Why do people with excellent credit and a high FICO score get the lowest interest?

I know I'm going to get a lot of flack for this. So here goes. High interest rates are given to people with bad credit or no credit. Or not enough credit. I understand the risk with bad credit. Why such high rates with the no credit or not enough credit? The banks shouldn't be surprised if some of these accounts result in default. People get into trouble when their interest rate is so high. Then they lose their cars and their houses. Doesn't it make more sense to give these people a lower interest rate to begin with? I realize it is a business and not a charity. If they are going to default. It doesn't matter what the interest rate is. A low interest rate is better than losing any profits from a repossession or foreclosure.

Public Comments

1. because they do not cost the lending industry anything but a vey little paperwork!!!
2. Why do u think?
3. This is real simple. They get better interest rates because they are lower risk.
4. Economics 101 . If you had money to loan, who would you expect to be a better risk? Someone with a track record of successful payment or people that have no history at all? Banks aren't surprised about the default rate thats why they charge so much interest to make up for the loss. It's a numbers game of probability for them. If banks gave low interest loans to people with no history of credit & the default rate was high ( which is what it historically is) the banks would suffer more because they wouldn't have other high interest loans paying them to make up for the loss. Besides, if people with bad credit or no credit start showing a good payment record & history they get rewarded with lower interest rates.
5. They have proven themselves to be responsible and that's their reward so to speak. If they gave low interest rates to people with bad credit, where's the incentive to keep your credit in good standing?
6. because we can be trusted and have shown that in our past dealings
7. Simple. All interest rates for loans are based on factors of risk. People that have high scores and great profiles have shown that they are responsible with their bills and pay them as agreed, therefore they are the lowest risk so they get the best rates.
8. Imagine I have excellent credit. Everyone is going to want to lend to me, they'll lower the interest rate down to the bone so that they can have me. This makes sense no? The opposite is true for a bad payer. To convince them to lend to him, he's having to pay very high interest rates, they'll take him and the risk on board but they want to be paid for it.