In what seems like the most obvious move to occur during economic hardship, creditors have begun to tighten and monitor their current customers- adjusting credit lines as needed.
This morning jobs numbers were updated and we found out that another 4.4 million people filed for unemployment last week, bringing the five-week grand total to 26.5 million people! These numbers make the great depression look soft!
I spent most of 2019 in my daily emails urging people to make a plan, which included to have revolving credit there in case you needed for times like right now! Most people as you could imagine did not listen!
When it comes to credit scores, people either treat it like garbage aka free money as they mindless spin the wheel aka submit applications hoping to win big or they treat it like some sort of weird trophy that shouldn’t be touched as if that is the only accomplishment you will ever get.
The reality is, if you were paying attention then you would be sitting in a much better position right now then 99% of other people!
Remember at any point a lender can call in a loan, this can be a credit card all the way to a mortgage (even though right now they can’t do that with emergency rules in effect), so nothing is guaranteed- lets not pretend like it is. They can also reduce credit limits at any point which may negatively impact your credit score if your utilization is too high!
Bloomberg reported just this am that …
Discover Financial Services just became the largest lender yet to acknowledge it’s begun reining in lines of credit. In a regulatory filing late Wednesday, the firm said it’s also easing off efforts to sign up new customers and that it expects to take a hit from programs letting existing borrowers skip payments or delay the accrual of interest.
The announcement came a day after Synchrony Financial, the company behind cards for J.C. Penney Co., Gap Inc. and American Eagle Outfitters Inc., said it will try to stem losses by closely managing customers’ accounts. In a conference call with analysts Tuesday, Chief Financial Officer Brian Wenzel said the firm is using its own vast trove of data, as well as information from credit bureaus, to “dynamically reevaluate a customer’s creditworthiness.” That means some may be allowed to spend more, but others less.
Keep in mind that Synchrony backs somewhere around 116 store cards and in times like this I don’t think that people’s primary concern will be paying off their $500 American Eagle store card.
Discover reports that they have enrolled almost a half-million accounts, representing $3.6 billion in balances into its “skip-a-payment” programs. Discover made this statement…
“As the number of loans enrolled in these programs increases, our financial results will be adversely impacted in the short term due to forgone interest”