Wamu incr fin rate based on FICO

[Anonymous]

I have a credit card account with Wamu.  When I opened it, it was 3.99% until paid.  They just increased my interest rate to 15.9% because of the TU fico score.  I thought I read somewhere here that creditors cannot increase your rate based on Fico scores.  Can someone help?  I have not been late and I have not charged anything for a year. 

[Anonymous]

Unfortunately, CCCs can raise your rates for any reason they want (as long as it's not a discriminatory reason).  A drop in one's FICO score is a very common reason for raising rates.

Sorry to hear this happened to you.  Have you figured out what caused the drop?

[Anonymous]

No, and actually I believe my TU score is the same as it was when I first opened my account with them.  I'll go back and check.  Thanks

[Anonymous]

They are flailing to increase any scrap of revenue they can.   I recently heard that some other company just pumped $7 Billion into Wamu to cover their substantial losses.

I am not surprised.   When I defaulted on an investment property I could no longer afford, I received a total of about 10-12 phone calls, all but 1 or 2 were the automated variety like "Please call Washington Mutual with an important message about your loan".

They can't even bother to have a live collector call the borrower..............

[RobertEG]

Before you activated the card, you were provided with a  CC Terms agreement that you accepted by using the card.  I would carefully read the terms of that agreement.  If the agreement specified 3.99% until paid, and no other terms of the agreement were violated, then it would appear that they would be in violation of contract.  I would be very interested in the wording in their CC Terms that would give them such an option.

[Anonymous]

Robert, those agreements virtually always include provisions for allowing the CCC to modify the terms at any time.  I've never seen one that doesn't include that escape clause.

[RobertEG]

Cheddar, I do not disagree with your wisdom.   I am going to dig back through each of my CC Agreements, and review their terms!  I would LOVE to read their loophole!

But when a CCC advertises "guaranteed rate of 3.99% until paid,"  I just ignorantly assumed that, as long as I did not default on payments, then it would prevail.  Their advertisements do not post, in either bold, regular, italic, or minute 6-point font, that I have read, such a nebular loophole that they can increase this rate based upon changes in credit score.  I have never read this.

If the fine print on page 932, line 853, of their agreement permits this, then they are within their legal right.  But, it is not posted in their advertising, which is the solicitation which leads to the "contract."

A contract, as a point of law, is a "meeting of the minds."  Obfuscation is not a meeting of the minds.

Good post, Cheddar.

It has opened up my pessimism, and taxed my bifocals!

Message Edited by RobertEG on 04-12-2008 12:38 AM

[RobertEG]

OK, I have scoured all of my Cardmember Agreements.

This is the legalize that I extract.  Late payments, or going overlimit, on their account, or ANY other account, even not their own, gives them grounds to modify terms.  I see that.

But, my mentors, I can not find a single statement that the CCC can change the contracted rate and terms initially established in their contract for reasons such as a change in FICO score, or balance in their account, or "any reason of their choosing."  That defies any concept of contract law.... that one side can unilaterally, for any reason of their choosing, change their revised terms of contract.  A contract is a mutual agreement, not a uniltateral choosing of one side or the other. It just dont cut fish.

Their advertisements are stronge and simple.   Guaranteed rate until xx/xx/xxxx.  

You feel strongly that it is “standard” CCC contract language that they have such a right to change the contract.  I don’t see this. Could you please cut and paste for me such a provision in any account agreement that you now hold?  I would love to see it in black and white.  It just is not legally right,...

I appreciate your tolerance of my ignorance, but this is a gigantic issue.  It almost relegates any “guaranteed” rate to the land of Oz for all of us trying to travel the yellow brick road.

Thanks!

Message Edited by RobertEG on 04-12-2008 01:31 AM

Message Edited by RobertEG on 04-12-2008 01:43 AM

[haulingthescoreup]

This is a known issue with CCC T&C, and provokes universal outrage. It's commented upon with regards to the House bill called the "Credit Card Holders' Bill of Rights."

I'm definitely not an attorney, but this does appear to be a fact. I'm guessing that it's part of the state laws in Delaware and South Dakota, where they also don't bother with usury laws, which is why card company headquarters are generally in these two states. (I know I'm speaking REALLY broadly here.)

Some CCC's, in response to pressure, have announced that they will not rate-jack based solely on FICO score changes or payment problems on other CCC accounts, but I don't think that WaMu is one of them. They're scrambling to pick up all the loose change that they can.

Just saw this sentence on a pre-approval form a different bank that came for one of my kids: "We reserve the right to change the APRs, fees, and other terms of the account at any time." This sentence appears 4 lines after the sentence that says, "Your introductory APR is fixed, meaning that the Introductory APR will not be changed during the introductory period." So much for "fixed."

I think that their loophole comes from the fact that this is revolving credit, and not installment credit, that has fixed payments over a set timeframe.

[Anonymous]

Okay, I just recieved my "welcome kit" from wamu. Here's what it says about default: We will not increase your aprs solely as a result of your being reported delinquent on an account with another creditor. However, each time you default on this or any washington mutual account because you fail to make at least the minimum payment by the payment due date, exceed your credit line, or make a payment to us that is not honored by your bank, we may increase the aprs on your account up to a maximum of the prime rate plus 21.74%. We will also consider your overall credit risk, as reflected by a variety of internal and external credit scoring models. These models consider your performance with wamu and other creditor.  Now I'm afraid to activate this card, do I really want this?