Credit Scores May Be Affected By Where The Card Holder Shops

Most American consumers are well aware of the importance of their credit scores. Credit scores have become one of the most closely guarded figures in a consumer’s life. Basically, credit scores determine the availability of credit to a consumer. Whenever a consumer wants to take out a loan or a mortgage or simply wants to apply for a credit card, their credit score can spell the difference between an approval and a denial.

Nowadays, credit card companies are getting very strict in their credit card application approvals. Good credit scores are now doubly important and consumers need to guard their scores from getting any lower. However, as credit card companies continue to weed out as many of the credit-risky card holders as possible, credit card holders are finding it more difficult to keep their credit scores at a good level.

Take for example the case of Kevin Johnson, an entrepreneur and an American Express customer. Last year, Johnson got back from his honeymoon to find that his credit limit had just been cut from around $10,000 to a measly $3,800. Needless to say, the credit cut was a shocker to the entrepreneur. Johnson claims to have made sure that his bills were paid on time and that he was always responsible in the use of his credit card. He therefore believed that his credit with American Express would always be above board.

Johnson decided to do some research regarding his predicament and was further shocked by one of the reasons he received as to why he got a credit cut. Johnson was told that: “Other customers who’ve used their card at establishments where you recently shopped have a poor repayment history with American Express”. It seems that credit card companies are now assessing the credit worthiness of a consumer based on the behavior of other consumers.

Credit card companies are looking for different ways to find and eliminate risky borrowers and they are looking at several factors. One such factor seems to be the way that consumers shop. Robert Manning, author of Credit Card Nation, explains, “Whether you’re shopping from a middle or upper tire retail store and suddenly it shows a purchase at a dollar store”. According to him, such a “downshifting” of purchasing patterns could raise alert flags among credit card issuers.

Regarding Kevin Johnson’s case, American Express has responded, saying: “We don’t look at and never have looked at where someone shops to look at a line reduction… the primary factor is someone’s overall debt level, and we also look at payment history with us, credit reports and FICO scores”.

Johnson is looking at his experience as a much needed wake up call to get more involved in the issues. Johnson, who is also running for public office, said, “No one should be penalized for the actions of others”.