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Yet another comeity shutdown!!

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Anonymous
Not applicable

Re: Yet another comeity shutdown!!

How high, exactly, would "high inquiries" be though?

Message 21 of 34
pipeguy
Senior Contributor

Re: Yet another comeity shutdown!!


@Anonymous wrote:

How high, exactly, would "high inquiries" be though?


That's Comenity's classic excuse. When they shut down my one and only account 20 months old perfect payment Total Rewards that's the excuse they used. Since then BoA approved me for $33k in CL and NFCU approved me for $23.5 SL among various other CLI's etc with zero AA other than the Comenity shut down. I have a lot of inquiries, but it does not seem to bother Chase, BoA or NFCU or a lot of my other lenders. 

Message 22 of 34
CreditInspired
Community Leader
Super Contributor

Re: Yet another comeity shutdown!!


@Discover2016 wrote:

Aaaand my ban of Comenity continues..



Just had to drop in to say -- what a beautiful looking Ruby Smiley Wink


|| AmX Cash Magnet $40.5K || NFCU CashRewards $30K || Discover IT $24.7K || Macys $24.2K || NFCU CLOC $15K || NFCU Platinum $15K || CitiCostco $12.7K || Chase FU $12.7K || Apple Card $7K || BOA CashRewards $6K
Message 23 of 34
Anonymous
Not applicable

Re: Yet another comeity shutdown!!

Seems the warning from 12/2015 initially warned about high EQ inquiry count.

http://ficoforums.myfico.com/t5/Credit-Cards/Commenity-Accounts-To-Be-FR-ed-in-2016/td-p/4353384
Message 24 of 34
pipeguy
Senior Contributor

Re: Yet another comeity shutdown!!


@Anonymous wrote:
Seems the warning from 12/2015 initially warned about high EQ inquiry count.

http://ficoforums.myfico.com/t5/Credit-Cards/Commenity-Accounts-To-Be-FR-ed-in-2016/td-p/4353384

Their loss not mine as I have a ton of good cards and certainly don't need any Comenity backed card.

Message 25 of 34
Anonymous
Not applicable

Re: Yet another comeity shutdown!!


@pipeguy wrote:

 

Their loss not mine as I have a ton of good cards and certainly don't need any Comenity backed card.


Probably true, lol.

 

They had some pretty ugly charge-off totals in 2015 and with the destruction of retail happening, I'm sure it hasn't gotten prettier.

 

If you didn't use your TLs and they're tight on deposit ratio, they're going to want to switch those TLs to those who use it and pay some interest.  On the other hand, if a person has a lot of INQs right now, their internal scoring probably is triggered because it matches up for whatever reason with those who CO'd accounts over the past 2 years.

 

I'm sure it's not a huge deal to most people -- they only got those TLs in order to help overall utilization and rarely spend on them.

Message 26 of 34
Anonymous
Not applicable

Re: Yet another comeity shutdown!!

I just experienced a Comenity shut down on two new cards. I thinned my Comenity cards last year keeping a few that I use and a couple I may. It seems Comenity is getting nervous so I may close a few more. There are a couple I will keep because I e the merchant and the rewards the card offers. But, if I will not be used by Christmas, it's gone with one or two exceptions. My thoughts on Comenity is this, if you'll use it fine. If not it's not worth the hassle unless you're starting a rebuild of your credit, but the be careful and don't count on having the card tomorrow. 

Message 27 of 34
Anonymous
Not applicable

Re: Yet another comeity shutdown!!


@Anonymous wrote:

I just experienced a Comenity shut down on two new cards.


Which two cards?

 

How many inqs do you have showing on your reports and how's your overall utilization?

Message 28 of 34
Anonymous
Not applicable

Re: Yet another comeity shutdown!!

Here's the thing (and I was reminded of this the other day when I opined too broadly on account closures in another thread Smiley Tongue ): When accounts are closed seemingly out of the blue, there's always something else going on that you don't necessarily know about, or think of off the top of your head. It's not even often anything that's necessarily your fault, because in a lot of instances you can be carrying on with your cards in the same way you always have but something has changed on the issuer side. A lot of times it's because the issuer is changing or tightening up their policies in some way because of information that they have, not necessarily related to you personally but more likely to the overall market, that you don't have, and the unfortunate account holder - you - gets smacked as a result.

 

Now, we're seeing a couple of things going on here, as you'll notice from reading up on the articles linked in Credit in the News. First, there's a big wave of closure and consolidation going on in the brick-and-mortar retail market, which forms a crucial part of Comenity's business. Simply and somewhat crudely put, there's more physical retail capacity available than the market can handle, coupled with the fact that a number of retail companies have made errors of judgment that are now coming back to bite them in the rear end and in some cases causing them to shut down completely (e.g., HHGregg, Sears). This isn't helped by the fact that the thousand-pound gorilla of online retail, Amazon, is fixing to enter the B&M retail market in a big way over the next few years.

 

Second, there's (another) wave of defaults, as well as accountholders not quite defaulting but getting into significant debt trouble, going on in the consumer-credit market. This is hitting especially, but not by any means exclusively, issuers that have a lot of their business with the not-spectacular-credit/rebuilding segment of the market, like Capital One, Synchrony...and Comenity. The percentage of defaults has gone up markedly, and issuers are retrenching and taking stricter and more conservative stands overall. As a result, people who are exposed in one way or another - especially, but not again exclusively, folks who have a LOT of cards, people who've been hitting the CLI buttons too enthusiastically, people who've opened cards (many with generous CL's) but not made any significant use of them, etc., etc., etc. (it can be something as minor - as we've seen in at least one case here recently! - as updating your income information too soon after opening a new account) - are now more liable to AA's from those issuers as said issuers take steps to reduce their risk.

 

In that connection, I say again that it's my hunch that Comenity will put an end to the famous (or infamous) Shopping Cart Trick in the not-too-distant future. From all the signs, it's slowly, or maybe not so slowly, becoming more trouble to them than it's worth to keep around.

Message 29 of 34
Anonymous
Not applicable

Re: Yet another comeity shutdown!!


@Anonymous wrote:

 

 

...folks who have a LOT of cards, people who've been hitting the CLI buttons too enthusiastically, people who've opened cards (many with generous CL's) but not made any significant use of them...


Yep, this is very true.  Every time you receive a CLI, the lending bank has to have a reserve of cash set aside to cover any future charges you make (even if you PIF, they still have to pay the vendor).  

 

On top of this, even a superprime bank like Amex has recently had charge-offs jump up to 1.7% of accounts, which is a significant number if you consider the category of borrowers that Amex aims for.

 

Synchrony and CapOne recently announced a major jump in charge-offs, so it wouldn't surprise me if Comenity has similar issues with tight reserve capital versus charge-offs.  Charge-offs have already been paid to the vendors, so tightening capital reserves means CLD or closing accounts of anyone who isn't a profitable customer.

 

All banks and lenders have a value for every customer -- some customers are huge profit points, some only cost the bank money.  Every new account costs the lender money (issuing new cards, issuing statements, reserving capital for future purchases, etc) -- but also every phone call a customer makes costs the bank money, etc. 

 

So if you're a red line on the bank's profit line, AA isn't a surprise eventually, especially in a tightening market.

Message 30 of 34
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