With Approved Credit - WAC
With approved credit, or WAC (like wack-a-mole), is a signal from financiers letting buyers know that they can get this deal if they have good enough credit. As you hopefully already know, your credit is dependent on a lot of things, like your income, your past history paying off debt, your debt-to-income ratio, your credit limit, and all sorts of fun tidbits that aren’t always intuitive.
If WAC isn’t familiar to you, time to get some glasses. It’s usually mentioned in really, really tiny letters below a loan offer of some sort, giving the deets of how this magically amazing deal would theoretically occur, one of the requirements of which is WAC. A good WAC fixes a lot of things, no?
Why bother with this tiny WAC print? Because financiers don’t want to get in trouble. People could accuse them of a bait-and-switch tactic, luring in people with the promise of a good deal, only to switch it with a less-good deal. This is a type of fraud, and violates customer protection laws, ergo the fine print with all the details on the special offer in store.
Look for WAC next time a deal catches your eye—if you can see it, that is.
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Finance: What are credit ratings, and ho...59 Views
finance a la shmoop what our credit ratings and how are they interpreted?
well maybe you've heard your parents groan about all of their accumulated
debt or at least you did in high school and you know how it's sinking them. your [kid asks for dinner]
mom put the new fridge and dishwasher on her Amex and now it's all maxed out. your
dad meanwhile invested in a new set of golf clubs and put his flight to Myrtle
Beach on his visa, and now well your dad might have a nice tan and maybe he's
shaved a few strokes off his game, but you and your sister are eating baked
beans out of the can and taking time to 30-second showers to cut down on you
know gas expenses, so credits evil right? you should only pay for something if
you've got the cash right now in your pocket to pay for it right? well no not
right it's true making purchases on credit and be abused and often is but
building credit ie showing the rest of the world that you can borrow money and
then pay off your purchases responsibly whether you're an individual or a
corporation is absolutely essential in making your way through this vast [computer game labyrinth pictured]
complicated world of ours and establishing your own credit rating. so
what really is a credit rating ?well it's a determination of your ability to pay
your debts fully and in a timely manner. all right well there are three major
credit rating agencies who specialize in making these types of evaluations for
the big boys ie large public corporations who borrow money all the
time. the agencies well they're the ones with catchy names like Moody's Standard
& Poor's and Fitch. note that these three are typically used to determine the
reliability of businesses to pay off their debts.
don't confuse credit rating agencies with credit reporting agencies, of which
the major players are Equifax Experian and TransUnion. those guys publish credit
reports assigning credit scores to individuals. so they determine whether
you're able to get that Prius you've had your eye on or whether you can get [orange Prius pictured]
the keys to a nice new condo or whether you can finally upgrade from your
antique typewriter to Mac. but credit ratings indicate whether
someone might want to trust this or that company to make good on their debts.
check out this table which gives you the rundown of Moody's and SNP ratings right
there. don't worry about Fitch for now they're low man on the totem pole .all
right for Moody's anything rated be a three or better is considered investment
grade. for S&P well it's anything triple b-minus or higher. so both agencies would [credit rating chart pictured]
recommend investing in a company's debt at the top of their class, but for any
failing below this line well they've kind of slapped a junk ish bond label on
it. in other words you know and take your chances. the better the grade the better
a company is done in keeping their books checking their boxes crossing their T's
and dotting your I's and likely it means that they're a low risk. and so
they get cheap interest rate. though the odds are paying back their debts are
high when the risk is low and they're encouraged borrow more money until
they're not a good credit risk. well the ones at the bottom of the barrel are
probably sending weekly emails soliciting funds to you know help [sympathetic woman sits behind a computer]
Nigerian Prince's in distress. so those are credit ratings if you find yourself
in a position to care about them well now you know what they mean and how to
interpret them. as for your personal credit score well just make regular
payments don't spend well beyond your means and refrain from ordering one of
everything off Amazon and you should be just fine. [woman shops from computer]