Subprime and Prime identifing.

[Noah_Bodie]

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fused111 wrote:

What I meant was will these same companies be in the business of selling joint accounts with intention that their clients never actually receive the card and do not know the account#?  This way the company cannot get burned.

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Probably not without committing outright fraud.

Changing my wife from AU to joint on one of our CCs involves them sending a form for her to fill out and sign. I suspect the same will be true for almost any CCC. The form is gonna state, very prominently, probably several times, the name of the bank in no uncertain terms.

Once you know the CC is with Chase, and it's in your name, you got 'em. If someone sold you joint account holder status, but you didn't get the CC, you'd simply call Chase and say, "Hi, I lost my CC. I need to cancel it and get a new one issue. My name is. My SSN is. No I don't remember the CC #. I feel like a dummy. I just got the CC, and I already lost it. Can you believe what a klutz I am?"

The kindly person in Customer Service will get you a new CC in your name sent right out to you.

Only way I see for them to pull it off would be to have you sign something, and then they lift your signature.

Even if they did that, once it started reported to your CRAs, you'd see "Chase Bank" and at least a partial account number big as all outdoors. On TU you'd likely have the full account number.

[TheNewWorldMan]

I don't see any way FI could differentiate between prime and sub-prime in a way that wouldn't incite considerable public anger, and quite probably lawsuits.

One back door FI could use would be to increase the impact credit limits have on FICO scores...i.e., make it so low credit limit accounts don't help as much as high-limit accounts. Since most low-limit accounts are subprime, that would achieve the desired effect without explicit labels being attached to other firms' goods that could constitute disparagement.

[Noah_Bodie]

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ilovepizza wrote:
So maybe in the future
Prime loans 6% and lower.
Medium loans 6-8%
Low loans 8-10%
Subprime loans 10-18%
Sub Subprime loans 18-32%

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Driving FICO scoring off the APR would never work. The banks would have an easy claim that CC APR is controlled by a number of factors. Two biggies are state laws that cap APRs and the myriad of market forces behind CC APRs. Fed Prime, WSJ Prime, LIBOR, et al.

Today, a 14% mortgage would probably be considered predatory. 22 years ago, 14% would probably be considered über-prime. The market drives these things up and down.

Because of state caps, two people living in two different states but otherwise identical credit history would pull a different FICO score because of the CC APR. FI would get crucified by 50 state AGs, along with a myriad of consumer groups, and a multi-trillion dollar banking industry.