Shopping at Wal-Mart can hurt your credit?!?

  • bmw0

    Posts: 588

    Sep 28, 2009 2:22 PM GMT
    So i was just watching CNN and they ran a story about how American Express, Visa, Mastercard and others have been reducing credit limits and raising interest rates based on us changing where we shop!

    A lot of people aren't familiar with how credit works, but lower available balances can reduce your credit worthiness to other lenders. For example, if you have a credit limit of $5000 and a balance of $1000 (20% of available balance) your credit looks good, but if they suddenly drop your limit to $1500 (you are now at 66% of available balance) it makes you look like you are less responsible with your credit and other credit companies are less likely to give you financing. Experian, Equifax and Trans union will lower your credit score for this as well.

    Now i agree this is kind of strange but they have the right to do it legally. If they see you shopping at more discount stores (or if you regularly shop there and start buying less) it makes you a "higer risk of non payment" customer. So be careful about using your cards at dollar stores and wal-marts across the nation. it might just hurt you in the long run!
  • groundcombat

    Posts: 945

    Sep 28, 2009 2:37 PM GMT
    Well that's a little bizarre. I mean how dare you attempt to live within your means.
  • bmw0

    Posts: 588

    Sep 28, 2009 2:39 PM GMT
    groundcombat saidWell that's a little bizarre. I mean how dare you attempt to live within your means.


    I know, right?
  • Posted by a hidden member.
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    Sep 28, 2009 2:44 PM GMT
    It the usual non-sense from the type of financial whizzes that brought us the wall street collapse and financial ruin.
  • Sparkycat

    Posts: 1064

    Sep 28, 2009 2:46 PM GMT
    Srew 'em. I luv my dollar store.icon_biggrin.gif
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    Sep 28, 2009 2:49 PM GMT
    I read about the same thing a few months ago. Shopping at a discount store shows you are trying to be wise about your spending. It doesn't necessarily mean that you have no money. The article I read said that American Express was curtailing that practice. I guess they haven't if CNN just ran something about it.

    I have an Amex Blue card which I use for just about everything and pay off at the end of each month. Since I've been unemployed for a year now, I've shopped at more discount stores than usual and it hasn't lowered my credit limit. Since I don't plan to apply for a loan, mortgage or credit cards in the near future, I'm not too concerned if they lowered my limit.
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    Sep 28, 2009 4:59 PM GMT
    yeah the credit to debt ratio is bogus. I felt bad when everything started going down hill. all these people would come in with checks form like citifiancial or some other bank to consolidate their debt and want to close their accounts. I gave them more or less the same situation and told them it was a very BAD idea to close their accounts.

    Say you have 5 credit cards with $2K limit on each card meaning you have
    $10K of total credit extended to you.

    lets say you max out 2 of the cards (now you are 4K in debt) and close out 2 of the cards. you drop you total 10K down to only 6K total avalible credit but you are still 4K in debt from the other 2 cards you still have. Thus your credit to debt ratio being screwed... people end up screwing themeslves when they close out a credit card. I would dare them to prove me wrong and point them to Suze Orman's Book Woman & Money (since most of Express' clients actually are women). Got a lot of thanks for telling them that and well my other motive was to keep them an EXP card holder. And for new accounts espically students I told them to always pay their card off in full. Having family thats been in the financial sector for years helped me help them.
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    Sep 28, 2009 6:29 PM GMT
    I don't think this is typical practice. From all the previous credit card bullshit stories I've heard over the past few months, it seems American Express is the main culprit of shadiness. I heard another incident where a guy kinda let it slip that he got laid off while he was talking to an Amex rep. This resulted in his credit limit being slashed. And since he already had a balance, he was almost maxed out.

    Also, I just want to add that your credit score isn't just your credit/debt ratio. There's more to it. Credit reporting agencies also take "snapshots" of your credit/debt over time. They determine your ability to pay and how much debt you can handle. So if your credit card company lowered your limit, you might take a hit on your credit score, but temporarily. After a few months, your credit score will go back to where it was, or pretty close to it.
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    Sep 28, 2009 6:35 PM GMT
    My credit card is run by a visa subsidiary, they dropped my limit from 1500 to 900 while my balance was at 850... then charged me an overdraft because i went over before i got the notice... and now its lowered my credit score because my debt ratio looks too high since i have a bestbuy account i'm paying down too... piece of shit companies.
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    Sep 28, 2009 8:28 PM GMT
    I am just happy that come Feb. I will have all my credit cards paid off! Good riddance!
  • Posted by a hidden member.
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    Sep 28, 2009 8:38 PM GMT
    I use my debt card for everything! and limit my CC spending. My main focus now is retirement
  • HndsmKansan

    Posts: 16311

    Sep 28, 2009 8:39 PM GMT
    Gaymedes saidI am just happy that come Feb. I will have all my credit cards paid off! Good riddance!


    Well according to the story, it can affect your credit limits.... and that kind of activity could affect your credit score for future credit purposes. I find the report troubling for sure!
  • HndsmKansan

    Posts: 16311

    Sep 28, 2009 8:40 PM GMT
    Hillie saidI use my debt card for everything! and limit my CC spending. My main focus now is retirement



    Excellent, kudos to you!!

    icon_biggrin.gif
  • Posted by a hidden member.
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    Sep 28, 2009 8:44 PM GMT
    Shopping at Wal-Mart can hurt your credit?!?

    It's bad enough that shopping at Wal*Mart hurts your dignity. icon_razz.gif

    We very rarely shop there, except for the very few times they offer something we absolutely need, that no one else sells. Their HRC record was very poor, but improving a bit lately.

    Still, we have better choices like Target for inexpensive off-the-shelf small appliances and that sort of thing. And as for this specific issue of credit rating through monitoring card use, neither of us has used credit in many years, nor plan to.

    Meaning our credit rating is probably in the basement, and we couldn't care less, buying everything cash (or debit card), from our cars to socks. That's the best way to beat all these credit card companies -- don't use them.
  • jarhead5536

    Posts: 1348

    Sep 28, 2009 9:12 PM GMT
    Sparkycat saidSrew 'em. I luv my dollar store.icon_biggrin.gif


    If you have always shopped at discount stores, you will be fine. They are only doing this to people that used to shop at Nordstrom and Williams Sonoma that suddenly are switching to Walmart. As has been previously said, God forbid we try to economize during a recession or anything...
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    Sep 28, 2009 9:18 PM GMT
    They tried to slaughter my credit limits, i got them raised at every opportunity over the last few years(used my card to buy plane tickets for the rents and collect the miles) then the government passed a law limiting the limits on student finance products

    I declared it unacceptable and said I would take my business to another bank

    Read the fine print they couldn't lower it without my agreement provided I never gave them reason to which I hadn't. every time I step in the Bank they say this isn't right your limit is 3 times the maximum allowed

    last time they trotted out the branch manager to give me a big speech and get me to agree to it.....

    Not happening icon_twisted.gif

  • Posted by a hidden member.
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    Sep 28, 2009 9:47 PM GMT
    Hillie saidI use my debt card for everything! and limit my CC spending. My main focus now is retirement



    That's even worse. Granted its your cash and you dont have to pay any fees to anyone.... God forbid you should ever Overdraft or have any kind of problem with it. Bank fee much more of a bitch these days compared to back in the day. I had it great when my mom worked for a bank. then a bank from span bought them out, and 4 others and they got merged in to one... trust me if you should ever have or hear of this bank or consider it... RUN! it sucks.... you know it is BBVA Compass. HORREEEBLE! (Spelled messed up on purpose so you say horrible in spanish, hah)icon_razz.gif