Banks to Share Deposit Records for Credit Card Approvals
A group of about 10 major banks, including Chase, Wells Fargo, and U.S. Bank, are planning to share information about customers’ deposit account records as an alternative underwriting method for credit cards.
The initiative is aimed at individuals who don’t have credit scores but who are financially responsible. These are customers who would usually be turned down when applying for credit cards. The banks would consider applicants’ account balances over time and their overdraft histories, according to people familiar with the matter, as reported by The Wall Street Journal. That would let bank tap into an estimated market of about 53 million customers.
JPMorgan Chase is slated to grant the first approvals under the pilot program as early as this year. The new program grew out of a working group formed by the Office of the Comptroller of the Currency (OCC) last summer. Banks are discussing using credit reporting bureaus such as Equifax, Experian and TransUnion and Early Warning Services as the conduits for this data-sharing.
If a customer applies for a credit card and banks find that they don’t have a credit score, then the bank-account data will be reviewed. Things like not having any returned checks or overdrawn accounts, for example, could improve someone’s chances of being approved for a new credit card. Customers who approved this way should expect lower credit limits than people with above average credit scores.