Purchases that can harm your credit?

[dddewdrop]

   What if I am employed as a pornstar? Does that hurt my credit rating? Gotta pay the bills and keep the fans happy. I am nothing without my fans. Seriously I find it not cool that Amex acts this way. I will vote with my wallet though. As much as I would like to qualify for an Amex card, paying $95 dollars for the "priviledge" to charge stuff and pay the bill every month is a waste of money in my particular situation. I don't like credit cards. I am only using them to improve my credit. I would rather be loaning other people money then borrowing it from a credit card company who could "pull the rug out from under me" at any moment. 

[Cdnewmanpac]

1. Amex routinely cites their status as both a card issuer and a network as a competitive advantage. This can only be true if they are making competitive use of the data this gives them. Unlike issuers that use the Visa and MC networks, Amex can see what items are commonly purchased at the stores their members are using. This is where the "Amex cut my limit for shopping at Walmart" story comes from. They saw a pattern of fraudulent purchases at Walmart (mostly small, easily returnable items) and then applied that information to the spending habits of their members. While it wasn't a great PR move, it makes sense from a risk model standpoint. It wasn't Walmart per se, it was the fact that Walmart was (at that time) a popular target for a particular type of fraud.

2. There is no way to identify that a purchase was for a traffic ticket. It will just show up as a charge from a municipal court. Would be coded the same as filing fees for small claims, etc. Now if you pay those private red light camera "tickets" with a card, that is potentially mineable.

3. The idea that alcohol sales generically are considered a negative is absurd. I spend about 5k a year on direct purchases of wine from wineries. Clearly an alcohol sale. Also pretty clear that people who buy wine off of mailing lists are desireable to financial institutions and travel companies. Every purchase results in about 50 mail/email solicitations for expensive vacation packages, investment services, high end car leases, etc. I find it hard to believe the same institutions paying for those mailing lists are then dinging those same purchasers on the other end. Same, I'm sure, goes for people buying alcohol while entertaining clients. I also have no idea how (given the way transactions are coded) an issuer can discriminate between high end wine shops and corner liquor stores.

[GaTech]

Wells Fargo kept tabs of all my spending patterns in 2012, I pushed roughly $12,000 through a $900 limit college student credit card. According to their calculations, I spent $500 at Starbucks and about $350 at bars/liquor stores. I don't think they care either way since they gave me an automatic $200 increase to my limit.

[SCoach]

This stuff is absolutely fascinating.  

AmEx must LOVE me for using my Plat. card for me weekly shopping trips to Wal-Mart.  Maybe I'll start using the Bluebird for that now instead.  Since I don't have a set spending limit on my AmEx cards I don't know what my real limits are, however I did get a letter once that indicated something near $50k because my deposits known to them.

I'm not too worried about it in any case, but it would be hard to be trying to run a business off a credit card and seeing the limit reduced.  

I wonder if anyone else found it interesting that this guy was essentially doing a $6k-$8k float per month on his Platimum card, and AmEx was reducing his limits as he was "paying down his balances".  Was he carrying a balance on the Platinum?  If so, and if he'd just done a re-fi with a risky lender, I can certainly see why AmEx would want to limit risk in that case.

[Open123]

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dddewdrop wrote:I suspect that is a figment of a columnist who needed a few extra words to fill up a pages' vivid imaginnation.

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No doubt, there are a few points I think the writer is taking considerable liberties on without much merit.  There is however an article that professed to interview a "credit card" statitician insider who had gone into his reasonining for those purchasing retread tires leading to hire default rates, while those who had USPS and premium birdseed purchases had lower rates of default.

It was all based on a midwest bank who pioneered the "probabiity and statistics" benhavioral modelling.

I'll try to unearth some of these articles and post them.  I found them an interesting read, though as you've said, it is often difficult to sort through truth, willful misinformation and flat out untruths.

[Open123]

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@Cdnewmanpac wrote:

1. Amex routinely cites their status as both a card issuer and a network as a competitive advantage. This can only be true if they are making competitive use of the data this gives them. Unlike issuers that use the Visa and MC networks, Amex can see what items are commonly purchased at the stores their members are using.

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Something interesting happened with my Amex a few months ago. 

I had upgraded from the BCE to the BCP for the 6% supermarket cashback.  I was going to buy assorted gift cards for personal gifts, so mind as well make 6%.  I also made purchases for my wife's sister who was visiting, so she can get a 6% rebate on her spending.

The next month, Amex sent me an email suggesting I should add "AUs" to increase my cashback bonus.  While I'm only surmising, I think they were able to "guess" that I was making purchases on this card for another person.

[cashnocredit]

Yep, analytics everywhere. That's one reason I stopped worrying about my Amex spending limit v a card with a CL. In effect, all CCs are really NPSL. They can and do shut you down if they don't like what they see well before you reach a CL.

OTOH, I recently bought a $400 bottle of tequilla with my Amex.

[Open123]

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@cashnocredit wrote:

Yep, analytics everywhere. That's one reason I stopped worrying about my Amex spending limit v a card with a CL. In effect, all CCs are really NPSL. They can and do shut you down if they don't like what they see well before you reach a CL.

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+1

Static CLs with Amex aren't very reliable if they see something amiss.  It'll be FR and frozen immediately.

In my view, the best defense is PIF.  I think if one pays in full every month without balances elsewhere, these analytics are meaningless, especially with a charge card's dynamic spending ability. 

This is why I still prefer the old fashioned NPSL charge for the majority of "large" spending.

[cashnocredit]

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@Open123 wrote:

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@cashnocredit wrote:

Yep, analytics everywhere. That's one reason I stopped worrying about my Amex spending limit v a card with a CL. In effect, all CCs are really NPSL. They can and do shut you down if they don't like what they see well before you reach a CL.

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+1

Static CLs with Amex aren't very reliable if they see something amiss.  It'll be FR and frozen immediately.

In my view, the best defense is PIF.  I think if one pays in full every month without balances elsewhere, these analytics are meaningless, especially with a charge card's dynamic spending ability. 

This is why I still prefer the old fashioned NPSL charge for the majority of "large" spending.

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Yep. When I first had an Amex charge card, back in the 70's, I didn't use it very much at all in part because of the NPSL. Since I went bavk to Amex I've tended to do exactly that, and put the largest charges on Amex. I'm actually astonished at the amounts I've been able to spend given a relatively short history. It has much more flexibility than my Citi. Or at least I suspect it does. I've never tried spending over 50k on my 25k Citi card.

[OnTheRebound]

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@Open123 wrote:

http://www.consumerismcommentary.com/10-purchases-that-can-harm-your-credit/

What do you guys think?

Edited - to add additional links for those interested in reading further:

Mainstream Yahoo - http://voices.yahoo.com/behavioral-scoring-credit-card-companies-revealed-2505838.html?cat=3

White Paper - ftp://210.59.95.83/ESWA_20120104/An%20integrated%20data%20mining%20and%20behavioral%20scoring%20mode...

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Everything in the above articles is true. I know. Because I read it on the internet.

And just for everyone's information, I'm a French model. Bonjour!