The reason CCC's are giving CLD to everyone is

[Anonymous]

Wow does it stink when you have been completely faithful in paying your CC on time, possibly PIF or many times the minimum and never been late.  Maybe you have perfect credit and have had an account for 20-30 years and you still find CLD!

Why?  Well, the decision for most creditors is a multi-pronged issue.

1.  The capital resources of many, or most, banks and CCC's was jeopardized by the subprime mortgage and resulting economic decline.  These companies relied on an ability to raise capital from borrowing, sale of securities, sale of bonds and sale of debt (sell your account to another creditor).  When credit began freezing up, it started at the top and trickled down.  Okay, it poured down.

2.  The capital resources of all people as a whole was reduced.  One of the largest, if not largest, asset that most people have is their home.  Homes have traditionally appreciated over time and in the 10 years prior to the burst they had appreciated even faster than normal.  This provided a resource to people who found they needed to pay off credit cards by refinancing their homes, taking out seconds or equity loans.  With the decline of the housing market the values dropped, meaning people had less value or no value to borrow against, or worse yet, negative equity.  The combination of low/no value to borrow and the credit markets seizing up dried up a very prominent source of credit card companies being paid off.

3.  As the decline spiraled, many people found themselves in homes they could not afford due to rising interest (ARM adjustments) or because of job losses.  This increased the level of home foreclosures which saturated the market with distressed sellers or foreclosure sales, which aggrevated the home prices and housing market even further.

4.  As the domino effect cascaded, people began buying less, meaning companies sold less thus laid people off.  The loss of jobs across the board was a general loss of resources used to pay CCC's.

From this series of events, over leveraged people defaulted at much higher levels than normal.  And most of these companies had participated in the various subprime securities, whether it was the mortgages, derivatives or the "anybody" qualifies credit.

Companies found themselves with less capital, less capital resource, increased defaults and huge exposure in outstanding credit lines that people potentially would tap if the "economy" affected them negatively.

Many companies chose to reduce exposure, recoup outstanding debt as fast as possible and to begin tightening lending criteria not only to "who" would get credit, but "how much" which was less for everyone across the board.

There really is no way for these companies to do otherwise.  They don't have the capital to lend at the levels of previous years, could not meet the CL exposures they had extended and were far to financially distressed to take on additional high risk or losses. 

Thus, we all feel the pinch.  Where we once found easy credit, we now find easy AA for any number of reasons.

I think we can all agree that irrespective to whether we agree with the decisions banks are making, that the financial sector as a whole is going though a signficant period of transition and policy change.

Unfortunately, this means that what used to be great may now only be good, what was good may only now be fair and if you were fair.....well, you get my gist.  What once works now does not or not as well.

So, I think that as the banks redefine themselves, this may mean that we have to redefine our relationships, which ultimately may mean changing banking relationships to those more inline with our outlook and circumstances.

Message Edited by txjohn on 04-15-2009 01:53 PM

[favor4me2]

Very well said.

[Watchmann]

Whatever. 

At the end of the day, when everything is sorted out, those that have solid histories with good repayment records will get credit.  Those with new or questionable records will not, or they will pay a lot more in interest.  The system will just have to sort itself out.  Hopefully the Government will not intervene and make the situation worse.

Just being faithful in paying the bills is not enough if the payor is keeping a half dozen balls in the air to make it all work.  Let's hope the system wil allow itself to work.

[Anonymous]

The point of the post, watchmann, was that credit will be extended differently due to a variety of circumstances, which many posts have indicated frustration and non-understanding as to why "solid histories with good repayment records" did NOT get credit or at least the level of credit they desired to obtain or maintain.

Message Edited by txjohn on 04-10-2009 07:34 PM

[Anonymous]

Not everyone has gotten a CLD or AA of any kind. I don't personally know anybody that has. Regardless, unless it affects your score it doesn't really matter. It's easy to position yourself so it won't matter if it happens. The simplest method is to PIF, diversify your portfolio limiting yourself to one or two cards per issuer, have plenty of credit union cards and oddball issued cards and a couple of cards that don't report to the bureaus at all. Credit cards are for convenience and rewards, not long term financial instruments.

[Anonymous]

No, not everyone has been directly affected.  And I did not infer that all had.

This post was provided as basic info for those individuals who have been affected and who have expressed confusion, anger and outrage when they were hit with CLD.  Many people have taken those actions personally. 

Therefore, the OP was information that is only applicable to those individuals who were affected and were confused or upset by it.

I don't completely agree that "unless it affects your score, it really doesn't matter."  In my mind, you have a score in order to serve your credit needs.  And if your credit is cut, or you are not allowed to maintain levels of credit that you had, wanted or expected, then high FICO is secondary. 

I personally am less concerned with FICO as a number and more concerned with what FICO can do for me.  When it begins to do less, then FICO means less in those terms.

However, I do agree that maintaining the proper credit practices will continue to positively affect your FICO and that you can only obtain credit or improve your access to credit by doing such.

I also agree that diversifying, using credit unions, etc.

Again, the whole point of the OP was to address those individuals who had "long standing relationships" and whom took CLD personally or were confused by it when they had great records for an extended period.  Many of them expressed "the relationship" and felt "betrayed" or let down as though the action taken against their CLD was a personal attack.

Message Edited by txjohn on 04-11-2009 04:05 AM

[Anonymous]

---

@Watchmann wrote:

Whatever. 

---

lol

[haulingthescoreup]

It's pretty obvious that if psychic can get CLD'd, it can happen to anyone. He has what is probably the best credit profile and overall credit history of anyone here (that I'm aware of --I know that there are other modest 800+ folks around, lol.)

I agree completely with what txjohn wrote, and I'm glad he posted it. Many of us who have had to rebuild for one reason or another get into a mindset of OK, doing this here should make them happy, and they ought to like that there. Then when AA comes, sometimes out of the blue, it can feel like a slap in the face and a rejection of all our efforts.

Just keep repeating, it's not you (well, not mostly), it's them. Because although we can often identify triggers, the fact is that a lot of these actions would not have occurred in the days of easy money. Now that the banks are hurting for cash, they're coming to take it back.

I'm still quite amazed that they haven't gotten me yet!

[score_building]

---

@Anonymous wrote:

---

@Watchmann wrote:

Whatever. 

---

lol

---

                   mjb, you're a mess!

[Watchmann]

I agree with everything txjohn originally posted.  No argument there.  My viewpoint is that the FICO score system is deeply flawed and it has badly let down the financial industry that came to rely on it.  Those on this board that are fanatical about maintaining a high score are missing an ever larger part of the picture.  The industry is now looking at where you live, where you work, and other factors to determine if you should get credit or even a CLD.  So the FICO score is only a part of the decision making system.  Someone with an 800 score who lives in Detroit and works for an automaker will NOT be treated the same as someone in Houston, TX who also has an 800 score and works for an oil company.  Each of these people have a different perceived exposure level to a creditor.  So when somebody chimes in here and says they have been CLD'd with an 800 FICO we don't know the whole picture.  We really don't know if there is something in their credit report that is hinky, and we don't know where they live and where they work.  So blanket generalizations based on scores are becoming less and less accurate.  The CCC's have been burnt by FICO so they are looking at other information to make their decisions.  AMEX is a master in the mining of data.  Although their decisions look wonky to some, they are probably right in many instances although some innocents get caught up in the trawl.  That is the price we pay for automated credit issuance, we don't sit down in front of the local banker to ask for money anymore. 

As many people have said the best way to credit nirvana is to live within your credit profile and don't carry a lot of debt.  If you don't owe a lot it really doesn't matter too much if some of your CL is cut.  We have been going overboard in securing credit lines the last few years and we hold these huge credit lines up as some sort achievement, or looking at them as some sort of income to be tapped.  That sort of activity was dangerous and many people spent those CL's in maintaining a lifestyle.  As long as they could refinance to another line at cheap rates they didn't care.  That merry-go-round has stopped and that is where the pain comes from.  People have to now deleverage (pay it off) or go bankrupt.  The piper has to be paid.  In the end we are all responsible for the situation each of us are in, we were not forced in using those CL's.   

Although this is a FICO board, and I realize the main talk around here is all things related to FICO scores, I feel too much emphasis is put solely on a high FICO score.  A high scorer with lots of revolving debt is not as good as someone with a lower score but with little debt.  But around here a high FICO score is king (witness the number of people who post their scores in their sig line).  Why don't we just post our salaries?