@kdm31091 wrote:
@NRB525 wrote:the existence of closed accounts is a non-issue, except on a detailed manual review, which likely only turns up when someone calls for recon.
You say that as if recon is an uncommon event! Anytime someone's app is pending, they are advised to recon. Almost every single time. With the possible exception of Chase.
It's reasonable to have a small number of closed accounts that didn't fit your spend pattern, etc. But having say, 10 accounts open and closed in less than a year just makes you look bad. No way around it other than to wait. Of course the accounts take ten years to totally fall off, but even just waiting a year or two should make the evidence sufficiently "old" that it won't carry as much weight.
This is why the answer whenever someone asks about a card shouldn't always be "go ahead and app!". (That's not directed at the poster I quoted, btw).
Anytime someone who visits myFICO or some of the other CC discussion boards 
In the real world, recon is unlikely. Of course, to your point, in the real world the chances of someone determining that they were going to open and close double digits of accounts in a year is unlikely, so maybe the two go together: The apper who closes commonly is also more likely to recon. Still, the underlying concern is the number of accounts opened in my mind, and less on the closure of those accounts.
@Open123 wrote:
@TheConductor wrote:
I do think that the well-documented 5/24 rule Chase has adopted makes it clear that at least one lender is specifically looking for patterns that indicate churning.
And I think we can agree on no further evidence than common sense that rapid account closures, especially when they cluster near the 90-day mark that is the cutoff for many spend requirements, are certainly a pattern that can indicate possible churning.
Right, say, we started a CC company and to gain market share offered sign-up bonuses. Becase we're small and have significant skin in the game (this is our life savings, not shareholders), we'll review not only each CRA, but analyze each credit report individually (not unlke JCB Murakai). By doing this, we can easily discern which files are churning, enaging in MS, or otherwise unprofitable or too high of a credit risk. Since we're small and less regulated, we can decline this group of "undesirables" with letter stipulating our specific reasons, and not rely on the "law of large numbers."
However, what if we run across a "churner" who does have, say, 5 accounts aged 25+ years; and, the person spends $500K PIF per year. In this case, we can make a business decision and decide, "ok, guy's a churner, but if we can win this business, we'll have the hope of winning a portion of that $500K." So, here, we'll approve the app even knowing the person is a churner, because there's a "hope" of future profitability. On the other hand, for a person spends only $15K per year and maximizes every penny on sign-up bonuses, we'll blacklist.
This is how a manual review should be conducted, but it's impractical and would be highly unprofitable for any large Issuer to conduct such a complete analysis.
I'm not convinced that lenders are specifically looking for MS or churning behavior, as there isn't a real way to discern that from one's credit reports. I would argue that they're more so looking to identify people who are habitual credit seekers, which could be an equally plausible explanation for Chase's rule, for example. The initial credit application seems like its purpose is to gauge risk of default; policies in place after acquiring the card, I'm guessing, would attempt to address the MS, bonus stuff.
