Tag Archive | “Spending lavishly through Credit Cards”

Financial Profiling: A New Technique Of Cutting Credit Limit

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Just think over that as you have been consulting with a consultant and paying his fee with your credit card or for example, if you use your credit card to pay to retread your tire, the bank may draw the conclusion that you are, or are about to be, in financial distress and consequently adjust or withdraw your credit limit. Think your application for a loan has been rejected because of your affiliation with property consultant or any mortgaging company. Again just think that your credit card provider decrease your credit limit just because you shop at the same place where people who have bad credit history come to shop as well.

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The Figure (Above) Gives Us An Insight Of Financial Profiling

You Are Welcome to Financial Profiling or Behavioral scoring.

Take an example A family used to do shopping using American express card regularly, they shop for around $5,000 in a month and usually paid the full amount back. You’ll be shocked to know that their credit limit lowered about 75% of the original credit limit. This is a live example of victims of financial profiling despite the fact that they didn’t make anything wrong. The bank indirectly impacts their credit rating by reducing the ratio of in-use to available credit.

Consumers also find no opportunity for recourse. Individuals are not given justification for the reduction of their credit limit and often report difficulties in contacting the bank to negotiate a resolution.

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December 2010
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