Capital One Credit Discrimination by Zip Code

There have been ongoing rumors since credit became tough to get that some creditors (American Express in particular) have been rejecting new applications or reducing existing customer credit limits based on where the borrower lives. It was said American Express was doing so on the grounds that home prices and foreclosures were worse depending on your zip code. That’s a reason there are new AmericanExpressSucks and other protest websites appeaing on the internet.

Now we have first-hand evidence that credit discrimination based on where you live is in fact hapenning.

Here is a letter from CaptalOne (the big credit card firm) I now have in my hand dated April 5 2009 which say’s “Thanks for your recent request for auto financing. After reviewing your application we cannot grant your request for credit because of worsening economic conditions in your area, in addition to the year of your mortgage.”

So basically it means because the applicants geographic area has lots of foreclosures and his/her home may possibly have upside down home equity thay are not able to buy a new car!

It’s interesting to note the Capital One credit turn-down letter does not mention the normal credit rejection reasons such as past due accounts and negative credit issues. I think that’s a real shame and huge consumer letdown issue which can only make the economy worse (not better) due to reduced credit availability, combined with less retail sales as a direct result.

If this discriminatory credit “redlining” was done by home lenders or Realtors® involving real estate sales it’s believed doing so would be illegal and subject to presecution and fines so why is it legal to discriminate by credit card firms and auto lenders?

That kind of blatant credit discrimination and redlining needs to be complained about to the Federal Trade Commission in our opinion. You may file a consumer complaint at this FTC web site http://www.ftccomplaintassistant.gov

A good FICO Score is critical

Lenders use your FICO Score more than other factors when considering your home loan, credit cards or other loans and financing. That is why you should try to stay up-to-date on what your Fico score currently is and always be on he lookout for ways to improve your FICO score. There are good ways to make your fico score better. One of them is effective, simple and surprisingly easy to do, which will be discussed in an upcoming post.