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Got a question, hope someone can answer... American Express, Discover Card or Visa? Thanks in advance for any answer or 2. Another question on my mind: Just finished reviewing the latest revision of new creditlaws that came out last week. issuers will not be able to provide customers with performance based or automatic system cli's on accounts and they will not be able to do point of sale preapprovals (like when you open a DDA). new laws require issuers to "verify ability to pay" on any extension of credit. also because of the new debt to income guidlines there will be no more credit being approved based on soft hits... |
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Hmm... I need to find out myself. I don't know what is the answer. I'll do some poking around and get back to you if I got an anything. You should email the people at Discover Card as they probably could assist you..
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I know about some of those products you mentioned but, problem is they are not going to be giving those tools away for free to the issuers. issuers are already scrambiling to figure out how to compensate for the lack of revenue the new credit laws will create. a new expense for a new product prob wont come for a while...
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Creditors will figure out how to automate the approval process, just as they have before. Do you really think the banks are going to let a pesky thing like the law get in their way?..
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I hope you are mistaken.
Instant is the best way for many people. Also "IF" you kill instant like at places like BEST BUY.... Nobody. Will do that big screen TV purchase. (IMPULSE BUY). ...and how are you going to prove I can pay???. I'm sure not going to show you my checking account or savings account balance. This post has been edited by. GEORGE. : 22 January 2010 - 02:26 PM.. |
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But, these laws are completely changing how they generate profit. they dont even have a clear plan yet becuase the government is still making changes to these laws...
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Tell me about it..thats how big this is.. that opportunity will not be there because of these new laws. (at least untill they figure out away to adapt).
Well thats the kicker..law does not specify to verify income..just "the ability to pay".. |
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Sounds like time to forever sockdrawer my Cap1 card..
Cap1 is not accepting customer initiated CLI requests and. Now they cant automatically review for CLIs without a customer. Request and body cavity search.... |
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Where are you getting this from?.
The actual text of that section says:. "A card issuer may not open any Discover card account for any consumer under an open end consumer credit plan, or increase any credit limit applicable to such account, unless the card issuer considers the ability of the consumer to make the required payments under the terms of such account.€™". Considers the ability of the consumer to make the required payments under the terms of such account.... How is that any different than any type of lending that's happened in the past?. It doesn't specify how they must determine ability to repay, what is considered able to repay, etc.. Do you seriously think the automated underwriting that determines POS preapprovals and Auto-CLI's is devoid of any consideration of ability to make payments?.. |
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Do you honestly think banks wont twist this language to optimally suit themselves?.
Its moot anyway. Any liquid assets banks might have had were given out in bonuses,. While they use fantasyland valuated assets to secure their debts.. The point is, if banks had been doing this in the 1st place, the financial landscape. Would look remarkably different and then it was only in their long term best interests.. Now, they are STARVING for revenue, so they will make a faux stab at compliance. And I'll see all of you here 10 years from now when they explode again from repeating. The same stupid mistakes of the present... |
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INSTANT APPROVAL AT THE REGISTER IS WHERE TONS OF MONEY ARE MADE.
One more way to kill retail business to who's benefit???.. |
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Bonuses MUST be paid GEORGE or we'll lose "all the talent" that.
Drove the world economy off a cliff... Sheesh....C'mon GEORGE.. You're smarter than that..... |
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My point was that it's so incredibly vague to the point of being useless. There's no need to twist anything or find loopholes..
It's bureaucratic thinking at it's best. Let's have a round table to discuss how the financial crisis happened. Conclusion? Banks gave loans to people that couldn't repay them. How do we stop that? Write a law that says "banks shouldn't give loans without considering if they can be repaid". Without providing guidelines or requirements, what have you really accomplished?. It makes everyone feel better, makes voters think their Congress critters did something, but doesn't even attempt to solve the problem.. No bank is running around saying "let's make loans to people who can't pay for them!". Bank A may have a dreamy picture form an alternate reality than bank B but ask either bank and they'll say they thought the borrower had the ability to make the payments when they made the loan... |
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I dont think that is the right verbage..i am looking at the revisions given to issuers straight from the federal trade commission thursday of last week..
What I am telling you is issuers are required to confirm "ability to repay" on any extension of credit. yes this does affect pos preapprovals and auto-cli's..the "ability to repay" refers to income not payment behavior. the past strategy assumes that if a customer pays balance of every month then logic would say they have income and can handle an increase..issuers cannot do that any more. they now have strict debt to income guidlines to comply with and the "ability to pay"(not verifing income).. This post has been edited by. Honestjoe. : 22 January 2010 - 03:18 PM.. |
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+1.
Altho, I think the issue is deeper than that. I dont believe most of the defaulted loans were. Written by banks. They were written by underwriters, who then bundled and moved the. Debt elsewhere. They made their cut and could care less about the outcome.. These are great rules for banks, but shouldnt they apply to the Mortgage Factories as well?. Ps. I also agree that the language is so vague as to be meaningless.. Good point... This post has been edited by. Sonicanatidae. : 22 January 2010 - 03:15 PM.. |
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Oh another thing to consider..u will start seeing, if not all ready, an option to opt in to over limit fees.. if you do not opt in the issuer will not let you go over your limit and I think this will include pre authorizations...
Say you are staying at a hotel and you give the hotel your Discover card with 1k limit so they can do a hold of $500 to make sure you will pay when you leave. then you go out and buy abunch of stuff ($450)keeping in mind to keep some room for the room cost which you know will be way less than $500. when you go to check out the transaction will be declined bc you did not opt in to over limit fees becuase the issuer has to assume that the hold for $500 will be spent so you do not go over the limit... |
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+1.
You are buying something at Nordstrom. The cashier asks you if you would like to apply for their card to get $20 off today. You say yes. Their stats show that the average Nordstrom customer makes $93,000 per year. You are shopping at Nordstrom. Computer estimates you make $93,000 per year. Approved!.. |
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Partially, yes...
By using flawed models to make a sale. Then the consumer, who really didnt. Qualify for that "loan" defaults and *WE* get to pay for that.. Add that to the mortgage debacle and real problems start to arise... |
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Honestjoe, I don't get it. Fico is developing scoring tools for this very purpose. Of course they will charge issuers for them. But, as an issuer, I'm going to buy that product because not doing so would mean i'd either have to develop a system myself (certainly not free) or forego automated approvals systems (again, not free)..
No doubt the big issuers will create proprietary systems to reduce their reliance on the Fico product just like they all have proprietary scoring models now.. Your portryal, that issuers will just throw their hands up and say "Well, that was a fun ride" sounds naive to me.. This post has been edited by. Encoder. : 22 January 2010 - 05:06 PM.. |
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WE COULD GO BACK TO THE OLD DAYS WHERE THEY PULLED A PAPER REPORT FROM ONE OF THE BIG 3 AND LOOKED AT THE REPORT LINE BY LINE...ACCOUNT BY ACCOUNT...PAYMENT HISTORY BY PAYMENT HISTORY.
30ish DAYS LATER YOU GOT A DENIAL LETTER or A Discover card IN THE US MAIL.. |
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What's so bad about this? Do you feel embarrassed when your Discover card doesn't go through? I prefer this very much to an automatic fee when you go over limit..
And regarding the requirement for the creditor to make sure that you can repay your loan? They will find a way. It will either be something like the guessing model that the credit bureaus develop, or you might find one of those little paragraphs that you have to put your initials behind, like when you rent a car, where you swear you have such and such income or 10,000 dollars in a savings account. They might like the second model, because they can even sue you for fraud if you lie in the second case... |
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Don't expect this measure to be implemented nearly so cavalierly..
Yes, the guideline is vague. So retailers and other creditors will have a fair degree of latitude in implementing it and will go to moderate extremes in getting the outcome they desire.. But the bottom line is going to be that if you legitimately state your income is $50K, but for whatever reason the statistical models say that your patterns are consistent with $20K, expect that secondary income verification will now become necessary.. I don't expect such situations will become prevalent, but I predict we will here stories along those lines in the month to come. (At least with respect to greater requirement for verification ... retailers will be closed-lipped about what income their reports estimate.).. |
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Fico is already selling automated income scoring products to address this..
There's been several threads. I'd say these products are generally bad for consumers, but they would have the affect of facilitating both of the things you mentioned.. This post has been edited by. Encoder. : 22 January 2010 - 01:56 PM.. |
