topic Re: American Express cancelled my account in Credit Cards

American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 13:52:03 GMT

First and fore most. I'm new here so if something sounds wrong don't go to hard on me.

I got my 1st Amex Blue card in March of 2008. CL of $1100. Yesterday I get a letter in the mail form them saying that after a recent review, my account has been cancelled.

In the letter, the reasons being are;

I have high debt with other creditors relative to my total available credit.

(Why do they take into consideration my other accounts when I've been excellent with theirs? My credit history is atleast 4 years old now and I have NEVER missed a payment and ALWAYS have paid more than the minimum on ALL my credit cards.) What is the point of credit if when you use it its going to look bad? It shouldn't matter cause I make enough money to pay them off when I feel like it. Technically it defeats the purpose of even having credit.

Your consumer credit bureau score

I have not had anything below 635 ever. The only reason it is low is because maybe owing 50% of my total credit is bad? This is ridiculous.

The average amount of payments in relation to your overall balance on your American express account has been to low.

So IM not paying enough to amex? That's crap. I've always paid more than the minimum and I had just paid $1000 last month to them. If that's the case why even have a credit card with the option to carry a balance with a minimum payment. It defeats the purpose of even having a minimum amount due.

My monthly payments are to low in relation to my outstanding debt on ALL my credit card accounts.

Once again, why do my other cards matter to them? It shouldn't and like I said earlier, I've never missed a payment and have always paid more than the minimum and I get paid well enough to make my payments on time with more than the minimum. I have never defaulted on any of my accounts.

The best part is coming up. In the bottom of the letter it states that the cancellation of this account under these circumstances may result in a negative reporting of this account to the consumer reporting agencies, additionally, if you do not pay your account, your account may be referred to a collection agency.

What should I do? Should I call them and harass them until I get to talk to someone in charge and TRY to get it resolved or what? This shouldn't be allowed and for that to have a negative impact on my credit should even be considered illegal. I don't want to let this go that easily and let them get away with this.

Re: American Express cancelled my account

MidnightVoice — Mon, 05 Jan 2009 14:01:17 GMT

Due to the credit crunch Amex is doing this a lot. Some other companies are doing it as well. I am afraid it is legal, and their comments are based on statistics - people who carry large balances are more likely to default than those that carry small balances, and people who carry large balalances on multiple cards are more likely to default.

As you have the funds, your best bet may be pay it off.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 14:06:14 GMT

I understand but it is still nonsense. If most companies now are going to base their accounts on statistics, why even have a individual credit report for people. Apparently your credit history doesn't matter to them anymore.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 14:10:19 GMT

Unfortunately, it's not illegal. Amex is not a company you want to carry a balance with, especially now. I have heard from others that if you carry a balance with Amex, they want you to PIF in no more than three months and that if you don't you are considered a higher risk.

As MidnightVoice stated, Amex is looking at you as a risk because people with high balances on multiple cards are more likely to default. Amex is also CLDing and chasing the balance with a lot of Amex customers who have been so for years and have perfect payment history with Amex.

Creditors want you to use your available credit, but any useage of 10% or more the person can be considered a risk, especially if that is 50% or more. They prefer you use your credit and PIF if not every month than within 2-3 months at the most. Having 50% of your available credit used makes you appear risky, regardless of if you pay more than the minimum and pay on time every time.

I personally don't think it's fair either, but it's legal. The best thing you can do right now, for yourself and your credit score is to pay as much of especially Amex as fast as you can, but also to pay down everything else. With Amex closing your account with a balance you may soon start seeing AA's from your other creditors.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 14:28:05 GMT

So amex cancels my account. What kind of AA will other creditors try to take? So my credit history goes down the drain because amex wants to base their decisions on statistics. Now all creditors will see me as a risk? There has to be something wrong here.

Re: American Express cancelled my account

MidnightVoice — Mon, 05 Jan 2009 14:40:52 GMT

@Anonymous wrote:
So amex cancels my account. What kind of AA will other creditors try to take? So my credit history goes down the drain because amex wants to base their decisions on statistics. Now all creditors will see me as a risk? There has to be something wrong here.

Credit has been based on statistics for many years, and has good and bad points

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 14:43:36 GMT

Your Amex reports as closed with a balance, your util % goes way out, because at that point your are essentially 100% maxed out on your card and that is very bad for your FICO scores. Once other Creditors see this, they may: ratejack your APR -- bad for your wallet, CLD you -- bad for your Util% and your FICO scores, close your cards bad for your util % and your FICO scores. CLDing you and closing your cards can set you into a very quick cycle of having other cards do the same, until your FICO scores are very low.

Which is why: do what you can to PIF your Amex.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 14:56:14 GMT

Sorry to hear. As Warren Buffet quoted.. "Beware of geeks bearing formulas." AMEX's risk analytic system is quite flawed and has lossed many valuable card members from Blue to Centurion. Hopefully someday they will losen up like they used to be back in the old days.

Re: American Express cancelled my account

score_building — Tue, 06 Jan 2009 04:38:08 GMT

@Anonymous wrote:
So amex cancels my account. What kind of AA will other creditors try to take? So my credit history goes down the drain because amex wants to base their decisions on statistics. Now all creditors will see me as a risk? There has to be something wrong here.

i am sorry this happened to you but CLD's and account closures for the reasons they provided have become more frequent during this credit crunch and will likely continue to escalate before things get better.

since you mentioned you are able to pif, this closure by issuer should have a relatively minor effect on your fico score and may not lead to AA from other creditors. the score impact stems primarily from the loss of the credit line leading to an increase in overall utilization. it does seem unfair but these actions are being taken against many thousands of their card holders, many with good payment histories.

the terms and conditions that we agree to with ccc's typically afford the issuer the legal right to close or CLD the account of a card holder for any reason at any time with proper notice. just remember you may be able to do a good deal of damage control on util via cli's from other creditors if you're eligible. perhaps a good time to make requests for increases may be after you pif your accounts or at least lower any blances if that is what you intend to do.

a closure can have a significant score impact and perhaps attract the attention of other creditors quicker if you are unable to pif to bring the acct balance to zero. a closed account with a balance is always to be avoided if possible since it can also be worrisome to other creditors who may in turn enact AA in the form of a CLD or account closing.

ETA: Cleanmachine yes, my understanding is also that the score impact is the same whether the acct is closed by the card holder or issuer and it is casued by the drop in util. in this thread the OP was speaking of a closure by creditor so that is what i referenced initially (but not to the exclusion of an account closed by card holder which would apparently have same effect on util). i removed the reference to 'issuer closure' so as not to cause further confusion.

Message Edited by score_building on 01-05-2009 08:38 PM

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 15:21:37 GMT

It is my understanding that accounts closed by Issuer or Consumer has no impact on credit score.

The only impact would be the overall utilization of debt to credit limit that is reported.

Re: American Express cancelled my account

GregB — Mon, 05 Jan 2009 15:28:23 GMT

I have been hit hard by Amex new account policies and think they have gone way too far. However,

I can see some legitimate reasons for Amex concern with the OP.

1. He considers a FICO score of 635 and owing 50% of his available credit to be acceptable.

2. He considers consistently paying "more than minimums" to be OK. He says nothing about regularly PIF.

3. He doesn't quite get it that he is deeply in debt and it wouldn't take much to push him over the edge.

4. He is relying on continuing income to keep disaster away. Jobs can be gone quickly

I assume that he is inexperienced and should take this as a warning sign to get in a better credit position. Since he "paid Amex $1000 last month" and has a $1100 CL, it should be fairly easy to PIF that account soon so that it doesn't affect his FICO score for very long, if at all. Worst case, take a cash advance against another account that is NOT USED AT ALL. Hopefully he doesn't have big balances on ALL his accounts.

With a bit of care, he can end up with a more reasonable FICO and work on getting all of his accounts in a better position. Hopefully that won't result in higher limits and him digging himself into a bigger hole next time.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 15:58:39 GMT

First of all, im not inexpirienced. I clearly know what im doing and I am not living my life on a check to check basis. I got my score up to a 775 in a matter of 2 months cause I knew what to do. This whole credit score is just a game. You can choose at what score you want to be and how to win at it. Who are you to assume anything? BTW if credit was given to you, you have the right to use it and it still shouldnt have any impact on your credit score.

What im mad about is the principle of the situation. Amex cancelling my account and possibly having a negative impact on my credit history when i have tried hard to maintain a perfect credit history with using my cards regularly. If that wasnt the case why do people even get credit cards in the first place. Just save all your money and buy everything cash.

Having only to use 10% on a credit card to only "look good" to creditors defeats the point of having it. So im gonna get a 5000 CL with a credit card and only have to use 500? Thats retarted.

Re: American Express cancelled my account

score_building — Mon, 05 Jan 2009 16:31:37 GMT

@Anonymous wrote:
First of all, im not inexpirienced. I clearly know what im doing and I am not living my life on a check to check basis. I got my score up to a 775 in a matter of 2 months cause I knew what to do. This whole credit score is just a game. You can choose at what score you want to be and how to win at it. Who are you to assume anything? BTW if credit was given to you, you have the right to use it and it still shouldnt have any impact on your credit score.

What im mad about is the principle of the situation. Amex cancelling my account and possibly having a negative impact on my credit history when i have tried hard to maintain a perfect credit history with using my cards regularly. If that wasnt the case why do people even get credit cards in the first place. Just save all your money and buy everything cash.

Having only to use 10% on a credit card to only "look good" to creditors defeats the point of having it. So im gonna get a 5000 CL with a credit card and only have to use 500? Thats retarted.

it may not appeal to you but managing util for best score effect is part of the game. no matter how experienced someone is there is always something to be learned. the forum is a great place to vent, share info. and try to be supportive too.

Message Edited by score_building on 01-05-2009 08:31 AM

Re: American Express cancelled my account

MidnightVoice — Mon, 05 Jan 2009 16:29:03 GMT

smon1234 wrote:

BTW if credit was given to you, you have the right to use it and it still shouldn't have any impact on your credit score.

A CC is an unsecured loan. You have the right to use it, and the CCC has the right to take it away

And I am afraid that how a person uses their credit does have an effect on their score. One of the reasons that FICO has become popular is that it is statistical, and does not care if you are rich, poor, black or white. It assesses a persons likelihood of defaulting. Like any statistical analysis, outliers will always exist

Message Edited by MidnightVoice on 01-05-2009 10:29 AM

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 16:23:24 GMT

@Anonymous wrote:
BTW if credit was given to you, you have the right to use it and it still shouldnt have any impact on your credit score.

Having only to use 10% on a credit card to only "look good" to creditors defeats the point of having it. So im gonna get a 5000 CL with a credit card and only have to use 500? Thats retarted.

Why should the amount of debt that you have bear no influence on your credit score? Your credit score is supposed to measure risk. I think that the amount of debt is one of the most reasonable factors in your credit score. You may have enough money in your accounts to pay everything back immediately, but for this to factor into the score, the procedure of score calculation would have to be much more complicated and require you to send statements of your checking/savings accounts, etc.

And as to util: If you use all credit that you have been extended, it looks as if you need it. The CCC have no means to know your overall financial situation (except after financial review). And if you really don't need the credit, there's no reason to be overly upset with Amex closing one account. Then it's more a case of bruised ego than anything else. I know that I would be slightly miffed, but it would have no practical consequences for me.

Message Edited by Ulan on 01-05-2009 08:23 AM

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 16:24:33 GMT

Well sorry OP it's not only Amex that's doing this crap. Last week I got an update from EQ that my account was changed. When I looked I saw my merrick bank card with a 27.99 apr was closed with a zero balance. My limit was $750 but they raised it to $1150 a month ago. I called and was told it was closed because I had too many new accounts "5". Well over the weekend I wrote a lenghty FU letter to Merrick Bank along with my approval page from my new discover card with over a $3K limit and sub 10% apr.

Try to open up new TL to help with UTIL as that's what I'm doing. I have almost a 10K limit on my Amex and I'm building up for when Amex slashes me.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 17:13:13 GMT

Thanks for the help and support everyone . I'll take this as a life lesson and try not to make the same mistake twice.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 17:18:37 GMT

I will never ever have an amex card again ever. I can't beleive the hoops they make people jump through for their cards. I couldn't trust to use it when I need it. Nope never ever ever.

Re: American Express cancelled my account

Anonymous — Mon, 05 Jan 2009 17:22:53 GMT

Hi,

Just wondering - do you happen to have a mortgage as well? Maybe with Countrywide? Just wanted to know since I have 2 Amex accounts both of which are close to the limit, and want to know what additional factors they look at. (Don't want to be CLD either).

Thanks,

Re: American Express cancelled my account

MidnightVoice — Mon, 05 Jan 2009 17:26:22 GMT

@Anonymous wrote:
Hi,

Just wondering - do you happen to have a mortgage as well? Maybe with Countrywide? Just wanted to know since I have 2 Amex accounts both of which are close to the limit, and want to know what additional factors they look at. (Don't want to be CLD either).

Thanks,

Rumor has it they look at zip code (for high mortgage foreclosure areas and high unemployment). And obviously, a low score, a drop in score or an increase in utilization across the board as well as on their card.

They also don't like "out of pattern" spending without warning