US banks to begin issuing credit cards to “responsible” adult with no credit

[gdale6]

A US regulator has asked major banks to think up ways of making loans to people who don’t have credit scores but who are financially responsible.

JPMorgan, Wells Fargo, US Bancorp, and others are considering a pilot programme designed to help people who have traditionally lacked opportunities to borrow.

https://www.retailbankerinternational.com/news/us-banks-to-begin-issuing-credit-cards-to-responsible...

[Anonymous]

Personally I think this is good news. Lived out of pocket for years with only 1 credit card and that 1 would not generate score because of account in dispute remarks (new card issued because of stolen number). Had non reporting mortgage and no other personal debt. My business had\has good credit but there I was on personal side with no score for over 3 years. Really wasn't a problem for me, just thought I was penalized for doing the right things or what use to be considered the right way. 

It's a different world now. Use to be you needed to have relationship with a banker, now it's mostly automated an score driven.

[Revelate]

What I heard on the radio not 30 min ago that one way they were going to go about this was to share more data between FIs.

There weren't hard details as it was couched in generalities but I am not sure how that is going to play out privacy wise for people that aren't underbanked.  

I was fine with the scraping of social media, bought ticket take ride... but data on me being shared between FI's,  no.  This is something that if it comes to pass may well get me to leave Chase if my own data is being shared and I do not want nor need that. 

[Anonymous]

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@Revelate wrote:

What I heard on the radio not 30 min ago that one way they were going to go about this was to share more data between FIs.

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That's exactly what it is, @Revelate .

WSJ (original source for the other articles):

"Some of the largest U.S. banks plan to start sharing data on customers’ deposit accounts as part of a government-backed initiative to extend credit to people who have traditionally lacked opportunities to borrow.

JPMorgan Chase & Co., Wells Fargo & Co., U.S. Bancorp and others will factor in information from applicants’ checking or savings accounts at other financial institutions to increase their chances of being approved for credit cards, according to people familiar with the matter. The pilot program is expected to launch this year."

CNBC: "The program is said to involve widespread collaboration between the different banks so that one can tap the other for any prospective customer’s bank account activity when deciding whether to approve them for a credit card."

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I've been reading more and more over the past 2 years about this 'Cash Flow Analysis' trend in credit risk management. Lots of fintech startups are out there touting the benefits of being sort of 'anti-FICO' and using this method alone.

[simplynoir]

Short version on my thoughts on this: **bleep** that and *bleep** better be optional aka not ever

[sarge12]

I hope they give us the opportunity to opt-out of this data sharing between FI's. From all I have seen in life, data sharing seldom benefits the consumer. I think there has been enough erosion of privacy already. I might would be tempted to get off the grid, but I am not even sure there is anywhere left to be off the grid on this planet. What is next? Hidden cameras in our homes? As I have often said, I will never voluntarily do a 4506-T to get a credit card, and I will never voluntarily allow sharing my savings account data either. Does anybody know if there is an opt-out option for this intrusion?

[Anonymous]

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@sarge12 wrote:

I hope they give us the opportunity to opt-out of this data sharing between FI's.

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This seems like an opt-in thing for people without a credit score.

Although if these large banks find out a few years from now that cash flow analysis is a better predictor of default than traditional credit scores, they might just try to make it the new standard. They're going to need at least a few years of profile data to make that determination.

[Slabenstein]

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@Anonymous wrote:

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@sarge12 wrote:

I hope they give us the opportunity to opt-out of this data sharing between FI's.

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This seems like an opt-in thing for people without a credit score.

Although if these large banks find out a few years from now that cash flow analysis is a better predictor of default than traditional credit scores, they might just try to make it the new standard. They're going to need at least a few years of profile data to make that determination.

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[Revelate]

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@Anonymous wrote:

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@sarge12 wrote:

I hope they give us the opportunity to opt-out of this data sharing between FI's.

---

This seems like an opt-in thing for people without a credit score.

Although if these large banks find out a few years from now that cash flow analysis is a better predictor of default than traditional credit scores, they might just try to make it the new standard. They're going to need at least a few years of profile data to make that determination.

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I so rarely disagree with you my incredibly smart friend but they already have the data.

FI's have their historical customer data, and any time they are looking at a new algorithm especially an internal one (which these will be) they will just run the algorithm through their historical data back some number of years and compare the predicted results of the new algorithm with the actual performance of the accounts over the same time period.

I hope there is an opt out.  I am going to have to go talk to Chase anyway now that I am in NC and I will give my customer feedback, but if there isn't a way as stated above I may pick up my financial ball and go elsewhere at least for all that seems a bit short-sighted as Chase has done well for me for the last decade.

[Anonymous]

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@Revelate wrote:

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FI's have their historical customer data, and any time they are looking at a new algorithm especially an internal one (which these will be) they will just run the algorithm through their historical data back some number of years and compare the predicted results of the new algorithm with the actual performance of the accounts over the same time period.

Yes, each one has their own data silo, but have they ever pooled it with other banks and analyzed that entire combined set, like EQ/TU/EX did with Vanatage Score?

The implications of that sort of data sharing and analysis have to keep some people at FICO up at night.