	Article Directory		Article Submission Service		Article Marketing Blog		Publishers		Member Log In

Article Directory :: Finance & Investment Articles

Will You be Paid to Close Your Account?

By John Rasor

Republish: EasyPublish™
Published: 01May2009
Word count: 456
Viewed: 222 time(s)

Get Free Content For Your Site

It's not news anymore: Credit card issuers are making an extreme effort to deal only with those consumers who pose the least risk while offering the greatest potential for earnings

That means that along with requiring higher credit scores to open a new account, they've backed off from issuing secured cards, they're lowering credit lines while raising interest rates, and they're closing unused accounts.

But American Express is taking it a step further - they're bribing customers to close their accounts.

Some American Express customers are being offered a $300 pre-paid credit card in exchange for paying off their balances between March 1 and April 30 - and agreeing to have the account closed.

This is a select group of consumers that American Express believes to be high risk. This is based on the customer's overall credit profile - and likely based on one of a number of secret scores that creditors keep on each of their customers.

All of these actions negatively affect a consumer's credit rating, so the practice is likely to snowball in coming months. As each card issuer either cancels a card or reduces the line of credit, the consumer's credit score is lowered. Then the next card issuer sees the lowered score and either cancels the account or reduces the credit limit. That lowers the score once again.

This could put consumers who once enjoyed good scores to find themselves fighting to keep a mediocre score, in spite of paying all of their bills on time.

One of the "secret scores" that some credit card issuers have begun using is based on how a consumer uses his or her credit card - and if there's been a change in the way they use it.

For instance, if a person previously charged clothing purchases at an expensive boutique and now makes those clothing purchases at Wal Mart, it becomes a warning flag that things aren't going so well in their financial life. A shift from charging $200 dinners to charging $200 at the grocery store is another signal that card issuers will use to put a consumer in a higher risk category.

We as consumers can hope that the credit bureaus will begin to take a look what's happening in the credit marketplace and adjust their scoring system accordingly. But that's not apt to happen soon, since a new credit scoring system has just been introduced.

The only thing consumers can do at this point is to be aware of how the credit card issuers are judging us, and try to avoid activities that will cause them to put us in the "high risk" category. That includes paying all accounts on time, paying more than the minimum required, and avoiding charges that signal a shift in circumstances.

http://www.creditscorecowboy.com is the #1 source on the planet for a free credit report, identity theft software and a blog with a wealth of information writtten by lending professionals that know about credit and what determines ones creditworthiness.

EasyPublish™ this article - publishers click here