The "Chase" and the "5/24" rule: An open discussion of credit discrimination

[JSS3]

LMAO!

I'm thoroughly entertained by this thread and love a healthy debate.

Continue.

[bldmt]

Been reading with great interest and I see OP's point to a certain degree. But, I then thought about other lenders who have different rules that I do not believe discriminate. The first one that comes to my mind would be NFCU, they have certain requirements (rules) related to only allowing retired veterans. and their families to become members and be eligible for their products. I was not happy about not being able to join after serving 7 1/2 years in the AF but, it is their rule and I went elsewhere for similar products. The Chase 5/24 rule is really no different.

[myjourney]

Very interseting topic, 

Discrimination? Hardly 

Just plain old everyday banking being updated in a ever changing global economy

Examples:

800 scores across all 3 CB's 

100k available credit 

12 HP's each CB

App with Cap1 

Denied for to much extended credit

Do they qualify ....yes score wise 

Is this discrimination no just a sound financial decision based on the person and criteria presented 

750 scores 

500k upside down mortgage bought before the crash at $0% down 

130k salary

2 auto loans balance 45k

Never missed a payment 

CC's with UTL of 43%

AAoA 8 years

App with Chase 

Denied for DTI

Do they qualify yes score wise

Is this discrimination no just a sound financial decision based on the person and criteria presented 

So because Chase sets a rule on their product it's considered discrimination against the consumer.... no wayyyyyyy

What makes this rule any different than any other bank?

Citi  isn't BK friendly would you consider that discrimination.....no but another financial decision based on the lenders criteria of who they lend to.

Amex a certain amount of time needs to pass before they accept someone with a BK and in some cases it must be gone from CR's completely

Citi, Amex, Chase all have the unspoken  (deniable) BLACKLIST would you also consider this discrimination as well because I qualify now and it shouldn't matter that I burned you before because my debts were all wiped clean.....certainly in no form or fashion discrimination 

[Darinox]

It is not about whether you think you qualify or not. It is about the law.. The law sets standards to lenders based on variety of factors from which having 5/24 is not included there (see § 1002.6  Rules concerning evaluation of applications)

[redpat]

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@Darinox wrote:

It is not about whether you think you qualify or not. It is about the law.. The law sets standards to lenders based on variety of factors from which having 5/24 is not included there (see § 1002.6  Rules concerning evaluation of applications)

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Dream on!

[Anonymous]

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@Darinox wrote:

It is not about whether you think you qualify or not. It is about the law.. The law sets standards to lenders based on variety of factors from which having 5/24 is not included there (see § 1002.6  Rules concerning evaluation of applications)

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You are misunderstanding what the law is then.  Because we don't see it that way... If credit is not about qualification, what is it about?  I think you are beginning to contradict yourself.

If it is the law, then everytime a lender denies someone credit, they will be breaking the law then.  Don't you think so?

[Anonymous]

Darinox,

You're wrong, and I'll make one more attempt to explain why and then I'm done. Again, in order for legal discrimination to occur, there has to be disparate impact on a delineated class of people. Here's an example from my own real life experience:

Back in my corporate lackey days I spent five years as Director of HR for a rather large Wendy's franchisee. We had 51 stores and 1500 employees. I handled quite a number of cases. One of those cases involved a female employee filing a discrimination complaint with the Washington State Human Rights Commission against one of our store managers claiming he was treating her badly. She was right, he treated her like garbage. We won the case anyway. Why? because he treated everybody like garbage. Female, male, Black, White, Hispanic. It didn't matter. The guy was a complete and utter jerk. Because he treated everybody the same - badly - there was no disparate impact.

Chase is treating everybody the same.

[StartingOver10]

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@Darinox wrote:

Qualify - Chase sets different practices which would otherwise make you ineligible i.e. not able to qualify.

Okay let me makes this simple:

Credit discrimination is based on a variety of factors out of protected classes:

Credit discrimination is illegal. Under the Equal Credit Opportunity Act, a creditor can't discriminate in any credit transaction, including mortgages, against any applicant because of these factors:

• Race
• Color
• Religion
• National origin
• Sex (gender)
• Marital status
• Age, unless the applicant is not legally able to enter into a contract
• Receipt of income from any public assistance program
• Exercising in good faith a right under the Consumer Credit Protection Act.

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.

One of the dependent clauses of the Consumer Credit Protection Act states:

• Refuse to extend credit, or use different standards in determining whether to extend credit

=5 accounts different standard from other lenders which is based on something that is not rational. Therefore illegal => therefore considered as discriminatory practice though the lender may not have intentionally done it to discriminate but instead might have resulted later on.

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^^^Statement in red contains errors:

1. First, it is not '=5 accounts' that is causing your issue, it is the addition of 5 accounts within 24 months which has been defined by Chase as their definition of 'active credit seeking' or alternatively 'agressive credit seeking'. In your specific case, you have added 12 new accounts over the last 9 months so you meet the definition that Chase is using to determine the difference between credit seeking and 'aggressive credit seeking'.  It is their definition of the level of risk they are willing to tolerate with a new account.
2. Each lender sets their own guidelines and yes, they must be consistent in the application of the guidelines to approve/disapprove credit for that particular lender.  This specifically does NOT mean that all lenders have to have the same guidelines.  Right now we know that Chase has set a 5/24 rule, but we don't know the parameters of BOA's or WF or other banks similar rules.  Are there similar rules? Yes, because we have seen others turned down for agressive credit seeking with other lenders. We just don't yet know how many new accounts over which period of time generate the turn down. 

The really interesting thing here is this:  you can change your cc profile by simply waiting (called "gardening" here) until your accounts age two years; continue to pay on time and then apply again.  It isn't as if this is a permanent ban.  It is a simple turn down based on your current credit profile.  We all, as consumers, have our own individual credit profiles that change with time.  

If you are suggesting that the CFPB says the entire lender marketplace has to have identical rules, which is what I gather from  your arguement, then that in itself is a false statement. From your own posts, the CFPB is saying that the individual lenders' rules have to be applied the same to every consumer that applies; not that every lender has to have the same rules. Read your post again: this phrase " Refuse to extend credit, or use different standards in determining whether to extend credit" applies to each individual lender as they apply the criteria to each application. Not that Chase/BOA/WF et al have all the same criteria.  

[myjourney]

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@Darinox wrote:

It is not about whether you think you qualify or not. It is about the law.. The law sets standards to lenders based on variety of factors from which having 5/24 is not included there (see § 1002.6  Rules concerning evaluation of applications)

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Based on your thinking and the way you're interpreting the law....

Everyone denied credit based on accounts written (Chase) or unwritten (all others) by law have been discriminating.....are you serious? Lol

Because you can't single Chase out because they put it in writing when they all do it...IMHO

Welcome to the forum by the way

[Anonymous]

Person A and B enter a Chase bank to apply for a CC:

Both have an 800 score.

Both have AAoA of 20 years.

Both have 0 baddies.

Both have 9% UTIL.

Both have 6 INQs.

Person A has 4/24

Person B has 5/24

Person A approved. Person B denied

I totally understand where you're coming from and this can seem somewhat discriminatory when you look at it quickly.

However, when you really come down to it, it's up to the banks to decide who qualifies and who doesn't.

Heck.. if Chase chose to create a 2/48 rule, they'd have the right to... even if it's ludicrous.