Unbelievable. I just got a call from a collection agency I've been having a long-running dispute with. I've been double-billed for the same charge and despite presenting them with what I consider written proof that the amount was paid in full, they have rejected my dispute and have informed me that unless I pay in full before noon tomorrow (gee, that's 16 whole hours, thanks guys!), they will file a report and my credit rating will suffer. I'm trying to put my anger aside and look at this realistically: in the next month or two I plan on opening an account with a futures broker and start seriously day trading--at least 24 hours a week (mostly the e-mini.) I'm pretty confident about my skills and the tools at my disposal--eventually, this could even become my full-time job. The amount of money they say I owe is not a trivial amount (for me, anyway), but it wouldn't completely screw me. I would just have to wait another month or so. On the other hand, I really want to just give them the finger and take them to court. My credit rating would likely be ruined at least for the next year or two, but I'd have my money, and I'd have my satisfaction. It all comes down to this: would my credit rating have a significant impact on the margin my broker offers me? Yeah, it's technically a loan, but they have margin calls and automatic liquidations to protect themselves from losses... right? Does my credit rating really have anything to do with the amount of leverage I'll see? extra incentive: I recently purchased multi-year one minute and tick data from http://www.anfutures.com on ES, NQ, ER, ME, EC, and JY. If you guys can give me some helpful info in the next 14 hours, I'll email or PM the links (which should remain active until Saturday) so you can download the data. There is no copyright or EULA I can discern, so this should be legal.
Don't pay them. They are screwing you. If you think, you have a system, then trade it. Don't be afraid. You are better of taking a chance now and may be you will end up making 20-30k per month. Then may be, you can always get a lawyer and negotiate with them. But the important thing is this: when you do become rich, you can pay them off. Just not now. You can also argue that the top analysts who worked for SSMB were "forgiven" millions of dollars in loans and why not you??? I forget his name, but this is the guy who used to make 20 mil per year with travelers. my 2 cents.
It all comes down to this: would my credit rating have a significant impact on the margin my broker offers me? no
I've had this shit happen to me. I have paid the same bill 3 times over the past 4 years. Everytime I refinanced, I've paid it again. What' worse, It's a bill from a Texas utility company, I have never lived in texas. I figured it was easier to pay the couple hundred bucks then hastle with it. I don't see any future refinancing so I don't think it will show up again for a while. As for your question, no impact. They want to lend you money to trade, it's how they make money.
If you have good evidence of violations of the federal credit protections act you can probably get a lawyer to take you case for free since attorney fees are paid if you win.
That personally suprises me. I realize that the structure of margin accounts greatly reduces risk for brokerages, but would a broker really want to open up a margin account for a client with prior bankruptcies, debt repayment issues, etc.? There must be some purpose behind requiring a credit bureau.
Yeah, it surprises me too... especially in light of the very large margins availible with index futures like the e-mini. I also have a very hazy half-memory of of my old stock broker mentioning a credit check in the passing. Currently checking this with some Googling. So far the only thing I've found is this: <i>Margin Facility Limit Minimum limit of RM50,000 Maximum limit of RM1,000,000 (limit exceeding RM1,000,000 is subject to client's track record and credit rating)</i> on http://www.paconline.com.my/pm_p1.htm not the market I'll be using, but I think it is fairly strong evidence that one's credit rating can be used to determine their maximum margin. 2.5 hours to go. That's how long I've got to decide whether or not it's in my best investing interests to make this all go away.
Your credit rating doesn't affect the amount of margin you get. And, never pay anything to a collection agency. Nothing could bring up your credit by opening up a lot of credit cards and paying them all in full at the end of the month. I supposedly have couple of defaults, but my credit is as good as gold.