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Friday, February 06, 2009

In case you needed YET ANOTHER reason to avoid Wal-Mart
Posted by Jill | 7:34 PM
...especially if you have/use an American Express card. Because if you use your AmEx card at Wal-Mart, or at other businesses that your credit card company doesn't like, it can lower your credit score.

Yes, you heard me.


Shopping at Wal-Mart and other low-end businesses lowers your credit score:
In recent months, American Express has gone far beyond simply checking your credit score and making sure you pay on time. The company has been looking at home prices in your area, the type of mortgage lender you’re using and whether small-business card customers work in an industry under siege. It has also been looking at how you spend your money, searching for patterns or similarities to other customers who have trouble paying their bills.

In some instances, if it didn’t like what it was seeing, the company has cut customer credit lines. It laid out this logic in letters that infuriated many of the cardholders who received them. “Other customers who have used their card at establishments where you recently shopped,” one of those letters said, “have a poor repayment history with American Express.”

It sure sounded as if American Express had developed a blacklist of merchants patronized by troubled cardholders. But late this week, American Express told me that wasn’t the case. The company said it had also decided to stop using what it has called “spending patterns” as a criteria in its credit line reductions.

“The letters were wrong to imply we were looking at specific merchants,” said Susan Korchak, a company spokeswoman. The company uses hundreds of data points in making its decisions, she said, adding that the main factor in determining credit lines “has always been and still is the overall level of debt, relative to the card member’s financial resources.”

The company will still have plenty of other data to judge your creditworthiness, though. American Express executives have spoken candidly to investors and analysts about its deep dives into your data.


It no longer matters if you pay your bills on time, or if you are careful with your credit cards. If you don't use your cards, your score is lowered. If you use your cards, your score is lowered. If you pay in full, your score is lowered. If you cary a balance, your score is lowered. Oh, and by the way? Don't cancel too many cards that you don't use at once. That's a red flag too.

(h/t)

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