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Comment by jmclnx | Hacker News Reader

>Credit card lenders were happy to help, signing up customers who might not have qualified in the past based on income, but looked like safe debtors because their bank accounts were flush with cash

To me that is the biggest reason.

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I wonder to what extent credit card issuers factored-in pandemic related stimulus into their risk models. If they really considered cash on-hand as a replacement to verified income the stimulus payments would have completely invalidated their existing models.

Wasn't this sometimes a bug instead of a feature?

Loaning based on cash instead of income is how Brex and Ramp took on Amex.

(obligatory: "commercial != consumer")

That seems to defeat the narrative of "the consumers are struggling due to high interest rates". If they have the cash in their accounts, they shouldn't be the ones largely defaulting.

They had cash when they signed up, they don't anymore

I think the story is that the COVID stimulus checks meant that people who normally live paycheck to paycheck were for the first time showing a healthy bank balance which increased their credit score just enough to qualify. Once the checks stopped they stated defaulting.

Since when is bank balance considered in credit scores and checks?

Since forever? Part of the assets/debt ratio.

I'm gonna need a source on this one.

https://www.myfico.com/credit-education/whats-in-your-credit...

I have applied for many credit cards over the years and I have never once seen one that asked about assets, only income.

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