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Advise to navigate these times from a credit analyst

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Regular Contributor

Advise to navigate these times from a credit analyst

Hello all! 

I am seeing a lot of posts of cards being closed and aa taken on accounts. While the majority of these could be because of lowering exposure limits for a bank. I just wanted to chime in. Banks of so much data it is honestly mind boggling, they have industry types reports probability of default information...etc in these uncertain times much of this seems unknown or not understood. Banks are analyzing customer profiles, their careers and the impact Covid-19 has had on specific industries. they are looking at job risk and analyzing years of patterns regarding certain impacted groups. Banks are closing accounts for certain industries, though they may not admit it. They are analyzing probability of default information for industries and they are looking at their portfolios as a whole and looking to cut risk in certain areas especially for borderline profiles. They are looking at credit card spend and balances carried as groups of individuals to avoid risk. In addition to this I just wanted to issue a PSA of sorts. I would advise to not do anything to bring attention to your report or anything require a manual review of your profile especially for borderline applicants. Do not add au do not take excessive cash advances and do not switch up your spending patterns. These are typically grounds for aa and are commonly overlooked when the economy is good. However, with banks going more conservative something as small as adding an au account could raise red flags around your intentions. A customer that normally does pif carrying large balances could get you balance chased. My recommendation is to sit tight and wait, hold off on credit and just garden your existing relationships for a few more months. Stick to your trends if possible. While it definitely is unfortunate that in your time of need they are cutting into emergency funds and impacting your ability to access money you need to feed your family and cover bills, banks are in the business of making money and they are using their data and extensive trend reports to mitigate potential loss in these times. The likelihood of adverse action greatly decreases if you stick to your normal patterns and don't deviate from this too much. I am sorry for anyone impacted by the virus or facing economic hardship. My other recommendation is if you need to run balances do so on cards you don't mind losing and keep your preferred lenders on trend! I am personally headed to the garden for 6 months at minimum to stay low in these times.

18 REPLIES 18
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Valued Contributor

Re: Advise to navigate these times from a credit analyst

Thanks for your input and advice @Jds142! It's interesting (& crazy) that they could be taking actions against people based on their job industry. At the end of the day, they're just trying to cover their butts. I admit that coming here makes the temptation of applying hard to resist, but posts like this (and others mentioning AA) is a great reminder of my credit and gardening goals. There is honestly nothing I need that my current cards don't offer, and I have to keep remembering that!





Message 2 of 19
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Regular Contributor

Re: Advise to navigate these times from a credit analyst

@KLEXH25 While I work in commercial lending, we are definitely minimizing exposure as much as possible to at risk industries. I also have heard rumblings regarding Covid-19 risk scores based on industry being used from friends in the industry. Very unfortunate but they are definitely using their data to minimize loss. It is hard because I feel morally banks need to help customers in hard times like we help them in good times, and it is easy to overlook that a bank does not necessarily care about this and they just care about returning profit to shareholders and the executives looking really good navigating a crisis. They have data regarding industries income and a ton of different buckets they can pivot off of to start analyzing these trends and I expect it to pick up as they continue to analyze and dig deeper into their data. Now, it is not like anyone from the restartaunt bar or hospitality industry are being closed out but they are definitely looking at the risk of these employees and comparing it to credit files and probability of default information to close out some accounts especially ones with a lot of red flags like inquiries, AA taken by other lenders and a bunch of different factors. Just want everyone to be mindful! Happy to keep you company in the garden! 

Message 3 of 19
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Super Contributor

Re: Advise to navigate these times from a credit analyst


@KLEXH25 wrote:

Thanks for your input and advice @Jds142! It's interesting (& crazy) that they could be taking actions against people based on their job industry. At the end of the day, they're just trying to cover their butts. I admit that coming here makes the temptation of applying hard to resist, but posts like this (and others mentioning AA) is a great reminder of my credit and gardening goals. There is honestly nothing I need that my current cards don't offer, and I have to keep remembering that!


They've been tracking that info and making decisions based on it for a long time. It's the reason applications will ask for your position at your employer. It's also why it's easier to get a loan for someone who stays in the same industry or position after changing employers. 







Message 4 of 19
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Established Contributor

Re: Advise to navigate these times from a credit analyst

Thanks for the insight.Hopefully many others will read it and benefit. Happy gardening!

Current Scores & Increase since May 2020:

EX: 701 (+38)| TU: 692 (+32)| EQ: 681 (+36)| TU Fico 9: 704

Next Goal: Min. 700 w/all CRAs

Subsequent Goal: Chase FU

Gardening Until: 06/01/2021| App: 5/26/2020
Message 5 of 19
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Regular Contributor

Re: Advise to navigate these times from a credit analyst

@Brian_Earl_Spilner @That is definitely correct. I mean as a lender myself we look at the industry and actually remove ourselves from lending to particular industries. They do use that info to make decisions but when the economy is good you can get a loan or card pretty much regardless of industry from a large bank. Now with small banks it's trickier because they have a max exposure per industry they will lend to so that they mitigate exposures and diversify lending. However, in these times impacted industries are being looked at for existing card holders very closely. Typically in a good economy we don't review existing card holders or existing loan holders unless something drastically changes in their financial situation or their credit report. Just wanted to give my .02 on what is going on and why some accounts are closing when they have been long standing customers and kind of advising people on how to avoid this to the best of their ability. When you have so many loans on your books it is hard to sort through all of them in a day so they start with those under manual review for requests and if this continues they will review customers on a case by case basis that are in these impacted industries. 

and exactly if you spend your whole career in one industry regardless of recently changing jobs it is much easier to explain this. Banks view job changes as risks but you can easily explain it by saying I am in the same type of position and industry I just left for a larger salary, more responsibility or promotion or better benefits or hours. It is much harder when you completely change an industry! 

Message 6 of 19
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Moderator

Re: Advise to navigate these times from a credit analyst

Breaking up blocks of text would make it easier to read, just a thought Smiley Happy..  Thanks for the helpful information though!

Message 7 of 19
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Epic Contributor

Re: Advise to navigate these times from a credit analyst

Thanks for the read!

Message 8 of 19
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Community Leader
Super Contributor

Re: Advise to navigate these times from a credit analyst


@Jds142 wrote:

@Brian_Earl_Spilner @That is definitely correct. I mean as a lender myself we look at the industry and actually remove ourselves from lending to particular industries. They do use that info to make decisions but when the economy is good you can get a loan or card pretty much regardless of industry from a large bank. Now with small banks it's trickier because they have a max exposure per industry they will lend to so that they mitigate exposures and diversify lending. However, in these times impacted industries are being looked at for existing card holders very closely. Typically in a good economy we don't review existing card holders or existing loan holders unless something drastically changes in their financial situation or their credit report. Just wanted to give my .02 on what is going on and why some accounts are closing when they have been long standing customers and kind of advising people on how to avoid this to the best of their ability. When you have so many loans on your books it is hard to sort through all of them in a day so they start with those under manual review for requests and if this continues they will review customers on a case by case basis that are in these impacted industries. 

and exactly if you spend your whole career in one industry regardless of recently changing jobs it is much easier to explain this. Banks view job changes as risks but you can easily explain it by saying I am in the same type of position and industry I just left for a larger salary, more responsibility or promotion or better benefits or hours. It is much harder when you completely change an industry! 


Yup. While income, credit score, and reports are a huge factor in starting limits, increases, and decreases, most people don't realize there are smaller, just as important, factors in play. A person's industry or position could set a cap on what a lender is willing to extend because it may be a turbulent industry, or your position reported has a high likelihood of default or job loss. It may not be as simple as "my lender just doesn't like my profile."







Message 9 of 19
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Valued Contributor

Re: Advise to navigate these times from a credit analyst


@CreditCuriosity wrote:

Breaking up blocks of text would make it easier to read, just a thought Smiley Happy..  Thanks for the helpful information though!


^this bc honestly tl;dr.



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