6 of 15

Write now Article Tools

Page 2 of 2

only charge interest and an account opening fee and these fees cannot exceed 1% of the credit limit on the card. On a $5,000 credit card they would be allowed $50 for opening the account - thats enough seeing as how its all automated. Credit card interest is hitched to the prime rate plus 5 points. The worst credit record gets 5 points and the best gets 1 point over prime. Can't make it on that basis - get into another industry!

3. Second mortgages are in need of some special efforts: (1) The rate on the second mortgage cannot exceed the rate on the first mortgage by 4 points; and (2) The value of the home made by an independent appraiser cannot be exceeded by a combination of the mortgage on the first and the proposed amount on the second! No more 125% loans for any reason.
4. Mortgage loans have similar problems - the new rule for making mortgage loans is that you cannot charge more than the prime interest rate plus 5 points, depending upon the credit risk. The poorest credit risk would get prime plus 5 points, the best would get prime plus 1! The mortgage loan must be based on the appraisal of an independent appraiser, licensed and certified to make such appraisals. No more in-house appraisers who rubber stamp the mortgage requests, no matter what the values.
5. Personal credit is by and large a thing of the past, except for the payday loan industry. They should be outlawed! Anybody who cannot make a decent profit by charging up to 15% on the money, should not be in this business. In Oregon it took a lot of doing but they finally reduced the 300% loans down to 33%, which is still out-rageous. When that occurred about 60% of the pay day loan industry simply closed their doors stating they could not make it on 300% interest! Go find a job!
If you change the credit game a little bit by insertion of the above rules, many of the scam artists simply leave for other territory. I know that the market is supposed to survive on a "buyer beware" concept, but it simply doesn't work for far too many people. It's time to reform our credit market.

Learn more about this author, Fred Tolleson.
Click here to send this author comments or questions.

• << previous page
• 1
• 2

Add your voice

Know something about Why no credit, no problem promises can be a scam?
We want to hear your view. Write now!