Most of us have heard of the term ‘Credit Rating’.
The way I understand it is that it is a means of ascertaining whether a borrower is a good risk to loan money to.
The Economists out there will be laughing their socks off at my simplistic view, but I have never been one for professional talk and my banking experience was customers first and then analysis.
There is a lot of money to be made out of debt.
Think about your overdraft charges, Pay Day Loans, APR interest rates, loans, mortgages, and the dreaded Credit Card.
I can only speak for what affects me, and our bank isn’t making a sausage out of us.
We do not have one of these ‘managed’ current (checking) accounts that attract a monthly fee to entitle you to preferential savings rates, free travel insurance and discounts at umpteen outlets.
To me, they are a con, as to cover your monthly fee, any savings you have with the bank must be pretty substantial, even at an enhanced rate, to attract at least £24 a year in interest or as much as £180 if your monthly fee is £15, AND you have to take into account the tax man’s cut at 20%.
If however you have oodles of money, go on holiday a lot and love to shop, away you go.
We have a small approved overdraft facility, which we have never used, but doesn’t cost anything to arrange and only applies interest on the days we are overdrawn.
Ain’t gonna happen.
Our credit card does not charge an annual fee either, and as we clear the balance every month in full, no interest applies, EVER.
So why is my post entitled ‘Credit Rate Plummets’?
Because dear friends, we have just ditched the last means of being given a credit rating.
Previous posts have moaned about the current banking problems we have experienced since selling our house.
The final straw to this sorry tale is that when Hubby tried to buy something over the internet using his credit card, it got messed up and cost a fortune on the mobile phone listening to their abysmal ‘hold’ music for over 20 minutes.
We decided to go into the Bank to find out what was going on (amongst other things that have annoyed us) and were advised that my credit card was showing as Dormant.
In my banking days, DORMANT was applied to an account that had shown no activity for 4 years (apart from any interest applied by the bank), and someone would check any other accounts held by the individual to ascertain if they too had seen no activity. If they were still active, the customer was politely written to in case they had forgotten about the account. If there were no other accounts, then it was placed in DORMANT and any movement was ‘flashed’ for referral.
Note I say SOMEONE would check.
Computers do not check anything that may be related. Computers do not think, computers do not have common sense. You may gather I hate computers.
Using their free in-house phone, I got on to the card centre and faced another farce of hold for almost half an hour! Eventually, I was told my card was considered dormant because I had not used it for a long time.
I cleared the statement in June, and hadn’t used it since, so less than 2 months is hardly a long time, and I told her so!
She very kindly de-dormant-ised me, and assured me that my balance was NIL and that hubby’s card was no longer a problem. Seems being a secondary card holder doesn’t work on their security sites.
Leaving the operator in no doubt of my displeasure, I hung up.
Then Hubby and I went up to the counter, saw a very nice lady and asked her to dispose of our credit cards, and arrange for the account to be closed.
But you know what the final rub is?
We won’t HAVE a credit rating because we don’t owe any money anywhere.
It wouldn’t matter if we had billions in the bank (we wouldn’t be in the UK if that was the case I can assure you!), because we have no debt, no-one can tell if we are a good, bad, low or high risk.
I can see the computer terminals now:
CREDIT RATING: unavailable
CREDIT RATING: undetermined
CREDIT RATING: unknown
CREDIT RATING: no data available.