topic Re: High scores and preapprovals in Credit Cards

High scores and preapprovals

Anonymous — Thu, 11 Jul 2013 22:42:09 GMT

I currently have scores above 800, but only rarely receive preapprovals, even though I'm opted-in. I occasionally get an offer from BOA or Cap One, and that's about it.

I usually leave a small balance on one card, to show activity. My income the last couple of years has been very low, around 25K. Income is not listed on reports, but I believe that it can be estimated or obtained using a variety of means.

I got to wondering how creditors view things, and my guess is that people with the highest scores are not the most valuable customers, unless they can be shown to spend a lot of money.

I expect that creditors use sophisticated risk/reward modelling, and the people who come out on top are those who have scores high enough to limit default risk, but also have characteristics that indicate that they're likely to carry a balance.

I imagine that the same people are the ones who get CLIs the easiest. I got a couple recently, but they weren't automatic.

A person who carries a 5K balance at 16% generates $800 in interest per year. A person who never pays interest or annual fees would need to spend 40K a year to match this, assuming a merchant fee of 2%.

Comments on this?

Re: High scores and preapprovals

oscar_actuary — Thu, 11 Jul 2013 22:59:37 GMT

@Anonymous wrote:
A person who never pays interest or annual fees would need to spend 40K a year to match this, assuming a merchant fee of 2%.

Comments on this?

that's me.

I was getting offers well before the spending hit over 40k though.

Perhaps times have changed, or you have not opened enough lines to get your name out there? I get more offers after I do something, like get a car loan.

Re: High scores and preapprovals

Odiseous — Fri, 12 Jul 2013 01:30:34 GMT

@oscar_actuary wrote:
@Anonymous wrote:
A person who never pays interest or annual fees would need to spend 40K a year to match this, assuming a merchant fee of 2%.

Comments on this?

that's me.
I was getting offers well before the spending hit over 40k though.
Perhaps times have changed, or you have not opened enough lines to get your name out there? I get more offers after I do something, like get a car loan.

This makes sense. Since a score above 800 usually means you are not actively looking for new credit, you may be overlooked.

On the other hand, with a score that high then suddenly you are in the market for new credit, it may trigger them to react. After all, maybe you'll pick them.

Re: High scores and preapprovals

CreditScholar — Fri, 12 Jul 2013 01:52:14 GMT

@Odiseous wrote:
@oscar_actuary wrote:
@Anonymous wrote:
A person who never pays interest or annual fees would need to spend 40K a year to match this, assuming a merchant fee of 2%.

Comments on this?

that's me.
I was getting offers well before the spending hit over 40k though.
Perhaps times have changed, or you have not opened enough lines to get your name out there? I get more offers after I do something, like get a car loan.

This makes sense. Since a score above 800 usually means you are not actively looking for new credit, you may be overlooked.

On the other hand, with a score that high then suddenly you are in the market for new credit, it may trigger them to react. After all, maybe you'll pick them.

I'm not so sure about this. I have scores ~800 and still get offers very frequently.

I think your income is what's holding you back, especially for offers that would otherwise be commensurate with your FICO. You're correct in that there are many ways lenders can estimate your income, from analyizing your spending patterns, your reported util every month, etc.

25k is extremely low, and as such your ability to spend will also be limited. Most cards that would attract scores of that type target high-earning (and high-spending) people. You don't currently fit that profile, so it's not that surprising that you're often being overlooked. If you increase your income and spending patterns, you'll find the number of offers you get will multiply quickly.