Here is why AMEX is looking at many CL's .......

[Anonymous]

So applying for a additional or CLI Amex makes me kinda a new customer for that card and as a new card holder I could be tossed in to a new group headed towards the F/R. People seeing new credit group.

[Watchmann]

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haulingthescoreup wrote:

Agree! It's not as if their other internal metrics have done them so well. Bit arrogant on their parts to think that they've got better insight than Uncle Fair and Uncle Isaac. I can see using their own formula for initial approval, but they might want to ponder what the FICO's are telling them on existing customers.

That's OK; if they're uncomfortable with the market into which they extended, they can just pull back out again. Sell their revolver business to a bank that knows what to do with them.

I like the looks of that share price graph, BTW. Do I sniff a bargain?

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Unfortunately the FICO scoring system has supplanted good old fashioned underwriting standards, mostly because of the sales job Fair Isaac has done on the industry.  There is no way you can reduce somebody's credit potential with a three digit FICO score as the score says nothing about the individuals capacity to actually repay a loan since salary is not part of the score.  It works ok in a rising market, but not in a down market.  BF (before FICO), you got a loan by working with your local bank documenting where you worked,  what you owed, and WHAT YOU EARNED.  Somewhere along the line the system was so streamlined that the income portion was taken out of the equation.  So now people of all ages and incomes can get unsecured credit lines that are more than their income, or get mortgages with do documentation of their income.  That is a recipe for disaster, but FICO would have us believe that the only thing that matters is the SCORE.  That's just plain dumb.   

[haulingthescoreup]

I don't think that FICO tries to tell people that the only thing that matters is the score. And I wasn't saying that myself.

What I was saying is that AmEx's internal scoring system seems to work pretty well on initial apps*, but this second system they have for early warning is absurdly hyper-sensitive. Sure, they need to know when there's activity stirring on members' reports, but their giant whump of over-reaction speaks to a decision-making process that's not very fine-tuned.

To get back to the image of the little old lady with the Colt, they seem to be blasting to bits just about anything that moves, from a burglar to a mouse to Granny's poor poodle. Turning on the lights and finding out what's up before firing would be a whole lot more productive on their part.

We know you're safe, though.


*edit to add: if anything, their initial internal scoring is too generous. They shouldn't be accepting people with some of the reports and, yes, scores that we've seen here in posts.

Instead of all these morning-after regrets, I'm thinking that they ought to be a hell of a lot more picky about who they pick up in the first place.

Message Edited by haulingthescoreup on 07-14-2008 01:12 PM

[Anonymous]

Amex's problem is that they tried to get into the true revolving business, but kept their old mentality. If you are going to lend money to people that actually use it as a short term loan, you need to look at them and evaluate them entirely different than someone that will pay their bill in full each and every month.

As prior posters have said, income evaluation and length of credit history are important considerations, and FICO scores should be used in conjunction with income and current debt levels to evaluate an overall credit portfolio's payment history.

When I read stories on Amex's decisionmaking it seems as if they do it off one or two transactions on their own card, without glancing at the entire portfolio to see that someone is carrying under 9% util or their debt is peanuts to their income.

Message Edited by debtisgood on 07-14-2008 02:47 PM

[MattH]

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haulingthescoreup wrote:...Instead of all these morning-after regrets, I'm thinking that they ought to be a hell of a lot more picky about who they pick up in the first place.

Message Edited by haulingthescoreup on 07-14-2008 01:12 PM

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Once upon a time, they were much more picky. Have their standards for traditional due in full charge cards shifted as much as have their standards for their newer credit cards?

I suspect part of the problem, aside from possibly growing too fast by loosening standards in general, is that by moving into credit cards they have entered a different sort of market, because charge cards by definition are targeted to convenience users.

[haulingthescoreup]

Well, they let me have a Gold card! and by the snootiness of their ads, I ought to be waiting on the tables of Gold card holders.

That's a good distinction, though. They broadened their demographics in order to increase their market share, and then they didn't know what to do with all those strange people who turned up on their front porch.

[Watchmann]

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MattH wrote:


Once upon a time, they were much more picky. Have their standards for traditional due in full charge cards shifted as much as have their standards for their newer credit cards?

I suspect part of the problem, aside from possibly growing too fast by loosening standards in general, is that by moving into credit cards they have entered a different sort of market, because charge cards by definition are targeted to convenience users.

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Yep, back in 1980 when I first got an AMEX Gold Card they advertised that only those with the top 5% of credit were eligible.  Whether that was BS or not I do not know, but standards for either the Green, or the new Gold Card of that era was very strict.  You had to document your income, assets, and ability to pay. 

Message Edited by Watchmann on 07-14-2008 07:35 PM

[MattH]

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@Watchmann wrote:

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@MattH wrote:


Once upon a time, they were much more picky. Have their standards for traditional due in full charge cards shifted as much as have their standards for their newer credit cards?

I suspect part of the problem, aside from possibly growing too fast by loosening standards in general, is that by moving into credit cards they have entered a different sort of market, because charge cards by definition are targeted to convenience users.

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Yep, back in 1980 when I first got an AMEX Gold Card they advertised that only those with the top 5% of credit were eligible. Whether that was BS or not I do not know, but standards for either the Green, or the new Gold Card of that era was very strict. You had to document your income, assets, and ability to pay.

Message Edited by Watchmann on 07-14-2008 07:35 PM

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I actually got my first AMEX Green Card in 1982 under a special program for graduating seniors who could document firm job offers, at that time it was unheard of for undergraduates to have credit cards, neither I nor any of my friends did, if money got tight we either cut back on spending for a while or called our parents, and of course we called after 11PM when the long distance rates were lowest (from my campus it was nearly impossible to get an outside line between 11:00 and 11:15 PM). They only offered to move me up to Gold after I'd had the Green card for several years with no late payments.

Message Edited by MattH on 07-14-2008 05:43 PM