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08-12-2011, 11:39 AM
Join Date: Mar 2008
Originally Posted by
These companies will throw credit at you just to get you to **** up
That having been said don't see why CC companies wouldn't do it too.
It's not the credit card companies that gives you credit, it's your bank. This why Visa-Desjardins is a direct competitor of Visa-Royal Bank.
Companies who's main line of business is not financial services (ex: Best Buy) will set up an alternate credit administrative company and make it sell credit-backed securities to investors. The credit income pays regular interest to them, and the company receive an immediate cash flow.
Since the company isn't the one assuming the bad credit risk, they have no incentive to be restrictive about whom they grant credit. They just know they can sell more stuff if they issue more credit.
Investors fuel the company's balance sheet, the clients provide income to the investors.
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