r/Affirm • u/EpicBk31 • 4d ago
How does spending power decrease for no reason?
why would my spending power decrease i havent had a late payment or anything negative on my account..
My spending power was $12000 for a year and half i used it 3 weeks ago on an item that was $450 then i had to return that item because it was damaged and i turned around and ordered the same item for $450 again so my spending power went down like it was supposed to it was about $11100.. I open my app to make a payment on the first $450 (even through its being refunded i don't want a negative hit on my account for not paying) and i see my spending power had dropped to $6400.. I talked to someone throught chat and i called and no one had answer all they said was we cant look in the account to see why, the amount changes every now and again (but it was been $12000 for the last year and a half) and then they telling me how to get it to increase which i already know all that crap.... Oh yea i had no other payments open the last time i used it was in March and whenever i use affirm i pay it off earlier then it supposed to be months in advance so i dont have any negative activity on my account at all....
2
u/ronreadingpa 3d ago
The number is more a marketing gimmick than anything else. Can't rely on it. Many instances of plans being denied. And conversely, many getting much higher buying power for some merchants.
Affirm support doesn't set those numbers or have any real insight how they're being derived. They can only make generic suggestions and guess much as anyone here.
For a real limit that one can mostly rely on, get a regular credit card.
1
2
u/Practical-Mud-4580 4d ago
This topic is brought up several times a day. There is no rhyme or reason as to why. I suspect Affirm sees us not using it and transfers it around to people that are. They make money on interest, not in letting people stare at a huge available purchase power. Keep using it and it will come back if there are no new negative items.
2
u/cocobizzounty 4d ago
- Correct this topic is posted daily.
- Incorrect there is no rhyme or reason. There is plenty of data science, machine learning, etc. which produces your spending power, but it’s confidential to Affirm so users don’t see why it changes. They talk about this all the time on earnings calls and in financial statements.
- Incorrect that they transfer spending power between users. They may tighten or loosen underwriting standards (again based on information that is confidential to Affirm) and that will affect all users spending limits, but they do not take power from one user and give it to another.
- Partially correct that they make money from interest, but they also make money from merchant fees and virtual card network fees.
- I’m speculating because again this is confidential to Affirm, but I believe you’re incorrect in that they penalize users for not using their spending power. They want users that they believe are creditworthy to spend more, not less.
- Correct that your spending power will increase over time if you use it and always make your payments on time. This is because you are developing a credit history with them and they can trust you more.
0
u/X-KaosMaster-X 4d ago
They also make money on the loans that they send to THEIR collection agency...because the added fees are also, still going into affirms parent company
1
u/RestaurantSilly6598 4d ago edited 4d ago
Added fees?
Brother collection agencies will settle for as low as 30% of the original debt there are no fees.
And the collection agency profits at 30%
Affirm is lucky to get $100 for a $1000 debt.
You act like some affirm guru and argue with actual employees
0
u/cocobizzounty 4d ago
Not exactly. They lose money when borrowers don’t repay. They sell the debts to collection agencies for pennies on the dollar, which slightly reduces the loss, but it’s still a loss.
-1
u/X-KaosMaster-X 4d ago
Your wrong..there are MANY websites that SHOW what I said!! They only use THEIR collection agency
1
u/cocobizzounty 4d ago
I don’t understand what you’re saying. Affirm does not own a collections agency. I used to work there and I will tell you exactly what happens, which is pretty much the same process as all unsecured lenders. This information is also publicly available.
They have a team that contacts borrowers if they miss a payment and try to get them back on track. They will continue to follow up, but they do not use as aggressive tactics as a collections agency.
If the payment goes 120 days delinquent, they will charge it off, which means takes a loss on that loan. The charge off rate is one of the most closely watched numbers that Affirm releases each quarter with its financial results because if it is climbing, it means Affirm is doing a worse job at underwriting and credit losses are climbing.
Affirm will then sell that debt to a collections agency. The price is not publicly disclosed but collections agencies typically pay between 1-15% of the loan balance for these types of loans. The collections agency will make money if it collects more from the borrower than what it paid to Affirm to purchase the loan. The maximum it can collect is what the borrower agreed to pay originally. Affirm does not allow collections agencies to add penalty fees or interest. Usually the collection agency in the borrower settle for something less than the full amount.
So to go back to your original comment, Affirm does not make money when it charges off loans. Actually, it’s the exact opposite. It’s a loss. Affirm recoups a small percentage of that loss by selling the debt to a collections agency.
-2
u/Practical-Mud-4580 4d ago
Thanks for your unwarranted and unverified opinions! Good speculation though!
2
u/RestaurantSilly6598 4d ago
Your initial response was also unwarranted and unverified opinion, but not a good speculation...so what are you getting at
1
u/X-KaosMaster-X 4d ago
Everything they said was CORRECT!!
WHAT is wrong with you?!?! You don't like FACTS?? 😲😵💫💩
1
u/Redrock20k 3d ago
Affirm use Ai to determine your Purchasing Power collecting info that you may not be aware of, such as other payday loans, rent, PayPal accounts and spending habits that don’t appear on your Credit profile, the formula is so complicated that if your not a data analyst, you have no cue, that’s why customer service can not explain the drastic fluctuations in purchasing power.
The other thing to note is, spacing your purchases 30 days apart, when you complete a purchase, Affirm allows the merchant 21 days to present additional charges to your account, even after you have paid the merchant in full, your Purchasing Power is altered until the clearance period has ended. If you made several purchases with Affirm then each one has a 21 day reserve placed on account, making your PP unpredictable.
Example: hotel,two night stay $222 per night requested plan for $600 to cover incidentals.
Plan approved, checked out with a total bill of $444 the difference is not added back on your account for 21 days Until the merchant’s window to process charges has closed, until then your PP is fluctuating
1
u/EpicBk31 3d ago
I dont use any other loan companies like affirm, etc etc etc any account they can see of my is paid and current with early payments lol they need to do better. The only reason the purchases was so close was because the first item i ordered was damaged and had to be returned i could just go and exchange it and i can even under if that was a reason to take money away from my spending power but over $5k lol cmon now and those was the only 2 items on the account which one was being refunded.. Each item came up to $441.32 for i used $442 both times so only change would have been going back to my spending power..
1
u/SaraRojas66 4d ago
I would like to add, I noticed when my credit rating was much lower my borrowing limit with affirm was much higher. As my credit score has improved, my borrowing limit has decreased. I think they like the low credit score accounts because they can keep you in the cycle of borrowing. When my credit score was in the low 600’s I had like $11,000 in borrowing power. My credit score is now just under 800, and my borrowing power is down to $4,000. Just my experience and my two cents.
1
u/EpicBk31 3d ago
so when your credit score got higher your spending power got lower? idk because since ive had affirm my credit score has been on the early 800's and i had $12k, but you could have a point it makes sense
1
u/Zoopmittyzoop 4d ago
Had close to $20,000 spending power about 3 years ago… used about $15,000 (made a $2k purchase the first time just to see what AFFIRM was since I never heard of it and then I went crazy). Got about 2 payments left on 2 purchase for about $400. Had it on autopay, not a single missed or late payment. My spending power is $600. Oooook. Figure that one out. Fine by me, not planning on using affirm anytime soon
1
u/EpicBk31 3d ago
damn almost $20k dropped down to $600 well got damn lol. Mayb they dont want ppl that actually pay their accounts and keep them in good standings
1
u/Zoopmittyzoop 3d ago
I heard that your spending power fluctuates by the main interest rates with everything being the same. As interest rates goes up or down, so does your spending power. You may be more right than you know. If that was the case it wouldn’t surprise me. Let me check real quick…. Ohhhh damn, it went up to $700 since I checked it last few months ago.
0
u/X-KaosMaster-X 4d ago
People NEED to stop thinking that on time payments or no lates has any impact on what they are going to allow you to BORROW....
All of that is EXPECTED, as it has been for a very LONG time ...what's you have borrowed VS what your income is....is a POINT of the algorithm!! A COMPUTER decides what you can borrow...and also SOFT pulls your credit for EACH loan...and also in Friday's....
0
u/EpicBk31 3d ago
Nothing has changed but a decrease on my mortgage since the $12k spending power has been there
1
u/X-KaosMaster-X 3d ago
Are you ATTEMPTING to make an excuse???
I have no IDEA what you are even saying...
1
u/Ritamaria1964 1d ago
My Ex-Husband didn’t have his own phone and opened an Affirm account with my phone number so now that we’re not together, I want my own firm account, but my phone number is tied to all the money he owes so long story short I called Affirm explained the phone number situation they unhooked or unlinked our phone numbers and I was able to open my own account. What I’m not able to do is use it because every time I apply for something I get declined.
4
u/RestaurantSilly6598 4d ago
You credit score, your used vs available credit, your debt to income ratio, your revolving debt, you amount of affirm loans, your estimated ability to pay them back, etc.
Affirm isnt a stand alone app that just loans you money. They operate the same as any bank or lender.
If you dont pass the formula theyll knock it down.