topic So I have a theory.... in Credit Cards

So I have a theory....

icyhot — Sun, 19 Jul 2015 14:52:05 GMT

Of why people may get AA. I may be way off base but correct me if I'm wrong.

Person A is approved for a Chase card with a $15,000 limit and lowest available APR. They then open 5 new accounts and accumulate 15 INQs in 30 days.

Person B is approved for the same Chase card but with the lowest required SL and highest APR. They too open 5 accounts and accumulate 15 INQs.

Person A's credit profile is considerably stronger than Person B's, longer AAOA and lower UTL.

Person A sees AA, Person B doesn't.

Why? Because Person B got a marginal approval, and so the bank approved them knowing they were a risk anyway. Hence the low limit and high APR. However no AA will be taken unless there's actual default. Whereas Person A was trusted with a large credit line and low APR, thus proving the banks wrong, and perhaps posing a risk.

I always see stories of AA from folks who were granted very high limits and probably had decent credit until something spooked the bank, myself included. What do you think? Am I missing something?

Re: So I have a theory....

mssher — Sun, 19 Jul 2015 14:55:47 GMT

Your theory makes perfect sense!

Re: So I have a theory....

kdm31091 — Sun, 19 Jul 2015 15:03:50 GMT

What this boils down to is risk. The person with newer accounts, worse APRs, lower limits is riskier than the person with longer, established history and "better" accounts.

AA is not something that happens out of the blue, or magic, or because "Amex doesn't like me!". It happens because you became a percieved risk. It may seem unfair sometimes, but it is what it is. All AA threads end up in the same speculation, but the basic point is the same. CLD and AA are at the will of the issuer. I just got my Double Cash and the welcome packet very clearly states "we may decrease your limit without notice". They are putting it right there black and white.

Your limit is basically a number in the system and that's it. It is not money you own or have a right to. Amex gives the whole "3x CLI" relatively easily but that doesn't mean they expect you to charge up 50k and pay minimum payments.

Re: So I have a theory....

icyhot — Sun, 19 Jul 2015 15:11:48 GMT

Correct, however if both of those people do similar risky behavior after being approved by the same lender, I personally have noticed a trend that it's always the people with bigger limits and more exposure

Re: So I have a theory....

kdm31091 — Sun, 19 Jul 2015 15:13:59 GMT

@icyhot wrote:
Correct, however if both of those people do similar risky behavior after being approved by the same lender, I personally have noticed a trend that it's always the people with bigger limits and more exposure

Right, which is why sometimes people should stop going for the biggest possible CLI they can get.

Re: So I have a theory....

NRB525 — Sun, 19 Jul 2015 15:21:08 GMT

OP, there are many potential scenarios of why AA happens. The pair of applicants you outline are possible, and it is possible both applicants get AA.

Each situation of AA has a confluence of factors that made the bank nervous. That is why we should not just take what a poster says "AMEX decreased my CL and I don't know why" and start calling for a congressional hearing without asking for a lot more background about the situation and behavior of the cardholder leading up to the AA.

This population on MyFICO is self-selecting as credit seeking. That by itself is a marker for getting AA, so many of us are on the edge of some form of AA.

AA can also take the form of a denial. The CCC decided, before even issuing the card, that they did not want to do business with this potential customer, or to expand business with an existing customer.

Those of us who have been through AA realize (I hope the others realize it, maybe they don't) that AA is only a part of the credit negotiations process. It is not the end of the world. You are not your credit cards. The only thing you really have to do is pay your credit cards according to terms. Whatever the lender does outside of that, there's not much you can do about it beyond staying away from behaviors that make lenders nervous, like opening 5 new accounts in 15 days, making only minimum payments, and other activities.

Re: So I have a theory....

kdm31091 — Sun, 19 Jul 2015 15:24:19 GMT

@NRB525 wrote:
OP, there are many potential scenarios of why AA happens. The pair of applicants you outline are possible, and it is possible both applicants get AA.

Each situation of AA has a confluence of factors that made the bank nervous. That is why we should not just take what a poster says "AMEX decreased my CL and I don't know why" and start calling for a congressional hearing without asking for a lot more background about the situation and behavior of the cardholder leading up to the AA.

This population on MyFICO is self-selecting as credit seeking. That by itself is a marker for getting AA, so many of us are on the edge of some form of AA.
AA can also take the form of a denial. The CCC decided, before even issuing the card, that they did not want to do business with this potential customer, or to expand business with an existing customer.

Those of us who have been through AA realize (I hope the others realize it, maybe they don't) that AA is only a part of the credit negotiations process. It is not the end of the world. You are not your credit cards. The only thing you really have to do is pay your credit cards according to terms. Whatever the lender does outside of that, there's not much you can do about it beyond staying away from behaviors that make lenders nervous, like opening 5 new accounts in 15 days, making only minimum payments, and other activities.

Agree 100% that it's not the end of the world.

I think everyone here knows the risk factors for AA, even if some people who have gotten AA may not have "pushed it" all that far. So knowing the risks and then choosing your actions from there is a personal decision. We are all adults. If you are aware of what can happen if you "push the envelope", then you take the risk.

Re: So I have a theory....

Anonymous — Sun, 19 Jul 2015 15:31:07 GMT

@NRB525 wrote:

Those of us who have been through AA realize (I hope the others realize it, maybe they don't) that AA is only a part of the credit negotiations process. It is not the end of the world. You are not your credit cards.

Right, when the CLD (or close your card) it doesn't mean you are a bad person, or they hate you, they have just decided your current risk level is too great. Of course, in contrast to some of the tone on this site, the opposite is also true: getting a great SL or big CLI doesn't make you a good person either!

Re: So I have a theory....

FinStar — Sun, 19 Jul 2015 15:37:35 GMT

@kdm31091 wrote:
@NRB525 wrote:
OP, there are many potential scenarios of why AA happens. The pair of applicants you outline are possible, and it is possible both applicants get AA.

Each situation of AA has a confluence of factors that made the bank nervous. That is why we should not just take what a poster says "AMEX decreased my CL and I don't know why" and start calling for a congressional hearing without asking for a lot more background about the situation and behavior of the cardholder leading up to the AA.

This population on MyFICO is self-selecting as credit seeking. That by itself is a marker for getting AA, so many of us are on the edge of some form of AA.
AA can also take the form of a denial. The CCC decided, before even issuing the card, that they did not want to do business with this potential customer, or to expand business with an existing customer.

Those of us who have been through AA realize (I hope the others realize it, maybe they don't) that AA is only a part of the credit negotiations process. It is not the end of the world. You are not your credit cards. The only thing you really have to do is pay your credit cards according to terms. Whatever the lender does outside of that, there's not much you can do about it beyond staying away from behaviors that make lenders nervous, like opening 5 new accounts in 15 days, making only minimum payments, and other activities.
Agree 100% that it's not the end of the world.

I think everyone here knows the risk factors for AA, even if some people who have gotten AA may not have "pushed it" all that far. So knowing the risks and then choosing your actions from there is a personal decision. We are all adults. If you are aware of what can happen if you "push the envelope", then you take the risk.

Exactly.

OP, an item to keep in mind, we are only made aware of bits and pieces of an individual's situation whenever AA occurs (sometimes information is "left out", other times the individual may be aware of the issue or may be in denial of the consequences or sometimes the individual isn't fully aware of what caused the lender's actions). Also, this forum and other boards represent a tiny slice of the pie when it comes to the overal scheme of things, especially AA. By the same token, the lender who takes action has a much better picture of an individual's risk than we would ever know, which is why it happened in the first place.

Re: So I have a theory....

Anonymous — Sun, 19 Jul 2015 15:44:40 GMT

@NRB525 wrote:
OP, there are many potential scenarios of why AA happens. The pair of applicants you outline are possible, and it is possible both applicants get AA.

Each situation of AA has a confluence of factors that made the bank nervous. That is why we should not just take what a poster says "AMEX decreased my CL and I don't know why" and start calling for a congressional hearing without asking for a lot more background about the situation and behavior of the cardholder leading up to the AA.

This population on MyFICO is self-selecting as credit seeking. That by itself is a marker for getting AA, so many of us are on the edge of some form of AA.
AA can also take the form of a denial. The CCC decided, before even issuing the card, that they did not want to do business with this potential customer, or to expand business with an existing customer.

Those of us who have been through AA realize (I hope the others realize it, maybe they don't) that AA is only a part of the credit negotiations process. It is not the end of the world. You are not your credit cards. The only thing you really have to do is pay your credit cards according to terms. Whatever the lender does outside of that, there's not much you can do about it beyond staying away from behaviors that make lenders nervous, like opening 5 new accounts in 15 days, making only minimum payments, and other activities.

I opened most of my cards within the past 3 weeks. I hope no AA occurs. I did have specific reasons for getting each card though. Needed to make a few purchases where I could have time to pay them off. Should have them paid within 3-4 months. Now you have me nervous though, lol.

Re: So I have a theory....

NRB525 — Sun, 19 Jul 2015 15:49:43 GMT

@Anonymous wrote:

I opened most of my cards within the past 3 weeks. I hope no AA occurs. I did have specific reasons for getting each card though. Needed to make a few purchases where I could have time to pay them off. Should have them paid within 3-4 months. Now you have me nervous though, lol.

EQ-671 TU-723 EX-675 as of 7/5/15
Discover IT $1250, Chase Freedom $500, Amex BCP $2.5k, Barclay Ring $1.9k, Cap1 Quicksilver $3k, Cap1 VentureOne $3k

Are these cards potentially leading to AA:

Discover - Low limit, not likely to AA anyone over that amount.

@Anonymous @ $500.... um, No

AMEX BCP - Just pay in full based on what should be going through this card anyway, groceries, gas and a shirt from the department store, you know, things you would buy anyway.

Barclay Ring - Congrats, they started you out with a relatively decent limit on this one.

Capital One x2 - You would have to really REALLY work hard to get any AA from this CCC.

Re: So I have a theory....

Anonymous — Sun, 19 Jul 2015 15:56:14 GMT

@NRB525 wrote:
@Anonymous wrote:

I opened most of my cards within the past 3 weeks. I hope no AA occurs. I did have specific reasons for getting each card though. Needed to make a few purchases where I could have time to pay them off. Should have them paid within 3-4 months. Now you have me nervous though, lol.
EQ-671 TU-723 EX-675 as of 7/5/15
Discover IT $1250, Chase Freedom $500, Amex BCP $2.5k, Barclay Ring $1.9k, Cap1 Quicksilver $3k, Cap1 VentureOne $3k

Are these cards potentially leading to AA:
Discover - Low limit, not likely to AA anyone over that amount.
@Anonymous @ $500.... um, No
AMEX BCP - Just pay in full based on what should be going through this card anyway, groceries, gas and a shirt from the department store, you know, things you would buy anyway.
Barclay Ring - Congrats, they started you out with a relatively decent limit on this one.
Capital One x2 - You would have to really REALLY work hard to get any AA from this CCC.

The only issue would be the Amex. Won't be able to PIF. Bought a new laptop from Sears because my old one was on its last legs. Got the $150 intro offer plus the 3% because Sears is a department store. But once that's paid off, no problem.

Re: So I have a theory....

Anonymous — Sun, 19 Jul 2015 15:58:58 GMT

wait.... sears sells laptops?

Re: So I have a theory....

Anonymous — Sun, 19 Jul 2015 16:00:31 GMT

@Anonymous wrote:
wait.... sears sells laptops?

On their website they do.

Re: So I have a theory....

Anonymous — Sun, 19 Jul 2015 16:09:46 GMT

@Anonymous wrote:
@Anonymous wrote:
wait.... sears sells laptops?
On their website they do.

oh i didn't know that. gotta check it out, thanks!

back to topic, I think once you establish a spending pattern, they won't AA you for almost maxing out limit. for example, my dad have a card from citi (before he got CSP), he was using that card only, it's got credit limit of 35k, and he used to put about 30-32k a month, never got any AA from citi.

Re: So I have a theory....

Anonymous — Sun, 19 Jul 2015 16:42:33 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
wait.... sears sells laptops?
On their website they do.
oh i didn't know that. gotta check it out, thanks!

back to topic, I think once you establish a spending pattern, they won't AA you for almost maxing out limit. for example, my dad have a card from citi (before he got CSP), he was using that card only, it's got credit limit of 35k, and he used to put about 30-32k a month, never got any AA from citi.

anytime