New research by Credit Suisse shows that the risk of default on a secured loan is greater than the risk for a direct loan, and that a higher credit score can actually reduce your loan’s interest rate.
Credit Suissen researchers examined data from nearly 14 million Americans with at least one secured credit card and more than 2 million borrowers.
In their report, the researchers found that if you have a higher score, you are more likely to default on your secured loans, but if you do not have a high credit score, the risks are lower.
Credit cards with higher balances, higher credit scores and higher default rates were the most likely to be affected by higher loan balances and higher credit cards’ higher rates of interest payments.
For example, a credit card with a balance of $1,000 or more was most likely a high-risk loan.
“Credit card balances and credit card debt are at high risk for defaults,” the researchers wrote in the report.
“We are concerned that the default rate for these cards has increased, due to increased interest rates and lower rates of repayment, which are a significant drag on credit card balance and credit cards interest payments.”
The report also shows that while people with a low credit score are at a greater risk of defaults, people with high credit scores are less likely to make bad decisions.
People with a high score, in turn, are more willing to take on more risky loans, the report shows.
For instance, people who have a lower credit score and a higher debt-to-income ratio are more inclined to take out a loan for a car payment, the study found.
Credit card balances with high balances, high credit cards and higher defaults were the top risk factors for default, and the top-risk factors for low credit scores.
For some, the highest risk factors are their credit score.
For others, it’s a low-interest rate loan.
The risk factors also include: A higher score