America will soon see a wave of bank mergers? • Hacker News Board

Re: America will soon see a wave of bank mergers?

#421

Post by youainti » Wed, May 03, 2023, 3:08 PM UTC

teekert wrote: post #392

hectormalot wrote: post #386

Earlier quoted context omitted.

Where I live there is a central register that identifies total exposure as well as red flags (late payments). Exposure is weighed differently. E.g. a 25k car loan might lower the acceptable mortgage by 25-100k because it’s backed by a depreciating asset and has higher interest rates. Similarly, a 5k credit card limit can have 2-5x the impact on a mortgage application. loan/credit application is mostly based on your i…

Sounds like my country, but, I don’t know anyone who has a credit card to increase their funds nor do I know anyone with a loan for a car. It also sounds to me that the difference between how we live here and the American system (I feel most people have loans for stuff in the 1–10k €/$ range in the US?) is a couple of months of living a bit more frugal, and the result is a lifetime of profit because you avoid all thi…

It is surprisingly true. Debt is a way of life for many people.

Re: America will soon see a wave of bank mergers?

#422

Post by 4RealFreedom » Wed, May 03, 2023, 3:43 PM UTC

jillesvangurp wrote: post #401

4RealFreedom wrote: post #297

Earlier quoted context omitted.

Just because people say something is an emergency, doesn't mean it's constitutional to do anything about it.

Whether or not something is constitutional is fundamentally a political question decided by judges appointed by the senate who get to interpret what the centuries old text says and what that actually means in a modern context. And that text only means something when you get judges to act on that. Until they decide something is unconstitutional, nothing happens. And often they decide something is fine after all. That'…

The courts and state representatives have eroded the constitution for some time. The federal government should only be responsible for the military and disputes between states. The only option I see is to eliminate federal agencies and eroded the federal government's power. People don't give up power willingly. What's your solution?

Re: America will soon see a wave of bank mergers?

#423

Post by HWR_14 » Wed, May 03, 2023, 4:15 PM UTC

nickjj wrote: post #409

HWR_14 wrote: post #399

Earlier quoted context omitted.

I don't think it's a ploy. I think it's an accident of how the people who designed the credit score used credit. And then inertia keeping things from being updated.

It's messed up because rent could be let's say $800 to $3,500 a month, if paying that every month on time isn't an indicator that you have consistent income to reduce risk on other loans then I don't know what is. It's especially messed up if the same system will ding your score if you buy $8 headphones and forget a payment.

Things are slowly being updated. And rent not being included is a pretty big error that needs fixing.

Re: America will soon see a wave of bank mergers?

#424

Post by kristianbrigman » Wed, May 03, 2023, 5:41 PM UTC

merek wrote: post #358

TexanFeller wrote: post #347

Earlier quoted context omitted.

Credit scores make more sense if you think of them not as scores of your ability to pay back debt, but as scores of likely profitability for the creditor. Someone who never carries a balance and never will pay the occasional late fee is less profitable and thus has a lower score.

I think you need to factor in risk. This is a simplistic example but demonstrates the influence of risk. Who would you rather lend a mortgage to? - Group A, consisting of people who prudently pay debts early - Group B, consisting of people who pay debts on their due date, and sometimes after Let's say you lend $100B to each group A and group B. Historical data might show that in aggregate, group A has a default rate…

It’s more than that - banks used to have prepayment penalties. People with high credit scores are (probably?) also more likely to move, which means the bank may only get a couple years of interest until you pay it back (when you sell to buy a new house with a new mortgage), vs. people who stay in their house for many years. These things mean that someone with a lower score may be a better investment for the bank.

If it sounds ridiculous… imagine that every month, all the mutual funds you are invested in shut down and gave you your money back (with interest), and you had to choose from a whole new set. Some of you probably do this anyways, but most people prefer to make the choice once and then just let it grow.

Re: America will soon see a wave of bank mergers?

#425

Post by orangepurple » Wed, May 03, 2023, 5:41 PM UTC

throwaway68911 wrote: post #400

silisili wrote: post #381

Earlier quoted context omitted.

Not necessarily. My credit today is good, but not perfect. I have trouble getting any new credit card. All for the same stated reason - too much available unused credit. I'm sure my score would dive if I closed a bunch, just pointing out that having a bunch isn't always a good thing.

I subscribed to both the Experian and Transunion apps. Both I quickly open either app and lock or unlock my credit(Transunion allows you to lock/unlock Equifax too). I can also see my credit scores as much as I want and ensure that I am using no more then 30% of my total accumulated credit limit. For example say I have 10 credit cards equally $100,000 combined then as long as don't have credit debt higher then $30,00…

I pay nothing for these services, have lived rent free for 3 years, purchase and pay off my credit cards to the tune of $2000 a month, and just bought a house hundreds of thousands over 500k with an interest rate 1.75% to 2% below what is shown on Google for the current rates for 30 year fixed rate. The lender credited me for all points. You don't need to waste 50 a month to make the bottom of the rate sheet. Just good negotiation skills and reasonable credit history.

Re: America will soon see a wave of bank mergers?

#426

Post by kristianbrigman » Wed, May 03, 2023, 5:46 PM UTC

HWR_14 wrote: post #397

Spivak wrote: post #346

Earlier quoted context omitted.

There's no difference at all for someone who works a dayjob. The only thing that matters is that you have you demonstrated that you can make a fixed monthly payment reliably. Paying your bills, paying your rent, paying your CC all demonstrate that. If you rent a $1500/mo apartment you actually have managed $18k of debt. Doing the same thing but this time with interest proves nothing the others don't. Borrowing histor…

> . If you rent a $1500/mo apartment you actually have managed $18k of debt. I agree. And slowly credit scores are starting to take rent into account. > There's no difference at all for someone who works a dayjob. But there is a difference. If you put your living expenses on a $500/mo credit card, you can have a $120k job and be eating ramen, living in a flophouse and spending the rest on drugfs or supporting people…

Your friend often asks for you to spot them $5 when you are out at lunch, it’s no big deal and they’ve always paid it back.

Now they want to borrow $5k all of a sudden. Do you give it to them, just based on the above history?

Re: America will soon see a wave of bank mergers?

#427

Post by jdmichal » Wed, May 03, 2023, 5:50 PM UTC

supportengineer wrote: post #341

chickenpotpie wrote: post #316

Earlier quoted context omitted.

> you think you can make more money by investing your 30k and letting it grow and compound Mortgages especially. Mortgage interest is tax deductible and makes it easier for high tax bracket individuals to outperform their loan by investing.

> Mortgage interest is tax deductible Since 2017, not really, due to tax law changes. Cap of $10k but that includes state taxes paid also.

The bigger change for mortgage interest was the massive increase in the standard deduction in 2018 to $24,000 from $12,700. We were barely doing better than the standard deduction prior to that, and the increase put us pretty far into "just take standard" territory.

Re: America will soon see a wave of bank mergers?

#428

Post by HWR_14 » Wed, May 03, 2023, 5:55 PM UTC

kristianbrigman wrote: post #426

HWR_14 wrote: post #397

Earlier quoted context omitted.

> . If you rent a $1500/mo apartment you actually have managed $18k of debt. I agree. And slowly credit scores are starting to take rent into account. > There's no difference at all for someone who works a dayjob. But there is a difference. If you put your living expenses on a $500/mo credit card, you can have a $120k job and be eating ramen, living in a flophouse and spending the rest on drugfs or supporting people…

Your friend often asks for you to spot them $5 when you are out at lunch, it’s no big deal and they’ve always paid it back. Now they want to borrow $5k all of a sudden. Do you give it to them, just based on the above history?

I absolutely don't spot them $5k all of a sudden, based on that history. I may based on other factors, but certainly not based on a long history of them borrowing $5 and returning it.

That seems like such an obvious answer to me I want to ask if you intended to ask that of me or the person I was responding to.

Re: America will soon see a wave of bank mergers?

#429

Post by c22 » Wed, May 03, 2023, 6:09 PM UTC

nickjj wrote: post #409

HWR_14 wrote: post #399

Earlier quoted context omitted.

I don't think it's a ploy. I think it's an accident of how the people who designed the credit score used credit. And then inertia keeping things from being updated.

It's messed up because rent could be let's say $800 to $3,500 a month, if paying that every month on time isn't an indicator that you have consistent income to reduce risk on other loans then I don't know what is. It's especially messed up if the same system will ding your score if you buy $8 headphones and forget a payment.

Last time I got a loan they asked me about my rent/mortgage (and utility!) payments so they could subtract that amount from my take-home pay when determining the risk of me defaulting on the loan. They seemed to assume I'd be paying my rent first and consistently regardless of any other debts I'd accrued.

Re: America will soon see a wave of bank mergers?

#430

Post by Spivak » Wed, May 03, 2023, 6:51 PM UTC

kristianbrigman wrote: post #426

HWR_14 wrote: post #397

Earlier quoted context omitted.

> . If you rent a $1500/mo apartment you actually have managed $18k of debt. I agree. And slowly credit scores are starting to take rent into account. > There's no difference at all for someone who works a dayjob. But there is a difference. If you put your living expenses on a $500/mo credit card, you can have a $120k job and be eating ramen, living in a flophouse and spending the rest on drugfs or supporting people…

Your friend often asks for you to spot them $5 when you are out at lunch, it’s no big deal and they’ve always paid it back. Now they want to borrow $5k all of a sudden. Do you give it to them, just based on the above history?

Let's make this more realistic since it's just mortgages but divided by 100. I'm bank of Spivak and you just submitted your loan application to me.

As part of your loan application I can see your savings, income, employment history, and credit history. The payment on a 30-year fixed $5000 loan is $35/mo with current interest rates so that's the bar I need to hit.

* I see that your monthly cash flow is $200 which puts your loan payment at 17.5% of that.

* You're putting 20% down or $1250 which demonstrates to me that you're capable of saving 35x the loan payment.

* Your borrowing history is sparse but you pay of your $5 Spivak CC every month which is 20% of the loan payment right there.

* The loan is collateralized by an appreciating asset whose market value is $6000.

Yes. Obviously I'm giving the loan. To second order no one has a six figure credit history. Their first mortgage is likely to be the first and last loan of that magnitude in their lives.