topic Re: What exactly is AA? in Credit Cards

What exactly is AA?

r34dy2fly — Sat, 02 Jan 2016 07:38:54 GMT

I hardly visit this forum anymore but decided to check out any new promotional offers that people seem to find on here.

While browsing through, I see constant talk of AA. What exactly is AA?

Re: What exactly is AA?

willwar14 — Sat, 02 Jan 2016 07:42:20 GMT

Adverse Action, google it.

Re: What exactly is AA?

r34dy2fly — Sat, 02 Jan 2016 07:52:28 GMT

What exactly are you asking me to google? I know what adverse action means but its hard to deduce what "AA" actually meant just from reading random posts. It's easy to see it was something negative but I just wanted to know what the acronym actually stood for.

Re: What exactly is AA?

willwar14 — Sat, 02 Jan 2016 08:31:39 GMT

"An adverse action notice is a letter sent after you've had an application - credit, loan, insurance, employment, etc. - denied. If you were denied because of information in your credit report, the Fair Credit Reporting Act (FCRA) requires creditors, lenders, and other businesses to send an adverse action notice letting you know the reason(s) you were you were denied and the name, address, and phone number of the credit bureau who provided the credit report.

The adverse action notice can be oral, by phone, or in writing and must be sent in a "reasonable" amount of time.

The credit-based adverse action notice must include a statement letting you know you can obtain your credit report free from the agency listed in the notice within 60 days. The notice will also state that the credit bureau wasn't involved in the decision and that the bureau can't tell you why your application was denied."

Re: What exactly is AA?

Anonymous — Sat, 02 Jan 2016 11:13:09 GMT

Adverse Action is basically "punishment" from the bank: anything that makes the account less desirable for the borrower.

AA can include denial of a new application or CLI request, account being closed, credit limit being reduced, or APR penalty rate being applied. Some people also consider transaction declines or freezing an account AA but I think that's a stretch.

Re: What exactly is AA?

UncleB — Sat, 02 Jan 2016 11:23:50 GMT

@r34dy2fly wrote:
I hardly visit this forum anymore but decided to check out any new promotional offers that people seem to find on here.

While browsing through, I see constant talk of AA. What exactly is AA?

Welcome back!

You're right, there are a lot of abbreviations and acronyms use around here. Here's a helpful link to a 'sticky' thread that covers most of them:

http://ficoforums.myfico.com/t5/User-Guidelines-General/Common-Abbreviations/m-p/88458#U88458

Re: What exactly is AA?

Discover2016 — Sat, 02 Jan 2016 11:45:55 GMT

For example, when I first got my Amex BCE, I requested a CLI when I activated the card, it was denied, that is an AA.

Re: What exactly is AA?

jeffery581 — Sat, 02 Jan 2016 11:57:41 GMT

i would call AA something other than a denied cli. AA is more serious

Re: What exactly is AA?

UncleB — Sat, 02 Jan 2016 12:05:58 GMT

@Discover2016 wrote:
For example, when I first got my Amex BCE, I requested a CLI when I activated the card, it was denied, that is an AA.

@jeffery581 wrote:
i would call AA something other than a denied cli. AA is more serious

I agree with both of you.

"Technically" speaking, having a CLI declined is 'adverse action', however when most folks on here use the term they're referring to something 'bad' taking place that causes them to be worse off than they were before. Being turned down for a CLI arguably leaves you where you were before the request, but it's still 'adverse'.

Re: What exactly is AA?

Anonymous — Sat, 02 Jan 2016 14:27:01 GMT

In the usually referred to AA, the CCC suspends all accounts pending review. The usual result is that the accounts are closed by the issuer.

AA can come about for many reason, some of them benign, but the usual reason is some violation of the TOS, such as MS. Other common reasons are aggressive credit seeking behavior, such as applying for or opening a lot of accounts in a relatively short period of time. If you keep it to 5-10 cards per app spree, and only 1-2 sprees per year, you should be fine.

Re: What exactly is AA?

takeshi74 — Sat, 02 Jan 2016 14:44:05 GMT

@willwar14 wrote:
Adverse Action, google it.

I'm all for people searching but "Google it" is not helpful. Google AA and see what you find. Nothing on the first page of hits is relevant.

One should consider other tools such as the stickies. This thread is linked in the Helpful Threads sticky in this subforum:

http://ficoforums.myfico.com/t5/User-Guidelines-General/Common-Abbreviations/m-p/88458

Prior discussions are also a useful research. Google can be used to search them but one needs to site restrict the Google search. Here's an example:

https://www.google.com/search?q=aa+site%3Aficoforums.myfico.com&oq=aa+site%3Aficoforums.myfico.com&aqs=chrome..69i57.6877j0j7&sourceid=chrome&es_sm=91&ie=UTF-8

@willwar14 wrote:
An adverse action notice is a letter sent after you've had an application - credit, loan, insurance, employment, etc. - denied.

That's one type of AA. One does not have to apply to encounter AA. Any activity that exceeds a creditor's risk tolerance can lead to AA.

@Anonymous wrote:
In the usually referred to AA, the CCC suspends all accounts pending review. The usual result is that the accounts are closed by the issuer.

This is also just one type of AA. Not all AA fits the above. Accounts do not have to be suspended or closed to be AA. Consider CLD's and balance chasing. Broccoli is a vegatable but not all vegatables are broccoli.

@Anonymous wrote:
Adverse Action is basically "punishment" from the bank: anything that makes the account less desirable for the borrower.

The motivation isn't to make the account less desirable to the consumer even though that is an effect of AA. It's about mitigating risk for the creditor. A creditor takes AA to reduce or eliminate risk based on risky activity on the consumer's part as reflected in the consumer's reports and account activity. A creditor doesn't just AA to randomly spite consumers.

@jeffery581 wrote:
i would call AA something other than a denied cli. AA is more serious

It's technicallly AA though AA here on myFICO generally refers to CLD's, balance chasing, account closures, freezes, AR's, etc.

A denial or even not qualifying for best terms is technically AA and why one is able to receive a free credit report as a result.

Re: What exactly is AA?

Anonymous — Sat, 02 Jan 2016 17:42:31 GMT

@takeshi74 wrote:
@willwar14 wrote:
Adverse Action, google it.
I'm all for people searching but "Google it" is not helpful. Google AA and see what you find. Nothing on the first page of hits is relevant.

I took Willwar14's response to mean "AA is Adverse Action [thus answering OP's question] and if you want to know more what that is, google 'Adverse Action'"

which seems fine to me and surprised the negative responses this has got!

Re: What exactly is AA?

Man-Of-Steel — Sat, 02 Jan 2016 18:56:29 GMT

@UncleB wrote:
@Discover2016 wrote:
For example, when I first got my Amex BCE, I requested a CLI when I activated the card, it was denied, that is an AA.

@jeffery581 wrote:
i would call AA something other than a denied cli. AA is more serious
I agree with both of you.

"Technically" speaking, having a CLI declined is 'adverse action', however when most folks on here use the term they're referring to something 'bad' taking place that causes them to be worse off than they were before. Being turned down for a CLI arguably leaves you where you were before the request, but it's still 'adverse'.

I find it interesting that the denial of a new credit application or CLI request is considered AA. I see that it is officially, but I find that interesting. The action part seems to be lacking in those scenarios.

Re: What exactly is AA?

azguy13 — Sat, 02 Jan 2016 19:00:52 GMT

@Man-Of-Steel wrote:
@UncleB wrote:
@Discover2016 wrote:
For example, when I first got my Amex BCE, I requested a CLI when I activated the card, it was denied, that is an AA.

@jeffery581 wrote:
i would call AA something other than a denied cli. AA is more serious
I agree with both of you.

"Technically" speaking, having a CLI declined is 'adverse action', however when most folks on here use the term they're referring to something 'bad' taking place that causes them to be worse off than they were before. Being turned down for a CLI arguably leaves you where you were before the request, but it's still 'adverse'.
I find it interesting that the denial of a new credit application or CLI request is considered AA. I see that it is officially, but I find that interesting. The action part seems to be lacking in those scenarios.

Wouldn't the denial of credit be considered the action? By definition, it is just an act of preventing success or development; harmful; unfavorable.

Re: What exactly is AA?

Man-Of-Steel — Sat, 02 Jan 2016 19:07:49 GMT

@azguy13 wrote:
@Man-Of-Steel wrote:
I find it interesting that the denial of a new credit application or CLI request is considered AA. I see that it is officially, but I find that interesting. The action part seems to be lacking in those scenarios.
Wouldn't the denial of credit be considered the action? By definition, it is just an act of preventing success or development; harmful; unfavorable.

You are probably correct. I like the word that salt_water_swimming used: punishment. I guess I think of an action that is in the form of punishment when I hear of AA, but that may just be due to the AA threads that I've read on this forum.

Re: What exactly is AA?

azguy13 — Sat, 02 Jan 2016 19:11:37 GMT

@Man-Of-Steel wrote:
@azguy13 wrote:
@Man-Of-Steel wrote:
I find it interesting that the denial of a new credit application or CLI request is considered AA. I see that it is officially, but I find that interesting. The action part seems to be lacking in those scenarios.
Wouldn't the denial of credit be considered the action? By definition, it is just an act of preventing success or development; harmful; unfavorable.
You are probably correct. I like the word that salt_water_swimming used: punishment. I guess I think of an action that is in the form of punishment when I hear of AA, but that may just be due to the AA threads that I've read on this forum.

I feel like AA gets too much attention here sometimes. A lot of the time, threads about AA are not posting about actual AAs that happened, but what people think may lead to AAs. There used to be a rumor circulating that using an Amex at Walmart would result in FR and then AA, lol.

Re: What exactly is AA?

elim — Sat, 02 Jan 2016 19:23:20 GMT

Most posters here don't use the term AA to reference "not getting a CLI or new line of credit". They do use it when something taken away... as in Credit Limit Decrease or Account Closure.

Re: What exactly is AA?

UncleB — Sat, 02 Jan 2016 19:24:08 GMT

@azguy13 wrote:
@Man-Of-Steel wrote:
@azguy13 wrote:
@Man-Of-Steel wrote:
I find it interesting that the denial of a new credit application or CLI request is considered AA. I see that it is officially, but I find that interesting. The action part seems to be lacking in those scenarios.
Wouldn't the denial of credit be considered the action? By definition, it is just an act of preventing success or development; harmful; unfavorable.
You are probably correct. I like the word that salt_water_swimming used: punishment. I guess I think of an action that is in the form of punishment when I hear of AA, but that may just be due to the AA threads that I've read on this forum.
I feel like AA gets too much attention here sometimes. A lot of the time, threads about AA are not posting about actual AAs that happened, but what people think may lead to AAs. There used to be a rumor circulating that using an Amex at Walmart would result in FR and then AA, lol.

Ironically, of all the lenders, Amex actually was one that would "judge" you based on where you shopped, specifically the ZIP code of the merchants - that's not just Internet 'lore', but there was/is documentation (I posted a few links a while back - Google can provide plenty). There was enough media coverage (mostly due to Amex not even trying to hide it - they would actually state that as the reason in the AA letter) that they finally stopped, or at least they stopped admitting it.

What I do find to be out in "left field' though is how some folks used to say that Amex would 'rate' you based on the first purchase made with a new card, i.e. make your first 'swipe' at Saks, Starbucks, etc. to set yourself up for later on (conversely, a first swipe at say, McDonald's was supposedly asking for trouble... LOL). Very entertaining, but pure speculation.

P.S. I never cared either way - I shop where I shop, and if my card issuer has problems with that then it's time for me to get a new card. I would tell them "it's a business decision", and I wouldn't be lying.

Re: What exactly is AA?

azguy13 — Sat, 02 Jan 2016 19:29:36 GMT

@UncleB wrote:
@azguy13 wrote:
@Man-Of-Steel wrote:
@azguy13 wrote:
@Man-Of-Steel wrote:
I find it interesting that the denial of a new credit application or CLI request is considered AA. I see that it is officially, but I find that interesting. The action part seems to be lacking in those scenarios.
Wouldn't the denial of credit be considered the action? By definition, it is just an act of preventing success or development; harmful; unfavorable.
You are probably correct. I like the word that salt_water_swimming used: punishment. I guess I think of an action that is in the form of punishment when I hear of AA, but that may just be due to the AA threads that I've read on this forum.
I feel like AA gets too much attention here sometimes. A lot of the time, threads about AA are not posting about actual AAs that happened, but what people think may lead to AAs. There used to be a rumor circulating that using an Amex at Walmart would result in FR and then AA, lol.

Ironically, of all the lenders, Amex actually was one that would "judge" you based on where you shopped, specifically the ZIP code of the merchants - that's not just Internet 'lore', but there was/is documentation (I posted a few links a while back - Google can provide plenty). There was enough media coverage (mostly due to Amex not even trying to hide it - they would actually state that as the reason in the AA letter) that they finally stopped, or at least they stopped admitting it.

What I do find to be out in "left field' though is how some folks used to say that Amex would 'rate' you based on the first purchase made with a new card, i.e. make your first 'swipe' at Saks, Starbucks, etc. to set yourself up for later on (conversely, a first swipe at say, McDonald's was supposedly asking for trouble... LOL). Very entertaining, but pure speculation.

P.S. I never cared either way - I shop where I shop, and if my card issuer has problems with that then it's time for me to get a new card. I would tell them "it's a business decision", and I wouldn't be lying.

Exactly! I think people often forget that even in respect to credit cards, we are the customer. This is absolutely the best argument in favor of diversification. I have no problem at all closing an account if the bank angers me. I almost did it to Chase when they plead guilty for foreign exchange collusion last year.

Re: What exactly is AA?

Anonymous — Sat, 02 Jan 2016 20:16:02 GMT

@azguy13 wrote:
I have no problem at all closing an account if the bank angers me. I almost did it to Chase when they plead guilty for foreign exchange collusion last year.

Problem with worrying about bad behavior in general (as compared to a bank doing something to your account) is that you are quickly left with no big banks as they have all been fined by regulators. That leaves the small ones, but they may well be doing some of the same stuff, and just aren't big enough to get the attention!