Question
So I applied a few months ago and got rejected. I was surprised as I have no credit cards with high balances or anything else bad.
When I asked for a second look over, I was told that my debt balances were too high. I inquired about how they calculate that number and the supervisor told me that they add up the TOTAL debt you have (car loan, student loans, other credit cards....) not the monthly payments you make for them. Well, of coarse when you add that up (car+student loans+other credir cards) you get a huge number. I was told because of this I can't get the mileage plus visa card.
My question is....how in the world does anyone get one then. If you own a home, I would assume your debt is thru the roof, into the hundreds of thousands. I don't, have only maybe $40,000 (car+student loans+other credit cards) and if I can't get it, I'm surprised anyone can.
Anyone wanna help me out with this????
Answer
It's your debt to income ratio. What % of your income does your $40k in debt represent? (obviously no need to answer publically) If it is a high percentage, this could be the problem - even though you have otherwise made on time payments. Also, while you might not have high balances on the cards, if you have relatively high credit limits (even unused) this can hurt your credit rating since you have untapped credit (potential liability) that you could run up if you ran into trouble - easily changing your total debt level.
You should also check your credit report - there could be errors
Finally, how recently have you applied for other cards, student loans, car loans, etc. Several applications in a short time period can hurt your score.
I repeat - check your credit report.
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Any good deals to check your credit report for free?
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Any good deals to check your credit report for free?
I believe you are entilted to 2 free copies every year, just call.
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I make no money but got one. Didnt lie either
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Any good deals to check your credit report for free?
ckidder331 is entitled to a free credit report from the credit reporting agency that provided your information because of the turn down. The rest of us only are entilted to one if you live in one of the states that passed legislation requiring the reporting agencies to provide one annually on request.
I'm reasonably certain that no person turned ckidder331's request for the cc down. It is much more likely that it was completely automated (except for the CS rep) and was solely based on the FICO (http://www.hsh.com/pamphlets/aboutfico.html) score and if you met their minimum income level.
I don't know how gomike with little or no income could ever be approved with these type of automated processes. :confused:
Credit Reporting Agencies:
Experian (http://www.experian.com/)
Trans Union (http://www.transunion.com/)
Equifax (http://www.equifax.com/)
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Finally got approved!
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My question is....how in the world does anyone get one then. If you own a home, I would assume your debt is thru the roof, into the hundreds of thousands. I don't, have only maybe $40,000 (car+student loans+other credit cards) and if I can't get it, I'm surprised anyone can.
Glad to hear you finally got approved for the card!!!
But regarding your question about debt load, there is a BIG difference between mortgage debt and credit card debt. Lower interest rates on mortgages, AND it is SECURED debt. Plus, most homeowners have substantial equity in their homes. However, I don't know how the algorithms that compute credit-worthiness factor in the type of debt, if they even do.
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However, I don't know how the algorithms that compute credit-worthiness factor in the type of debt, if they even do.
Most credit card companies only take total revolving debt (other cards) into account when determining eligibility for approval, with balance-to-credit-limit ratio the most important factor. Car loans and student loans are typically listed as "installment loans" on one's credit report as the money is borrowed for a fixed amount and repaid over a definite period of time.
And yes, a high number of inquiries over a 6-12 month period can drop one's FICO score significantly as it makes one appear desperate for new credit in the eyes of the reporting bureaus.
Bank One is one of the tougher approvals in my experience. I applied for an Amazon.com Visa through them (long before my obsessive mile-earning days began ;)) and was rejected because my monthly rent payment was too high in proportion to my income. Citibank promptly gave me a huge credit line when I provided them with the same information.
There are definitely a lot of flaws in all the automated credit card application programs. Best in this respect is MBNA, which has a real person review and approve/deny every single application. Plenty of people who might slip through the cracks of other CC companies' approval process (namely recent immigrants and others with limited, but good, credit history) get a chance with MBNA.
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I applied for and received the card about a year ago, when I was at about $70,000 in Student Loans, and making about $18,000/year...so I doubt it has anything to do with anything. My credit score is awesome though, I have never, knock on wood, missed a payment for anything. That might have helped. But I was thinking of applying for #2...I wonder if it would work the second time around?
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UA/First USA approved me and gave me a card when Citi Bank didn't - with a 5K limit - as high as any of my other cards. This is with a meager income. MBNA has been FAR more stingy in their credit limits.
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UA/First USA approved me and gave me a card when Citi Bank didn't - with a 5K limit - as high as any of my other cards. This is with a meager income. MBNA has been FAR more stingy in their credit limits.
Interesting that you and I have had totally opposite experiences with the CC companies.
I got my first MBNA card as a sophomore in college with a $500 limit...now, three years later, it's at $5000 and they raise it about every other month.
IMHO it's becoming way too easy for young adults to accumulate many thousands of dollars in credit card debt thanks to the availability of such high credit limits. And the CC companies know that most college students have neither the responsibility to spend within their means nor the income to pay their bills in full every month. Not as bad as those "payday loan" companies who target the working poor with 200%+ APRs, but still a form of predatory lending in my book. :td:
I'm glad my parents taught me well about money when I was younger, or otherwise I'd probably be mired in debt as well.