Do CC UW criteria change in different demographic areas?

[CreditCuriosity]

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@Anonymous wrote:

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@B335is wrote:
I lived in Detroit for 6 years until about 7 months ago. In that time I significantly built up my credit portfolio from a couple $300Cap1 cards to well over4x my annual income. With the exception of geographical limitations, I never found a lender to give me a hard time for living in Detroit with the exception ofLMCU (ironically), but that was over excessive new accounts.

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The OP asks an interesting question, and the first thing I thought of when I read it was, "Lawyers would salivate over this: a class-action lawsuit against a redlining bank." It's probably a given that big banks use data-mining; I do wonder why or how much a zip code would factor against payment history and other established credit factors when it comes to giving out credit cards. I can understand if a bank wanted to identify a certain zip code to establish a bank that offers financial services tailored to folks who fit into a certain economic profile. 

Speaking of The D: I moved there ten years ago for work. When I went to get car insurance, the agent tried his best to get me to move out of downtown (I was living on Jefferson, right downtown, which, I learned later, got me alot of street cred). He was incredulous that a working professional would want to live downtown. (In two years living in downtown Detroit, nothing ever happened to me; however, I got pulled over by Grosse Point cops when I drove there to buy groceries.) Anyway, my car premiums were astronomical due to, apparently, past claims based on zip code. That's why they can "get away" with charging alot based on location, just as they charge a premium based on age, type and even color of car. I think it would get more complicated with credit cards and bank loans (redlining.)

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Auto insurance does this deffinetly based on zip, so only makes sense lenders do as well.. Although they would never admit to it as it would be huge lawsuits...  Data is very very powerful when you apply even though you approval only take say 20 seconds.  I can compare you to say 200 million other people within those seconds or less and determine your risk level based on alogortigms.  Retrieving and comparing data can be done in milli-seconds to determine these things now if the system is programmed to do such things.   

[CreditCuriosity]

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@Anonymous wrote:

I would be interested to hear from UWs. I worked for a CCC but I wasn't in underwriting; however, we were trained that using geographic information was not allowed but how much control do they have over the subtle actions of UWs? 

I live in nice neighborhood in a college town; however, the majority of my zip code covers a nearby slum in neighboring city. We're seperated by a commercial corridor but if you just google my zip it'll bring up the crappy town instead of my neighborhood next door. 

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I am taking about computers that make the decision more than the UW's...  automated decisions based on 10's of thousands to millions of variables in a matter of seconds.  Very possible as I do it every day, just in a different line of work.

[ddemari]

I would think that demograpghics can influence a CC company's policy on whether or not to approve. I think it cant be a HUGE factor but definitely plays out into the offers, acquisition and marketing efforts CC company's use to gain profitable card holders. This article I found interesting, the CC companys are definitely interested in consumer spending, payment history, utilization, charge off rates, retention etc. and how they relate to certain geographical locations. 

http://www.fico.com/en/wp-content/secure_upload/Major_Bank_Bankcard_2917CS.pdf

Adapting to changing conditions in real time was my favorite part. I feel like basically their formulas have a 100000 variables and the ability to approve or decline might be have some threshold based on other information not disclosed to us. 

[Anonymous]

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@CreditCuriousity wrote:

I appologize if this is in the wrong section, but appears to be as good as any other for this purpose.

Do you think big bank aka Chase/Citi/BofA/etc change their UW standards at all persay for someone that might live in San Francisco (Fairly wealthy) area and one that may live in Detroit (not as wealthy).  Just using these as example demographic cities.  Meaning scores and income must be higher if you live in San Francisco to get approved than say Detroit can get the same card approved with lower scores and/or income?   I have always wondered this and believe it to be somewhat true as FICO scores vary pretty greatly on the part of the country you live in along with age and income for some obvious reasons or at least obvious to me.  CC companies do have higher/lower default rates in various areas of the country and they obviously mine/analyze this data...  So Curious what others think.

I would like to hear other peoples thoughts on this subjects. 

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I highly doubt it.  Just a for instance.  We live 30 miles west of Tampa.  Nice neighborhood but there are not so nice neighborhoods all around.  My dad likes to gamble & know several ppl with some bucks.  Unfortunately, he has none.  But always had a few cc's with good limits.  His friends have the limits you would see on here along with total overall high CL's.  It's really not where you live.  Most likey they start with your score, then check your report for negs, then see how responsibly you managed the credit you were given.  One thing my dad sticks to today.  Pay your bills when you get them, then worry about the rest later.  You will always have great credit!

[taxi818]

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@Anonymous wrote:

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@CreditCuriousity wrote:

I appologize if this is in the wrong section, but appears to be as good as any other for this purpose.

Do you think big bank aka Chase/Citi/BofA/etc change their UW standards at all persay for someone that might live in San Francisco (Fairly wealthy) area and one that may live in Detroit (not as wealthy).  Just using these as example demographic cities.  Meaning scores and income must be higher if you live in San Francisco to get approved than say Detroit can get the same card approved with lower scores and/or income?   I have always wondered this and believe it to be somewhat true as FICO scores vary pretty greatly on the part of the country you live in along with age and income for some obvious reasons or at least obvious to me.  CC companies do have higher/lower default rates in various areas of the country and they obviously mine/analyze this data...  So Curious what others think.

I would like to hear other peoples thoughts on this subjects. 

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I highly doubt it.  Just a for instance.  We live 30 miles west of Tampa.  Nice neighborhood but there are not so nice neighborhoods all around.  My dad likes to gamble & know several ppl with some bucks.  Unfortunately, he has none.  But always had a few cc's with good limits.  His friends have the limits you would see on here along with total overall high CL's.  It's really not where you live.  Most likey they start with your score, then check your report for negs, then see how responsibly you managed the credit you were given.  One thing my dad sticks to today.  Pay your bills when you get them, then worry about the rest later.  You will always have great credit!

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Well i can factually say. sandi. I live downtown Tampa. and before i joined the myfico forum i was looking at my equifax moble app. and the very first thing i saw was credit score demographics. if you use the app which is free. If you punch your own zip code you will not only see the average debt for your own zip code. but their average credit score as well. including the surrounding neighborhood. example. live  1/4 miles from bayshore. Average is 704 credit score. average debt is 156k.

Go 5 blocks north. the average score is 613  and average debt is 14k. which is the hood. there is no way you are saying that lenders don't use that. even if they don't admit it. Don't take my word for it. just look it up. download the equifax mobile app. and it will show you exactly what all lenders see. or better worded. what they know from the cra's. there is really no proof that lenders are looking at this. but i know they are.