Quote:
Originally Posted by tennisfreak
You need to build credit to show a lender that you are a trustworthy and responsible lendee.
If you have no credit history how do they know that you will pay the money back they lend you?
If there is no credit history then the lender takes a higher risk of losing their money, therefore they want a higher return on investment.
The entire reason there was a financial crisis (in the housing market more than anything) in America was because lenders were lending money to people who could not afford the loans they were taking and/or were never intending to pay the money back to begin with.
There needs to be tight requirements on who can get a loan. There was a time when luxury cars were typically driven by people who could actually afford them. Nowadays you see everyone and their dog driving luxury cars.
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Quote:
Originally Posted by Braces
No. Having available credit that is paid off is economically good. The reason for the financial crisis? The big financial institutions were securitizing the mortgage loans. Bundling them and selling them off as securities. As a young person ... it is important to carefully build up your credit history.
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Thanks for the explenation, it is a bit more clear to me now.
It still seems a strange system to me but then again i'm used to the Belgium system.