Posted by William Charles on April 13, 2015
Credit Cards

Published on April 13th, 2015 | by William Charles

26

American Express No Longer Backdating New Credit Cards

What Is Backdating?

One of the great things about American Express is that previously when they report the account opening date of a new credit card to consumer reporting agencies they report your member since date, rather than when the new credit card was actually opened (they actually report a bit of a hybrid, they use the year of your member since date and the month of when you applied for the card).

This means that if you’ve been a member of American Express (e.g had one of their credit cards) since 1990 and applied for a card this year, they would report the opening date of the new credit card as 1990. Giving it an extra 25 years of age. Age is important when it comes to credit scores, as one of the scoring criteria is average age of all accounts (which is a sub section of length of credit history – which accounts for 15% of your FICO score).

No Longer Backdating

A little over a week ago a user on the myFICO forums was told by American Express Credit Bureau Unit that as of March 21st, 2015 (this date is based on when American Express first reports your credit card and not when you were approved/received your card)  new credit card accounts would not be backdated and the actual approval date would be used. I’ve been reluctant to post anything, as customer service representatives often tell cardholders the wrong information.

 

That being said, I now have multiple reports from readers who’s cards have reported to the credit bureaus after this March 21st, 2015 date and they have all stated that their cards were not backdated to their original member since date. Other users at myFICO have also reported the same. I don’t have any recent applications with American Express, so I haven’t been able to confirm this personally but feel free to share your data points in the comments.

It’s important to remember that at the moment this change is only effecting new accounts that are opened, if your American Express card has already reported the old date then it will continue to do so. This also won’t affect the member since date which is shown on the front of your card, only the date reported to consumer reporting agencies.

There is always a possibility that this is a mistake and that the credit bureau unit has been giving out the wrong information to consumers, but I find that doesn’t seem to gel with the data points that I’ve seen. American Express declined to comment for this story.

Why Was This Change Made?

American Express being able to report the member since date rather than the actual account opening date is a bit of an abnormally and isn’t exactly accurate reporting. My understanding is that they were legally able to do this because they honored American’s letters of credit (traveller’s cheques and money orders) at the start of World War 1 in 1914 (don’t ask me how these two are related if anybody can provide more background that would be fantastic).

There are a number of theories on why American Express made this change (something to do with trying to keep Costco cardholders – which makes little to no sense to me).  The most likely reason is that they were either receiving pressure from regulators, consumer reporting agencies or even other financial institutions.

The value of the data found in credit reports is dependent on their accuracy (which is kind of scary given that one in five people’s reports could contain errors that cause them not to be extended credit), obviously American Express reporting a date other than the actual opening date isn’t accurate so you can see why companies would want this change made.

My Thoughts

This is a bit of a nuisance as opening a new American Express card was always an easy way to boost your average age of accounts for those that had a long history with American Express. That being said, here are two good reasons as to why you shouldn’t panic:

  • Length of credit history makes up only 15% of your FICO score. Average age of accounts only represents a minor portion of this 15% (more important is your oldest account)
  • It’s now only possible to get a bonus on each American Express personal card once. This means you really need to wait for the best sign up offer on each card before applying, which will drastically reduce the amount of American Express cards that you apply for annually.

This change won’t make a different to my American Express strategy, I’ll continue to wait for best in show offers on personal cards and aggressively churn business cards whenever a suitable bonus comes along. How will this change effect you?

Also please let us know your data points about backdating after this March 21st date in the comments below. P.S At this stage I don’t see any possible advantage of calling in to discuss this change, as this was never a publicly discussed benefit to American Express cards I doubt we’ll see an official announcement either.



26 Responses to American Express No Longer Backdating New Credit Cards

  1. Carl C says:

    Thanks for the update. I noticed a new account (amex hilton honors) opened the end of march had this happen.

  2. Robert says:

    Just a data point for you. I applied for the personal SPG card on March 10. Although the card was printed with “member since ’12,” they reported opening date of March 2015 the actual date to TU and EQ. The reporting date is April 7, 5 days ago. I’m feeling a bit upset to hear that they are stopping to backdating only because we’ve been so spoiled so far.

    • cav says:

      I noticed the same thing on my personal SPG opened March 8, 2015 – they did not backdate this account according to CreditKarma.

  3. Dov says:

    In addition to the 15% of the account age you need to count the impact for a brand new account showing on the report

  4. j says:

    Furthering Chenault’s death spiral…The board of directors had better fire his incompetent, crooked ass toute de suite before he fully takes down this formerly VERY valuable company when his chickens come home to roost in the next two years (not that the board ever took their legal fiduciary duty seriously…especially when the owners pay a fortune for insurance policies to cover the b.o.d.s/execs crimes).

    From the major strategy about-face of selling its corporate soul and identity and worth (‘unbanked’ incompetence-not a value judgment, just a fact when focusing on totally unprofitable business with a massive credit risk which they have to keep on their books, unlike the other crooked FIs… not that I don’t love my BB – :)) ) which is also a massive middle finger to the long-term incredibly profitable (yet foolish) customers, to one cc per lifetime, to losing costco (massive, massive incompetence which puts the overall viability under question–look at the true numbers both on and off the books), to this.. Two years. Mark my words. God help him/them when the equities market corrects by 2Q2017, noting the election time-frame.

    Btw, since its my 1st comment: thank you for phenomenal site, doc. /From phone, forgive typos

  5. j says:

    …not to mention the massive scalping their (formerly way inflated) interchange fees are going to get…

    Again, in no way ungrateful for my beloved birdie.. ;))))

  6. Claire says:

    Costco is my oldest Amex card. I had already realized that I would probably have to accept whatever other card they offered to replace it because of its age. But I don’t ever use it anymore except for membership.

  7. Anthony says:

    So if we currently have the Costco AMEX card and we convert it to another AMEX product when the Costco-AMEX partnership ends, will it still have the same account open date?

  8. Carlos says:

    I already tried to do a product change from my Cotsco card and I was told by Amex that this card is treated differently and a product change was not possible. I really hope they come up with a better option than closing/opening a new account.

  9. mommafrica says:

    How does this affect the Surpass that is offered w/ a soft pull on its website (the 50K offer) providing that you have a regular Hilton cc?

  10. This might be a YMMV situation. My recently acquired Amex Platinum was backdated to my oldest Amex card.

  11. DXS says:

    I applied for a replacement AMEX card because of the Costco thing. My new card WAS backdated to my original date.

  12. Opie says:

    If your oldest account is a $750 store charge card, does that count?

  13. Dan says:

    DoC, you might want to consider a post listing the various bank policies for backdating. Haven’t been able to find a good resource for that. Just an idea.

  14. Andy says:

    I have been an AmEx member since 86. My Costco AmEx also reported my member since as 1986. With the Costco/AmEx divorce, it closed my AmEx account. I opened up an AmEx account and it reported my join date as the date I applied (August 2016) and NOT 1986. This dropped my credit score almost 70 points.

  15. Joseph Doehicky says:

    I closed my AMEX Platinum card last year and opened a Blue Cash Preffered card. My account history length dropped from 25 years to 8 months, and it killed my credit score. This caused me to lose out on refinancing my home.

    My score did not rebound quickly, as the AMEX account was my oldest account. I’m done with AMEX. I’ll be closing my Blue Cash Preferred card, and I won’t be returning. The least they could have done would have been to warn us that this was happening. I only found out by my credit score dropping.

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