@RSX wrote:"I think the problem is that "normal" people don't have 6 sync cards in the first place to be shut down."
Sync went aggressive buying up other lenders over the last 5 years. I know 2 of the 4 I had were GE and Orchard before Sync took them over. So it isn't a case of someone voluntarily opening multiple cards with one lender
plus they are mostly store cards, so the 'normal' person wouldn't even know who the issuer is or care
as I said in my post from Feb - I wouldn't have closed all of them at once. But once they did it for me I am OK with it.
I will ensure I never apply for one of their cards again. And this will be easier given that I no longer want store cards anyway
Orchard was actually Capital One back in 2013 I think it was. I had one of their cards out of my initial 3 and went through that transition to Cap 1's deep subprime unsecured card.
@Anonymous wrote:
@Aim_High wrote:
@Anonymous wrote:The point is that the average person doesn't have 6 cards period, much less 6 with a single issuer...
I disagree that the point is how many cards someone has overall or with a single issuer. While many on My Fico do have more than the average number of accounts, remember that most reputable banks still have a buffer on what is tolerable and acceptable to their risk so that we can't just march into Chase or Bank of America or Wells Fargo and qualify for the levels of credit that Synchrony sometimes approves.
So the real point is ... who allowed (approved) someone to have six cards with a single issuer? Someone doesn't get six cards without getting approved by the bank's underwriting, or lack thereof. And who determined what credit limit someone qualified to hold? Did they? Or did the bank?
And as pointed out upthread, over a period of time some people may apply for cards with Old Navy, Ethan Allen, Chevron, and Lowe's ... four completely different and apparently unaffiliated business. Turns out, all four of those are Synchrony cards. You and I may know about this and know it is buried in the fine print, but it's often invisible to the average consumer. It's just another card to them until they all get shut down. (And don't say this only happens to us on My Fico; we're just the ones who are posting about this behavior, so do you really think it's not happening to average Joe Consumer on a lesser level?) So far in this thread, I haven't seen any evidence of anything that anyone did that was so catastrophic to risk that it merited shutting down huge amounts of their credit all at once. It was completely avoidable, from the way Synchrony approved the cards as well as they way they cancelled them.
I don't understand defense or justification of this behavior and when banks do this, they should have to answer for it. The problem is, they know they don't have to answer for it so they victimize consumers in the process due to their carelessness and irresponsible business model. Consumer protections and underwriting need to be strengthened.
The banks (or specifically Sync) make decisions at the time of application, and may decide, in the current economic climate and with this users history, I am happy given him/her 5 cards with a total CL of [lots]. Now if the user starts being late or shows signs of distress, most of us will understand the lender taking AA. But the same is true, in my mind, if the economic climate appears bleaker, now I am not so happy about all this potentially outstanding debt, even if the user hasn't yet shown any bad signs. I don't want to wait for that.
And, as an aside, we do see situations where security catches it a little late, and then we see posts "X approved me for 2 cards within 3 days, and then closed 1 (or both) before it even arrived" Which is certainly annoying but when people spree, what seems OK on day 1 might look risky once inqs and new accounts show up.
In other words, accounts and limits aren't given for ever. Consumers can drop and so can banks. I still believe that most normal people aren't impacted by this, which is why there hasn't been an outcry.
This is basically what I was going to say reading this thread, nicely put.
Ultimately people and lenders are prepping for a downturn, and if you're doing that as a lender you're reducing your exposure everywhere you can. Most consumers, even if they have more than the average credit cards, probably aren't hitting the CLI button like a weasel on crack such as we've done in the past here TBH.
Taking the OP's example, and seriously thank you for sharing your data points just using your case as an example: 7 tradelines, 86K exposure, not quite sure on use but just paying more than minimum may not be safe in this funky COVID time. Possibly underutilized tradelines, mortgage in the last two years which might not be affordable (data modeling) and credit card issuers get burned first and Synchrony is more cognizant of that than most.
Incidentally for comparison that's almost my identical Chase profile, but Chase has a large deposit base and could set aside something like $8B for additional reserves out of earnings last quarter. Knock on wood I haven't gotten slapped by them, I doubt I'd be one of the first ones if Chase does start paring back exposure, but never know... on the flipside Chase knows FAR more about me than Synchrony probably knows about anyone, and as such their risk analysis is going to be more comprehensive.
Anyway the fact it seems to be large exposure people that are getting whacked, just like Capital One went and whacked people above $30K I think it was a year or two ago, seems pretty consistent from what little I read, thank you @GApeachy for highlighting that.
@adelphi_sky wrote:Here is my problem with banks "prepping" for downturns. All of their "Prepping" should be done upfront. Banks have been around for centuries. They know the cycles. Build your risk profile to withstand guaranteed downturns during the good times. If your risk profile can withstand X amount of defaults, then don't offer more than X amount of credit. So when the downturn happens, you're not involved in nasty AA on GOOD customers as well as those who MAY pose a risk of default. Again, it is simply BAD risk management to go over your risk exposure in good times, then all of a sudden reverse course potentially harming consumers on the back end. ... these AAs should NOT be happening to customers in good-standing.
Exactly, and that was my point. The faulty underwriting means Synchrony incorrectly calculated their risk, which requires this HUGE whipsaw effect on the back end to correct it at the hint of a downturn. And consumers are left holding the bag with little to no recourse, because those "contractual terms" they had to agree to for the credit they needed were written by the lender's lawyers and aimed more at protecting the lender's interests than the consumer's.
I'm not suggesting that a regulatory crackdown be implemented such that it shuts out some consumers from getting credit altogether. The risk parameters need to be fine-tuned so that no single consumer quickly reaches a point of unacceptable risk with little to no warning.
