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Senior Contributor
Open123
Posts: 4,155
Registered: ‎02-23-2011
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Re: Why don't all credit card issuers backdate?


CreditMagic7 wrote:
The current credit laws are unseemly biased against the common consumer.

Sure, the entire credit scoring algorithm was created to allow the issuers a reason to charge the most amount of people a higher interest rate.  This is higher credit scores plummit on a single inquiry, while moderate scores are relatively unaffected.

 

However, once you realize how the scoring works, you can make decisions based on what is best for your credit wise.  

Established Contributor
eagle2013
Posts: 568
Registered: ‎12-27-2012
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Re: Why don't all credit card issuers backdate?

Thanks for the replies thus far, great thread. It is completely understandble why FICO would be adverse to CCC backdating as it will impede on their scoring metrics. CCCs really do not have too much stake in FICO - most even opting to use their own internal scoring methods. From a business sense, I can't understand why non-AMEX issuers don't backdate? Perhaps they don't think it is important? Kind of hard to believe given all the market research they do. Even here, if you were to do a search on this board "Why is AMEX is good/prestigious/etc" you'll see that the overwhelming majority of responses list backdating as an important perk. Some have alluded to the grandfather theory which is interesting, but as someone else noted that would be hard to justify with the current laws in place. Very interesting indeed. 

Super Contributor
enharu
Posts: 7,008
Registered: ‎02-27-2013
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Re: Why don't all credit card issuers backdate?

Regardless of whether lenders backdate, its important to remember that AAoA is just a small portion of fico scoring algorithm. The important things to focus on are still going to be utilization and payment history.

While having an account backdate to say 2-3 decades ago is an extremely sweet deal, there's only so much it can help as well. It's not going to make a lender overlook an applicant's bad payment history and/or high utilization.

In most cases, backdating helps people with little to no credit history the most, especially when Amex used to backdate AUs all the way back to when the original member opened his account. It's an extremely good way to help someone get started on his credit journey, but it was abused and Amex stopped that practice. At the same time, a small group of people had issues with mortgage or other loans that required a manual review as well, evident by older forum threads on this and other forums, where backdating confused the hell out of some underwriters as to how certain people whom are only 20-30 years old but had accounts opened since 15-20+ years ago as Amex backdated AU history onto their own cards. Its a minor issue mostly due to uneducated underwriters, but nevertheless a unnecessary problem.
JPMorgan Palladium (100k), AmEx Platinum (NPSL), AmEx SPG (46k), AmEx BCP (42k), Chase Sapphire Preferred (47k), Citi Prestige (31k), Citi Thank You Preferred (27k), Citi Executive AAdvantage (25k), JPMorgan Ritz-Carlton (21k), Merrill+ (15k), US Bank Cash+ (22.5k), Wells Fargo (12k), Bloomingdale’s (12.4k), Chase Freedom (5k), Discover IT (5k).
Senior Contributor
Open123
Posts: 4,155
Registered: ‎02-23-2011
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Re: Why don't all credit card issuers backdate?


enharu wrote:
In most cases, backdating helps people with little to no credit history the most, especially when Amex used to backdate AUs all the way back to when the original member opened his account. It's an extremely good way to help someone get started on his credit journey, but it was abused and Amex stopped that practice. At the same time, a small group of people had issues with mortgage or other loans that required a manual review as well, evident by older forum threads on this and other forums, where backdating confused the hell out of some underwriters as to how certain people whom are only 20-30 years old but had accounts opened since 15-20+ years ago as Amex backdated AU history onto their own cards. Its a minor issue mostly due to uneducated underwriters, but nevertheless a unnecessary problem.

+1

 

Right, the biggest benefit are those starting new.  Matter of fact, the benefit was so pronounced, this AU backdating feature was sold to ready and willing buyers for thousands of dollars.  A person new to credit with an instant 30 year backdated TL via an AmEx Au was instantly propelled into the mid 700s with all the appearances of a 30 year perfect payment history, at least to the computers.

 

In this case, instant approvals were assured, allowing one to quickly build other TLs with various issuers.  

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CreditMagic7
Posts: 2,969
Registered: ‎01-04-2014
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Re: Why don't all credit card issuers backdate?

I agree to that extent but it just seems from common observations that all parties could be better served if after you apply and are approved, that Full Credit Report Review should stand recorded (as it does) on CR(s), but if denied (even after repeated recon), for whatever reason (derog evidence/borderline), that the denial(s) is already firmly determined by the lender. To also apply a penalty hit on a DENIAL by adding a reported inquiry (valid or not) to consumer applicants score adds IMHO another unnecessary consumer's RISK by "additionally" adding an element of alienation from Denial HP's.

If approved, yes, it's both reasonable and productive for those (Approved) Inquiries to populate consumer reports to the CRAs. I guess i just find it counterproductive why AS IS, that Denial Inquiries were even written into policy in the first place and made an issue with FICO scoring at all.

Isn't there just a hint of imbalance in how HP's vs SP's are applied to CR's, unfairly or not and the tacking on of a wasted HP?

Sorry for muddling on OT about this, but the OP raising an interesting question on "backdating" opens up another very good point for maybe another topic of some concern that needs aired out.
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Frequent Contributor
Pat94108
Posts: 377
Registered: ‎03-23-2013
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Re: Why don't all credit card issuers backdate?

Interesting thread. Great info from everyone. I can only imagine if Chase backdated my account since I had a cc with them 9 years ago. 

Super Contributor
enharu
Posts: 7,008
Registered: ‎02-27-2013
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Re: Why don't all credit card issuers backdate?

@creditmagic,

The reason why inquiries are recorded is to keep note of a customer's actions.

Regardless of denial or approval, the inquiry is recorded because the customer is seeking credit. Someone who is desperately seeking credit everywhere over a short span of time may signal financial difficulty, and therefore high risk. Couple it in with a recent or serious derog, it makes the customer seem even much riskier.

If denial inquiries are not recorded, someone with BK for instance can go around applying for 20-30 cards on a daily basis until he gets something approved. That obviously doesn't seem right and just highlights how risky of a customer that person would be.
JPMorgan Palladium (100k), AmEx Platinum (NPSL), AmEx SPG (46k), AmEx BCP (42k), Chase Sapphire Preferred (47k), Citi Prestige (31k), Citi Thank You Preferred (27k), Citi Executive AAdvantage (25k), JPMorgan Ritz-Carlton (21k), Merrill+ (15k), US Bank Cash+ (22.5k), Wells Fargo (12k), Bloomingdale’s (12.4k), Chase Freedom (5k), Discover IT (5k).
Valued Contributor
wHiTeSoL
Posts: 1,059
Registered: ‎07-09-2013
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Re: Why don't all credit card issuers backdate?

Can't quote on the iPad but I wanted to talk about the HP/SP inquires thing. I think you are missing the point of INQs, it's solely to track when a person is seeking credit. Normally a HP is pulled prior to the computer or a person approving or denying your application so a CRA has no idea if you are approved or not until the TL is reported. Not getting a HP for a denial wouldn't accurately let a creditor know how often you are seeking new credit. Who would seem more "credit hungry?" a person who applies for a card every single day for 2 years and gets denied every time or the person who just doesn't apply at all for 2 years?

   3/12 $3500     6/12 $1200      10/12 $1500   12/12 $3400    6/13 $12000      7/13 $5000      7/13 $2500       8/13 $2000    8/13 $6000

  | CSP (AU) $12,000 | Amex PRG (AU) | United $6,000 | OCCU $12,000 | Ink Bold | GM $3,200 | DCU $7500 | Luthansa $9000 | SPG $6,000 | Citi AA Executive $11,000 | Ink Plus $5,000                                                                         | EX 2/7 697 | EQ 10/27 721 | TU 12/15 719 |

Valued Contributor
wHiTeSoL
Posts: 1,059
Registered: ‎07-09-2013
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Re: Why don't all credit card issuers backdate?

nooooooo Enharu beat me to it!

   3/12 $3500     6/12 $1200      10/12 $1500   12/12 $3400    6/13 $12000      7/13 $5000      7/13 $2500       8/13 $2000    8/13 $6000

  | CSP (AU) $12,000 | Amex PRG (AU) | United $6,000 | OCCU $12,000 | Ink Bold | GM $3,200 | DCU $7500 | Luthansa $9000 | SPG $6,000 | Citi AA Executive $11,000 | Ink Plus $5,000                                                                         | EX 2/7 697 | EQ 10/27 721 | TU 12/15 719 |

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Senior Contributor
myjourney
Posts: 26,628
Registered: ‎02-07-2013
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Re: Why don't all credit card issuers backdate?


wHiTeSoL wrote:
Can't quote on the iPad but I wanted to talk about the HP/SP inquires thing. I think you are missing the point of INQs, it's solely to track when a person is seeking credit. Normally a HP is pulled prior to the computer or a person approving or denying your application so a CRA has no idea if you are approved or not until the TL is reported. Not getting a HP for a denial wouldn't accurately let a creditor know how often you are seeking new credit. Who would seem more "credit hungry?" a person who applies for a card every single day for 2 years and gets denied every time or the person who just doesn't apply at all for 2 years?

That was supposed to have been fixed you still can't quote?

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