American Express Using Behavioral Analysis to Reduce Limits?

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Remember all the news about reduced credit limits? Well, here’s an interesting development… According to a recent report on Good Morning America:

A new policy being used by at least one major credit card company judges a shopper not necessarily by his credit purchases and payments alone, but also by the fiscal behavior of the fellow shoppers in the stores he visits.

They went on to tell the story of Kevin Johnson, an apparently responsible credit card user who pays his balance in full every month and sports a 760+ FICO score. Unfortunately for Mr. Johnson, American Express slashed the limit on his Amex Blue Rewards card by 65%, from $10,800 to $3,800.

Apparently Johnson was the victim of a new form of “behavioral analysis,” or “behavioral scoring,” in which credit issuers model risk based in part on the repayment behavior of other card users that shop at the same establishments that you do. In other words, you’re being judged not just on your own merits, but on those of your fellow shoppers.

According to Johnson, the only “abnormal” shopping trip that he had recently taken was a trip to a local Wal-Mart where he had never used the card. Could this have been the trigger? It’s hard to say, but it’s worth noting that Amex recently teamed up with Wal-Mart to offer a cash back bonus to repeat shopper.

Whatever the cause, this is an interesting development. Of course, the news on credit limits isn’t all bad, as Amex recently increased our credit limit.

Source: ABCNews.com via The Writer’s Coin

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Comments (scroll down to add your own):

  1. Don’t you guys get it?! The credit card companies are going from billions in profits to millions and their worried so they’re coming after anyone who might be getting over them in the least… they’re not going to lose without intervention from NEW LAWS..stay vigilant….they’re pulling out all the stops.. we need to find a way to stop- them. open for all suggestions

    Comment by karin tatela — Jan 31st 2009 @ 11:08 pm

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