DISQUS

One Bad Bitch · 7 months ago

The class action will begin.

pldestef · 7 months ago

I am fuming mad. I recently received a letter from Bank of America that they have dropped my credit line from $28000 to $14000. I called to get it reinstated and they told me that I NEVER should have had a line of credit that high and then they refused to reinstate it to the original amount. Wait a minute - you kept giving it to me! Now you are taking it away? I have never carried a balance and I pay my bill on time each month. I told them this would affect my credit score and they kept arguing it would not. I know it will. So basically, if you play by the rules you still get lumped in with the rest of the American consumers who can't pay off their debt. I am so disgusted. I plan on linking to your article on my blog.

marketfolly · 7 months ago

wow, that really sucks I'm sorry to hear that. You are a perfect illustration of what we were talking about in the article. This is something that consumers have zero control over and the lenders are just flipping switches and cutting lines.. its madness out there.

I think this issue will continue to gain more publicity and become more mainstream, especially as people's scores start to weaken over time due to the lenders' actions. That's all we can do is shine light on the subject and make people aware. Thanks very much for sharing your story.

sczech · 3 months ago

For somebody who habitually pays the full balance every month, the FICO score does not really matter at all. Regardless of what the FICO score is, such a customer is a very low risk source of fee income to the credit companies. They will NEVER deny credit to such a customer.

Banks are justified in reducing credit lines. This has nothing to do with the creditworthiness of credit card holders, but a lot with the fact that banks have no money to lend out. Most banks are bankrupt.

JUSTaNUMBER · 3 months ago

Get used to it. With our tax dollars BOA, JPMChase, and AE were able to quickly rebound and improve their balance sheets. Others have done the same but these guys are the worst abusers on record.
My wife, self employed, with 10 year perfect credit history; not one late payment, always paid more than minimum payment, never went over limits, had 783 FICO. 4qtr last year had family illness and used card limits up to 95%of capacity. Balances have been steadily decreasing and were down to between 70-80% capacity in June when Chase closed an account they bought from Washington Mutual. BOA and AE lowered credit limits on their cards to within $100 dollars of the current balances. Her FICO has dropped into the low 600s now and Chase is charging 28.98% on a closed account. She is has continued to make payments as always but that may change. People should check the Staute of Limitations on unsecured contracts in their states. When this recession finally comes to an end in 2 to 3 years, you will still be able to restart your credit. Just remember to avoid the companies that did not appreciate your business. What's good for the gander may be good for the goose. And to the "sczech", unless you are able to pay cash for your new home or new car, you will have trouble financing them at a decent interest rate with no FICO, which is based on credit history. Been there done that.

marketfolly · 3 months ago

Wow that's terrible I'm sorry to hear that. At the same time though, thank you for sharing the story because it highlights exactly the problems we are seeing in credit-land these days. Some appalling stuff going on that needs to be fixed.

vk9141 · 2 weeks ago

Whatever happened to common sense in banking?

I see many parallels between FICO scores for individuals and credit ratings for corporations. Too much emphasis on arcane calculations with flawed inputs. I'm not saying they're worthless, but they should be handled with care.

What is it they say in computing, garbage in garbage out? If the input parameters you highlight here are being unduly corrupted by uncontrolable external factors then human intervention is needed when making lending decisions to attempt to correct, ie use the FICO as a guide only, not a deal breaker.

The problem is with so much of origination in credit cards and personal loans being fed into securitisation trusts very little interest is placed on idiosyncrasies as they are impossible to model.

Kind of similar to the CDOs created from sub-prime securities where the emphasis was mostly on the ratings of the collateral where in reality the variation between one deal and another of the same rating was huge.

marketfolly · 2 weeks ago

Very true, the whole concept of 'rating' people, corporations, etc is a process that needs updating. While they have tried to tweak the FICO in recent times, a more in-depth overhaul is certainly needed on the corporate level.

People just blindly trust the ratings as well which is another big flaw given that half the time the ratings don't even seem to be correct! You would think a big event such as the credit crisis would get the ball in motion regarding efficient change, but it looks like we'll still be waiting for some time.