"I have credit cards with combined limits of just over $60,000. Surely that should give me credibility by demonstrating that others are willing to lend to me! I’ve also proven that I can manage my payments by keeping a balance of around $58,000 - the interest on which I pay on time each and every month.”
1. What two specific parts of Eric's situation above are likely the reason lenders are worried? Be specific and explain the implications of what you’ve noted.
2. You with Eric shopping for appliances at a local home center. A salesperson mentions that Eric can receive a zero percent loan on an appliance package if he opens up a store credit card.
Stressing his financial savvy, Eric notes that he recently negotiated the purchase of his car, his computer, and his big screen TV all with similar zero percent interest rate credit card accounts he opened for each purchase.
What specific component of Erics credit report is he inadvertently hurting? Explain the significance of his actions relative to that component and include your reasoning.
From the above scenario
1. Following are the things I have noticed
Because of this lenders are worried as his obligations are increasing and he is okay by just paying the Interest on loan and still confident that other are ready to lend money to him and that thing is going to Increase his debt, so if the same scenario persist, one day he won't be able to pay both principal and interest and lenders will loss their money.
2. Eric is ready for every purchase with Zero cost credit card.
He has already opened zero percent interest credit card for Car, Computer and Big Screen TV
and now want to open for purchase at home center
He has kept on buying thing on credit cards as per suggestion of sales man
Rather He should have bought one thing or two at a time as per his payment capacity and should have shown good payout ration in credit card account.
Once some of the debts are paid off he should go further to buy the thing rather than buying altogether.
He is taking to much credit and that thing is inadvertently hurting his credit report.
"I have credit cards with combined limits of just over $60,000. Surely that should give me...