Example: Bob and Joe each earn 100K a year. They each owe $300K mortgage and each have $20K in credit card balances.
Bob has a 30 year mortgage with 4% interest. His credit card balance is on an 18 month no interest offer.
Joe has a 15 year mortgage at 8% interest. His credit card balance is due in 3 days and is subject to 27% interest on unpaid balance.
Bob is clearly the better risk, but credit companies consider them equal risks. Why?
How come they overlook the importance repayment term and interest rate factor into the equation?
Read more: When credit companies review your debt to income why don't they factor the interest and/or term on that debt?
