Wednesday, October 15, 2008

Credit Card Issuers Curb Risky Accounts -- What Card Companies Are Saying Right Now


Bankrate.com just out with a story that looks at what credit card companies are currently doing in regard to underwriting. Bankrate.com interviewed spokespeople from four major card issuers. They're all saying the same thing: we're being cautious when we extend new credit. And we're reining in risk wherever possible. Bankrate talked to Chase, American Express, Discover, and Bank of America. You keep your finger on the pulse of the market by reading stuff like this. Give it a read.

From the story: Credit card issuers curb risky accounts (link here)

"They're reducing lines, they're closing accounts based on score cuts. I'm seeing data that says that even the higher score cuts -- 750, 760, 720, in that range -- that people are having trouble getting credit," says Dennis C. Moroney, research director of bank cards at TowerGroup, a financial services consulting and research firm.

That's all you need to see to understand the tone of the story. Read the rest for yourself.

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25 comments:

athensguy said...

"Representatives at American Express, Bank of America, J.P. Morgan Chase and Discover Financial Services told us how their companies' credit card lending standards have changed over the past couple of years."

My BoA was closed by a snarky Credit Analyst in Feb. I may try to get it reopened before it reaches a year dead. However, in the last month or two I've gotten CLI from Discover and Chase. Discover was asked for, and Chase was auto. I don't know why, but my accounts don't really seem to be affected much by the current situations.

GlobCredit.com said...

Athens, I'm pretty much in the same boat as you. With the exception of that closed Citi Flex account, which was closed for inactivity, I've been left alone.

GoldenDomer said...

I've taken my hand off the "Easy Button" and entered the Kona program.

GlobCredit.com said...

GD, I stayed on the Kona program for almost 300 days. Broke it for American Express.

Post more often, pal. You've been missed.

athensguy said...

Indeed. I forgot to use the BoA from 08/07 to 02/08 when I was bored and called in for a rate reduction and he started sounding like he thought I was going to run it up and default since I was asking about it now and hadn't used it for months. 2 CRs say closed by grantor and one says closed due to inactivity.

GlobCredit.com said...

AG, that's the biggest challenge for me right now: making sure I keep ALL of my accounts active. Tough to put charges on this many cards. LOL.

Anonymous said...

what is a kona program?

GlobCredit.com said...

Anon, sorry about that. Kona is the name of a person who hardly ever applied for new credit. Thus, most people aspired to be like her. When you are on Kona it means that you have decided to take a break from applying for new cards.

I lasted almost 300 days last time around.

Don Miguel said...

CM, am having the same problem of it actually being *work* to keep using so many cards. Makes the Kona program easier to follow!

GlobCredit.com said...

DM, I saw the writing on the wall a while back. That's when I started consolidating all of my accounts. If I had three cards with one issuer, I consolidated all of them and turned them into a single card. That's helped. However, I still don't have shopping needs that justify using so many cards so often.

Don Miguel said...

CM, only have two sets of two cards from identical issuers (Citi: Dividend Amex and Diamond Preferred Rewards MC; Chase: Platinum Visa and Flexible Rewards Visa), and don't want to have to choose between account age and rewards programs (the newer cards on each have the better rewards programs) so will try to use them all in turn and allow each one to show a small balance from time to time. I guess if they chop, they chop---any AA, though, would be the end of my relationship with that institution and mean more interchange fees for the institutions that remain.

GlobCredit.com said...

DM, I respect your thinking. You have to do biz with those you respect. If someone is chopping away at your limits, not exactly easy to get warm and fuzzy about that lender.

Don Miguel said...

CM, I have at least learned the lesson now that sockdrawering with token use every six months, rather than canceling, is more beneficial for my score and costs the card companies more in the event that an AA were to happen :)

GlobCredit.com said...

CM, right. And I would argue that using it every three months is even better. Six months seems too long now.

GlobCredit.com said...

Er, make that DM. Not CM. LOL.

David said...

One of the problems with what Amex is doing is the effects it is having on potential new clients. I've never had an Amex because I have no use that justifies their ridiculous fees. However their marketing eventually got to me and I considered getting one recently until I found all the reports of them arbitrarily closing people for "places you have shopped." Frankly if Amex can't stay profitable with the annual fees, ridiculous merchant rates they charge and everything else than I probably don't want to do business with them long term.
I just hope they develop a commercial that shows an Amex user out at a big business luncheon whiping out the Amex only to have it denied for financial review. Never see that in the commercials!

Anonymous said...

CM, How many cards do you have total?

Nikky

Jazzyburrell said...

I have moved my sock drawer program down from 6 months to every 2 months as well. In these times it is probably better to keep the TL's that you have active, because the old thought of "Ahh I'll just replace them if the cancel me due to Inactivity" is probably outdated!

Far Left Texas said...

I stayed on my Kona program for almost four weeks. Then I saw an ad on this site for an Advanta Business card 15 month 0% balance transfer.

As for usage, I'm going to use every card at least every other month. One simple thing - I've stopped auto-bill for cable, internet, phone and cell phone. Now I pay each one "by hand" (online, of course). There's two cards a month I don't need to worry about pulling out and finding a retail store. This also shows a decent dollar amount compared to the price of a pack of gum.

I use a very high tech method for keeping track - I placed all my sock drawer cards into a business card 3-pocket carrying thing. With a Sharpie I write each cards cut date its pocket and on a blank business card I write what I charged last. Then I pay in full in advance.

GlobCredit.com said...

Nikki, I have 17 accounts, including two biz accounts. Of those 17, 15 are credit cards. Of those credit cards, none have balances on them. They all get paid in full whenever they're used. On a regular basis, I use 3-4 of them each month. That allows me to rotate them every four months or so. However, given this crazy environment, I am trying to use more of them in a shorter period of time.

I know that credit card companies are looking for inactive accounts. I have no idea -- now -- what inactive means any longer.

GlobCredit.com said...

David, I got an Amex card this past summer. I only considered a charge card. Forget credit cards. I knew that Amex was slashing and chopping -- and I wanted no part of it. Granted, I can still have my exposure limit reduced on the charge card, but at least I don't have to worry about utilization issues that crop up after Amex takes a butcher knife to credit limits.

Amex is probably hoping that other banks get into the act, so it doesn't stand out as a serial butcher. If my readers are any indication, other card companies are really stepping up their credit-limit decreases.

That's good for Amex; won't make them look as bad (relatively speaking, of course).

GlobCredit.com said...

JB, that's what I am doing. My periodic usage would not have worked in this environment. I had to step up my usage. Still only buying things I truly need, but I am using the cards.

GlobCredit.com said...

FLT, that'll do it. Fifteen months at 0% is a tough thing to ignore.

By the way, just so none of us forget: with the increased usage, comes more accounts reporting balances. That's a negative factor in FICO. Thus, what I am doing is making sure that I use the card -- but also making sure that I pay the bill before the billing cycle ends (excluding Amex). I don't want 9 cards reporting a balance at the same time, even if it is for small-dollar items.

Anonymous said...

Applied for Advanta,credit score TU 738 1 inquiry,business 6 years,and was denied for.....not having mortgage account!!!:)))
Very strange?

GlobCredit.com said...

Anon, that's just stupid. Advanta needs to get its head out of its you know what. You'd think that not having a mortgage account right now would be good!

I've been hearing that Advanta has been giving out some really low limits lately, by the way. You probably weren't missing anything.

But that sucks -- big time.

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