topic Re: Why is a FR so bad? in Credit Cards

Why is a FR so bad?

jake619 — Mon, 24 Dec 2012 17:41:52 GMT

If you're not lying about income what's the big deal?

Re: Why is a FR so bad?

sccredit — Mon, 24 Dec 2012 17:44:48 GMT

Completely inconvenient.

Re: Why is a FR so bad?

Anonymous — Mon, 24 Dec 2012 17:48:46 GMT

A full FR (as compared to one when asking for a CLI when over $25K) is bad in the sense:

1) Your accounts are frozen during the review

2) A number of people (not all) have reported a very negative attitude from those conducting the review, guilty till proved otherwise

3) The end point can be reduction in CL and/or closure if they feel the circumstances justify it. So you can be truthful at the time of application, but things have changed (or Amex's view of risk changes) there is still a bad outcome.

Now 1 and 3 are certainly justifed from Amex's viewpoint. But that is why it is bad!

Re: Why is a FR so bad?

SnackTrader — Mon, 24 Dec 2012 17:51:50 GMT

@jake619 wrote:
If you're not lying about income what's the big deal?

Nothing, honestly. You're going to provide financial documentation for a mortgage, I don't see why it should happen for credit cards too. But some people have much more complicated finances than me (self-employed, multiple income streams, etc.)

However, if your account is shut down until you can pass the FR, then it becomes a big hassle for those using products frequently. It may block pending transactions or cause the card to be denied. Overall, it sounds much like a colonoscopy, unpleasant at the time, but not a big deal in the long run as long as nothing is found.

Re: Why is a FR so bad?

CreditCrusader — Mon, 24 Dec 2012 18:09:25 GMT

@jake619 wrote:
If you're not lying about income what's the big deal?

I don't care who takes offense, I'll come out and say it:

I believe that 95% of FR recipients who dread FRs feel that way because they fudged their application info in some form or another or they reported income that is not accurate as of the FR date. Perhaps 5% dread the inconvenience, but they are probably in the minority of that group.

Edited to add: to answer your question, FRs aren't that bad. They represent a lender exercising responsibility when lending...something they should be applauded for.

Re: Why is a FR so bad?

kevinjjc — Mon, 24 Dec 2012 17:57:06 GMT

At the very least, it would be such a hassle to go through it.

Re: Why is a FR so bad?

sccredit — Mon, 24 Dec 2012 17:57:18 GMT

@CreditCrusader wrote:
@jake619 wrote:
If you're not lying about income what's the big deal?
I don't care who takes offense, I'll come out and say it:

I believe that 95% of FR recipients who dread FRs because they fudged their application info in some form or another. Perhaps 5% dread the inconvenience, but they are probably in the minority of that group.

I completely disagree. I believe most people fear FR because the timing is normally terrible. I was traveling with friends 6 hours away from home when they decided to start mine. Horribly embarrassing when paying for a meal and your card is declined. If they want you to prove your assets and income they should do so BEFORE issuing a card, just like a mortgage is done.

Re: Why is a FR so bad?

jake619 — Mon, 24 Dec 2012 18:00:20 GMT

I'd be ok with that. At least you'd know where you stand with the creditor.

Re: Why is a FR so bad?

Anonymous — Mon, 24 Dec 2012 18:04:20 GMT

@SnackTrader wrote:
@jake619 wrote:
If you're not lying about income what's the big deal?
Nothing, honestly. You're going to provide financial documentation for a mortgage, I don't see why it should happen for credit cards too. But some people have much more complicated finances than me (self-employed, multiple income streams, etc.)

However, if your account is shut down until you can pass the FR, then it becomes a big hassle for those using products frequently. It may block pending transactions or cause the card to be denied. Overall, it sounds much like a colonoscopy, unpleasant at the time, but not a big deal in the long run as long as nothing is found.

And in many cases there will be accounts that auto-charge to the Amex account, and these will be denied, generating late/penalty fees with these other vendors.

Inconvenience can be inconvenient! There are reports here of people who got an FR while abroad, and need to have sufficient limits left on other credit cards to pay hotels and flights etc. Plus AMEX usually demands docs on a very tight schedule, hard when you are not at home.

Colonoscopy is one example. Two more are IRS full audit, and a police interrogation. At the end, even if nothing is found, not exactly an experience to shrug off!

Re: Why is a FR so bad?

CreditCrusader — Mon, 24 Dec 2012 18:04:22 GMT

@sccredit wrote:
@CreditCrusader wrote:
@jake619 wrote:
If you're not lying about income what's the big deal?
I don't care who takes offense, I'll come out and say it:

I believe that 95% of FR recipients who dread FRs because they fudged their application info in some form or another. Perhaps 5% dread the inconvenience, but they are probably in the minority of that group.
I completely disagree. I believe most people fear FR because the timing is normally terrible. I was traveling with friends 6 hours away from home when they decided to start mine. Horribly embarrassing when paying for a meal and your card is declined. If they want you to prove your assets and income they should do so BEFORE issuing a card, just like a mortgage is done.

Yeah, here's the thing: the lender sets the rules with regards to what is or is not acceptable when issuing or continuing extensions of credit. It never ceases to amaze me how many know and understand how stIngy and overbearing Amex is...including FRs...yet are suddenly outraged at the "inconvenience" of having to prove credit worthiness on a continuing basis.

Many have said it...and it's a good message: if you don't like the way Amex does business, move on to another card. As for the reasons for fearing FR, you may disagree, but I urge you to have a look at a vast majority of the Amex FR threads. You will see an abundance of posts about fudged info, changing income, etc. as motives behind those Fears. As I wrote, it's not 100% of those folks, but I'd bet it's a vast majority.

Re: Why is a FR so bad?

toppers555 — Mon, 24 Dec 2012 18:29:50 GMT

I would agree that I feel most people fear fr , because of hidden reasons. In case of timing if you are out ,and it get declined that can be embrassing, and a hassle , but this is why I keep some cash, and more then one card.

Re: Why is a FR so bad?

HiLine — Mon, 24 Dec 2012 18:32:38 GMT

@CreditCrusader wrote:
As for the reasons for fearing FR, you may disagree, but I urge you to have a look at a vast majority of the Amex FR threads. You will see an abundance of posts about fudged info, changing income, etc. as motives behind those Fears. As I wrote, it's not 100% of those folks, but I'd bet it's a vast majority.

I agree that if you have something to fear, then you fear it. But what if we change the word 'fear' to 'hate'? The majority of people that have a negative view of an FR hate it for the inconvenience, and for the signal that the issuer is regarding them as high-risk individuals.

Re: Why is a FR so bad?

HenryJumbo — Mon, 24 Dec 2012 18:52:33 GMT

It's like getting accepted into a good school. Once you're in you register for some classes (purchase stuff), and then out of the blue the administration sends you a letter saying they want you to take an assessment test. You're like wait a minute I sent them all my previous records, etc (when they looked over your credit history to issue you your frist card). So if you pass their test they might want you to take remedial classes (CLD). If you fail their test they will kick you out of school, regardless if you been in with the school many years and never missed class once. Does that sound like a school you'll like to be a member of?

Being a memeber I would cancel right away if I get FR. However, I don't think it's something common to people with clean credit and high scores. It's always that person who starts off the thread saying "I don't know why Amex is FR'ing me, I have perfect credit, my score is 620 and I never missed a payment. I have another card maxed out but that's none of their business".

Re: Why is a FR so bad?

cashnocredit — Mon, 24 Dec 2012 18:55:40 GMT

@HiLine wrote:
@CreditCrusader wrote:
As for the reasons for fearing FR, you may disagree, but I urge you to have a look at a vast majority of the Amex FR threads. You will see an abundance of posts about fudged info, changing income, etc. as motives behind those Fears. As I wrote, it's not 100% of those folks, but I'd bet it's a vast majority.

I agree that if you have something to fear, then you fear it. But what if we change the word 'fear' to 'hate'? The majority of people that have a negative view of an FR hate it for the inconvenience, and for the signal that the issuer is regarding them as high-risk individuals.

It's the inconvenience. I doubt I would cancel unless an issuer started doing multiple FRs or it occured at a particularly inconvenient time and I didn't have backup for some reason.

Re: Why is a FR so bad?

sccredit — Mon, 24 Dec 2012 18:58:05 GMT

@CreditCrusader wrote:
@sccredit wrote:
@CreditCrusader wrote:
@jake619 wrote:
If you're not lying about income what's the big deal?
I don't care who takes offense, I'll come out and say it:

I believe that 95% of FR recipients who dread FRs because they fudged their application info in some form or another. Perhaps 5% dread the inconvenience, but they are probably in the minority of that group.
I completely disagree. I believe most people fear FR because the timing is normally terrible. I was traveling with friends 6 hours away from home when they decided to start mine. Horribly embarrassing when paying for a meal and your card is declined. If they want you to prove your assets and income they should do so BEFORE issuing a card, just like a mortgage is done.
Yeah, here's the thing: the lender sets the rules with regards to what is or is not acceptable when issuing or continuing extensions of credit. It never ceases to amaze me how many know and understand how stingy and overbearing Amex is...including FRs...yet are suddenly outraged at the "inconvenience" of having to prove credit worthiness on a continuing basis.

Many have said it...and it's a good message: if you don't like the way Amex does business, move on to another card. As for the reasons for fearing FR, you may disagree, but I urge you to have a look at a vast majority of the Amex FR threads. You will see an abundance of posts about fudged info, changing income, etc. as motives behind those Fears. As I wrote, it's not 100% of those folks, but I'd bet it's a vast majority.

I don't disagree that some FR recipients fudge income, I don't think it's anywhere near 95%. For those that do shame on them.

As far as their right to do so I never argued that. After they performed mine, and I passed with no issues, I cancelled their card. The rep then tried to give some line about the esteem of American Express, bull****. They can do whatever they want, my Signature cards hold no less esteem that American Express and once they figure that out they will be a much more consumer friendly company.

Re: Why is a FR so bad?

cashnocredit — Mon, 24 Dec 2012 19:02:39 GMT

There's a difference between the people that post here after getting an FR and the general population of FRed cardholders. People that worry about discrepencies between their taxes and stated income are more likely to post because they are more likely to be concerned. I suspect most just comply, pass, and go on with life.

Re: Why is a FR so bad?

Anonymous — Mon, 24 Dec 2012 19:08:30 GMT

sccredit wrote

I don't disagree that some FR recipients fudge income, I don't think it's anywhere near 95%. For those that do shame on them.
As far as their right to do so I never argued that. After they performed mine, and I passed with no issues, I cancelled their card. The rep then tried to give some line about the esteem of American Express, bull****. They can do whatever they want, my Signature cards hold no less esteem that American Express and once they figure that out they will be a much more consumer friendly company.

I agree that 95% sounds too high (and plucked from nowhere I would guess!).

Also I agree with the comment about esteem. You just need to look on this board to see how easy Amex charge cards are to get (and then the magic 3x CLI on revolvers). They are mass-market cards that have somehow kept their exclusive reputation (not to divert the thread, but many Android lovers would say the same about Apple, which to their mind has an equally undeserved reputation).

Random Amex results from May of this year:

DEFAULT: The New York-based company said it wrote off 2.2 percent of balances on an annualized basis for the month. That's down from 2.4 percent in April. The rate also was 2.4 percent in February and March. The May rate is well below the 3.2 percent charge-off rate a year ago.

LATE PAYMENTS: Payments on 1.2 percent of balances were delinquent, or late by 30 days or more, down from 1.3 percent in April. The delinquency rate was 1.6 percent in May 2011. The figure is considered an indicator for what to expect for defaults in coming months.

So that is a lot of default, hence why they want to do FRs. Just think they could target them better and cause less annoyance

Re: Why is a FR so bad?

sccredit — Mon, 24 Dec 2012 19:11:22 GMT

@Anonymous wrote:
sccredit wrote
I don't disagree that some FR recipients fudge income, I don't think it's anywhere near 95%. For those that do shame on them.
As far as their right to do so I never argued that. After they performed mine, and I passed with no issues, I cancelled their card. The rep then tried to give some line about the esteem of American Express, bull****. They can do whatever they want, my Signature cards hold no less esteem that American Express and once they figure that out they will be a much more consumer friendly company.
I agree that 95% sounds too high (and plucked from nowhere I would guess!).

Also I agree with the comment about esteem. You just need to look on this board to see how easy Amex charge cards are to get (and then the magic 3x CLI on revolvers). They are mass-market cards that have somehow kept their exclusive reputation (not to divert the thread, but many Android lovers would say the same about Apple, which to their mind has an equally undeserved reputation).

Random Amex results from May of this year:

DEFAULT: The New York-based company said it wrote off 2.2 percent of balances on an annualized basis for the month. That's down from 2.4 percent in April. The rate also was 2.4 percent in February and March. The May rate is well below the 3.2 percent charge-off rate a year ago.
LATE PAYMENTS: Payments on 1.2 percent of balances were delinquent, or late by 30 days or more, down from 1.3 percent in April. The delinquency rate was 1.6 percent in May 2011. The figure is considered an indicator for what to expect for defaults in coming months.

So that is a lot of default, hence why they want to do FRs. Just think they could target them better and cause less annoyance

Maybe they feel the very slight drop in defaults is indication that FRs work. Who knows.

Re: Why is a FR so bad?

Anonymous — Mon, 24 Dec 2012 19:21:44 GMT

@sccredit wrote:
@Anonymous wrote:
sccredit wrote
I don't disagree that some FR recipients fudge income, I don't think it's anywhere near 95%. For those that do shame on them.
As far as their right to do so I never argued that. After they performed mine, and I passed with no issues, I cancelled their card. The rep then tried to give some line about the esteem of American Express, bull****. They can do whatever they want, my Signature cards hold no less esteem that American Express and once they figure that out they will be a much more consumer friendly company.
I agree that 95% sounds too high (and plucked from nowhere I would guess!).

Also I agree with the comment about esteem. You just need to look on this board to see how easy Amex charge cards are to get (and then the magic 3x CLI on revolvers). They are mass-market cards that have somehow kept their exclusive reputation (not to divert the thread, but many Android lovers would say the same about Apple, which to their mind has an equally undeserved reputation).

Random Amex results from May of this year:

DEFAULT: The New York-based company said it wrote off 2.2 percent of balances on an annualized basis for the month. That's down from 2.4 percent in April. The rate also was 2.4 percent in February and March. The May rate is well below the 3.2 percent charge-off rate a year ago.
LATE PAYMENTS: Payments on 1.2 percent of balances were delinquent, or late by 30 days or more, down from 1.3 percent in April. The delinquency rate was 1.6 percent in May 2011. The figure is considered an indicator for what to expect for defaults in coming months.

So that is a lot of default, hence why they want to do FRs. Just think they could target them better and cause less annoyance
Maybe they feel the very slight drop in defaults is indication that FRs work. Who knows.

Well, it goes up and down (for all issuers, defaults were down in Sep then up in Oct) and they have been doing FRs for a long time. There is a need to cut losses, but I would argue anything like 2% suggests that they aren't catching things as well as perhaps they should, given the intrusive nature of an FR.

But they are doing better than others (so that might justify the practice!) Figures from Oct 2011 (not 2012)

Five of the six biggest U.S. credit card issuers reported higher delinquency rates in September, but all of them reported lower default rates:

JPMorgan Chase’sdelinquency rate fell to 2.53 percent in September from 2.48 percent in August, after falling for 20 straight months. The bank’s charge-off rate fell for a fourth consecutive month, to 4.13 percent for the period from 4.67 percent. Chase’s current charge-off rate is at its lowest point since well before the financial crisis began and is 62 percent lower than the peak of 10.91 percent reached in January of 2010.
Bank of America reported a delinquency rate of 3.99 percent in September, up slightly from 3.96 percent in August. This uptick follows 11 consecutive monthly declines, which brought and BofA’s delinquency rate to its lowest level in more than five years. The Charlotte, N.C.-based bank’s charge-off rate dropped by 0.80 percent to 5.99 percent, following another substantial decrease – by 0.64 percent – the previous month. While BofA’s default rate is still the highest in the industry, it is now 59 percent below the peak of 14.53 percent, registered in August 2009.
Citibank was the sole big issuer whose delinquency rate fell in September – to 3.30 percent from 3.35 percent in August, the lowest level in more than four years. Citi reported a much more impressive drop in its charge-off rate, which fell to 5.87 percent from 6.92 percent in August. Citi still has the second-highest charge-off ratio among the top U.S. issuers, however it is now 51 percent below the peak of 12.14 percent, recorded in August 2009.
Capital One’s delinquency rate rose 0.22 percent to 3.65 percent in September. It was the fourth consecutive monthly increase, following the record-low of 3.32 percent reached in May. The rate is still 2.15 percent below the January 2010 peak of 5.80 percent. The bank’s charge-off rate declined by 0.20 percent to 3.9 percent for the month. Although it is still higher than the four-year low of 3.77 percent measured in July, Capital One’s default rate is now 64 percent lower than the 10.87 percent peak reported in April of 2010.
Discover reported a delinquency rate of 2.50 percent, up marginally from 2.49 percent in August, which marked the lowest level in more than five years. The September delinquency level is 56 percent below the October 2009 peak of 5.72 percent. The bank’s charge-off rate for September was 3.17 percent, down from 3.60 percent in the previous month, which marked the first time defaults dropped below 4 percent since October 2007. Discover’s current charge-off rate is 65 percent below the peak of 9.11 percent measured in February 2010.
American Express continued to lead its peers in both the charge-off and delinquency categories. The New York-based bank reported a delinquency rate of 1.50 percent in September, up from 1.40 percent in August, but still 72 percent lower than the record-high of 5.30 percent reported in February 2009. American Express’s charge-off rate fell 0.4 percent to 2.3 percent, which is 78 percent lower than the peak of 10.4 percent recorded in April 2009.

Re: Why is a FR so bad?

Revelate — Mon, 24 Dec 2012 19:58:37 GMT

@Anonymous wrote:
sccredit wrote
I don't disagree that some FR recipients fudge income, I don't think it's anywhere near 95%. For those that do shame on them.
As far as their right to do so I never argued that. After they performed mine, and I passed with no issues, I cancelled their card. The rep then tried to give some line about the esteem of American Express, bull****. They can do whatever they want, my Signature cards hold no less esteem that American Express and once they figure that out they will be a much more consumer friendly company.
I agree that 95% sounds too high (and plucked from nowhere I would guess!).

FWIW I don't think it's off by an order of magnitude or anywhere close. Having been around this past year and reading every FR thread, I'd estimate that 60% or thereabouts are people who misreported income, and another 25% are those running business expenses through a personal card. That's in the ballpark of the 95% figure that was suggested. Mine are pure swags too, actually I think the first number may well be higher for that matter at least in the earlier part of this year, but we've had a run of business expense folks in the past few months which edged it that way.

I think Amex's miss rate is close to 10% on this, so it's hard for me to argue their business practice as someone correctly pointed out they have the lowest default rate in the industry. Certainly a part of this is their charge card business which are inherently less risky in my estimation with all generations of people, but likely a non-trivial amount is the zealousness that they protect their investment through both fraud analytics and their FR practices.

Personally I doubt my expenses will ever outstrip my income or come anywhere close to it, so I suspect I'll never get a FR unless I do something horrendously awkward; that said, if they want my supporting documentation they're more than welcome to it and like another poster suggested I never leave home without at least one other card in my pocket and typically $20 in cash.

Edit: I'll also point out the people who post here often feel they were wronged or surprised, the ones who knowingly missrepresented income on the application probably don't even post full details here, and on that theory when looked at the wider population base and not just those who actually post their stories to the forum here, 95% is probably even more reasonable.