at risk from theft (from employees or hold ups)

It's still costing them money. Many places offer a discount for cash or even debit cards. I signed up with AT&T and allowed automatic payments to save ten dollars per month. Two months later I recieved a notice telling me to either start paying by debit card or lose half of my discount.
Nobody gets my debit card number.

 

[Torvy]

It's still costing them money. Many places offer a discount for cash or even debit cards. I signed up with AT&T and allowed automatic payments to save ten dollars per month. Two months later I recieved a notice telling me to either start paying by debit card or lose half of my discount.
Nobody gets my debit card number.

I would have warned you off of AT&T.

They set you up that way, I'd switch carriers tomorrow.

Utilities don't really get an advantage accepting cards. Retailers do. I figure if the card fees are really a loss to them, stop accepting them. They want to have their cake and eat it too.

 

[Jstpssng]

I would have warned you off of AT&T.

They set you up that way, I'd switch carriers tomorrow.

Utilities don't really get an advantage accepting cards. Retailers do. I figure if the card fees are really a loss to them, stop accepting them. They want to have their cake and eat it too.

They aren't a loss. The merchant just makes less off them. Hence cash discounts. Somebody has to pay for those rewards.

 

[ultrarunner]

I did.

I did also... no credit at age 21 even though employed and paying into social security with school work permit starting at age 12.

House was scheduled for condemnation hearing and got it 1/3 of asking and put life savings and sold my restored Z28 vintage 1968.

There are ways and not being able to get a loan and buying a 570 square foot 1910 shack was a great lesson... and forever changed my thinking about banks and loans.

 

[ultrarunner]

Big pieces of credit score...

Debt repayment history (35%) - do you pay your debts back on time. This can be cc balances, mortgage loans, vehicle loans, etc. But, also may include medical bills, rent and utilities. This depends on if the creditor reports payments to the bureaus. Type of debts doesn't matter on this.

Credit utilization (30%) - what percentage of your available credit (revolving only) are you using? Basically, the more your cards are 'maxxed', the worse your score.

Credit history (15%) - simply how long have you had a credit score? Longer is better.

New credit (10%) - how much of your available credit is new? This includes store branded cards, bank ccs, loans, etc. Less is better. People having financial trouble often escalate credit in the months prior to BK.

Credit mix (10%) - is all of your debt in one type of loan? Better to show you can handle various types.

This is just for FICO. Banks often use their own additional criteria to determine if they will give you a loan and what APR you will be offered. One bank I worked for had a proprietary model that looked at 200+ factors. No one person knew the whole model to avoid it being gamed. One that I know of included...credit utilization trend (are you holding bigger balances now than historically). People in trouble usually have a significant uptick prior to BK.

Other common factors on getting loans...asset type, LTV (loan to value) - higher LTV is a bigger risk. DTI - debt to income - what % of your income is tied up in debts? These are not part of FICO because this info wouldn't be on a bureau.

My credit score dropped a little when I put all expenses on the best reward card...

Over all credit utilization very very low but using one card showed me near the limit each cycle...

Never carried a balance and never paid interest except on a first mortgage... school and cars paid cash.

 

[paulsharvey]

For our OP, if your son has some established credit, and his own income; I donr know why you would want to do a private loan. Sure, maybe he saves the 6-8% interest, but I just think it's better if he goes with a conventional loan. Keeps you out of the mess, he continues to build credit, and as long as it's a fairly budget minded puchase (sub $20k); it's not going to be that much intrest over a 5 year loan.

The only reasons I see to do a personal loan, is avoid insurance requirements, if he had crap credit, or the car is too old to finance.

 

[paulsharvey]

I know some people are dead set against credit/loans; but if you could 'buy' a 50-100 point jump in credit; for like $1000; and you had any major purchases over next few years, you would likely be money ahead.