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Possible reason for Cap 1 CLD

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New Contributor

Possible reason for Cap 1 CLD

From Bloomberg

 

Surprise Surge in Card Defaults Sinks Capital One, Discover

 

Capital One’s provisions for losses in the credit-card unit, the firm’s biggest business, jumped 29 percent to $1.7 billion in the first quarter from the preceding three-month period, the McLean, Virginia-based company said Tuesday in a statement. The write-off rate rose to 5.02 percent, the highest in almost six years.

 

 

So I guess it isn't surprising that they cut some large lines that were not being used. They have to make adjustments when necessary. Also not a good sign for the economy if the trend continues. Definitly a good idea to plan out your credit exposure and have a plan for a downturn in the economy and tightening of credit.

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Moderator

Re: Possible reason for Cap 1 CLD

I saw this as well and a possible reason.. Doesn't explain really why some have been hit by the CLD and some haven't as some of those not hit have very high CL's with fairly small usage along with not perfect credit profiles.  Whether there is more rounds coming, it is anyone guess, I hope not.  I look as it I shed 35k in credit when I closed my card out after then CLD me to open it up for bigger and better lendersSmiley Happy.. I use to think they were rock solid, but obviously this isn't the case and if a company is having huge losses from defaults then they are certainly going to re-evaluate their UW/portfolio and make adjustments to limit their risks.

 

Their more lenient lending practices and limits can be coming back to byte them as people possibly got over their heads or whatever the case might of been causing higher write-off rates.

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Super Contributor

Re: Possible reason for Cap 1 CLD

This whole Credit game isn't supposed to have rhyme or reason to it. 🙂
EX FICO  16 INQ  791
EQ FICO  10 INQ  786
TU FICO  12 INQ  790
Total CL$477,00038 TL
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Senior Contributor

Re: Possible reason for Cap 1 CLD

Thanks for the information.
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Moderator Emeritus

Re: Possible reason for Cap 1 CLD


@Nixon wrote:
This whole Credit game isn't supposed to have rhyme or reason to it. 🙂

Lies!

 

Er, wait a second...

 

Smiley Happy




        
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Valued Contributor

Re: Possible reason for Cap 1 CLD

This corroborates the other article posted this week about increasing default rates worrying credit-card lenders. I wonder if the days of easy-as-pushing-the-button CLI's may not be coming to an end fairly soon. Also, the reason that Cap 1 is hitting some people with very high CL's/low util/less-than-perfect history and not others is almost surely due to their own internal algorithms and policies - they probably have a whole manual set up that they're not going to divulge to the outside public on who gets AA'ed and who doesn't in those circumstances.

 

 

Ch 7 BK discharged 11/28/14, credit rebuild well advanced. FICO:TU 680 FICO 8 (3/2/19) or 687 FICO 9/EX 694 FICO 8/EQ 685 FICO 8 or 674 FICO 9 (NFCU 3/3/19), VS 3.0 10/17/18: TU 702/EX 699/EQ 698. $92.9k revolving credit as of 1/31/19; $1K NFCU cashRewards Visa, $2K BJ's Perks MC, $5.1k Discover It #1, $6.5k Discover It #2 (new 3/12/18), $3.5k Petal Visa, $6k Paypal 2% CB MC, $6k Amazon Prime Store Card, $6k Walmart Store Card, $7k Apple FCU Platinum Visa, $7k Penfed Power Cash Rewards Visa, $11.8k Overstock Store Card, $15K Care Credit, $16K Cap One QS Rewards Visa Signature, $10k PenFed used car loan, $5k Navient student loan, $12.7k Lending Club loan. Gardening: 3 months, 19 days as of 1/31/19. 24 HP inqs total as of 10/12/18: 10 TU, 9 EQ, 5 EX (about half over 1 year old).
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Senior Contributor

Re: Possible reason for Cap 1 CLD


@CreditCuriousity wrote:

I saw this as well and a possible reason.. Doesn't explain really why some have been hit by the CLD and some haven't as some of those not hit have very high CL's with fairly small usage along with not perfect credit profiles.  Whether there is more rounds coming, it is anyone guess, I hope not.  I look as it I shed 35k in credit when I closed my card out after then CLD me to open it up for bigger and better lendersSmiley Happy.. I use to think they were rock solid, but obviously this isn't the case and if a company is having huge losses from defaults then they are certainly going to re-evaluate their UW/portfolio and make adjustments to limit their risks.

 

Their more lenient lending practices and limits can be coming back to byte them as people possibly got over their heads or whatever the case might of been causing higher write-off rates.


I think the default rate increase has an indirect impact on the recent wave of CLD. They can use the credit lines from CLD and reallocate them into new accounts lines without using additional resources.

 

 

American Express: Platinum Charge, Optima, Business Gold, Delta Business Platinum
Barclays: Arrival+ WEMC
Capital One: Savor WEMC, Venture VS
Chase: Freedom U VS, CSR VI
Citibank: AAdvantage Platinum WEMC
Elan/US Bank: Fidelity VS
Credit Union: Rewards Visa
FICO 08: (8.12.20) EX: 835 / EQ: 846 / TU: 834
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Super Contributor

Re: Possible reason for Cap 1 CLD

Interesting read. No cld from cap one. But Amex cut my lines. Hmm. Even gone for a while.
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Established Contributor

Re: Possible reason for Cap 1 CLD

Not much of a surprise. The last few years, with the economy recovering from the crisis and borrowers getting back on their feet and credit worthy again, credit card usage has surged. Issuers have been very aggressive in gaining market share and new accounts during this phase, fully knowing they will have some default issues. They know that a good chunk of these new accounts will be with them for ages. It's part of the cycle.
NFCU-Capital One-Chase-Discover-AMEX-Costco-Store cards
Total CL: 150k+
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