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Banks and credit card weirdness
Old 05-28-2009, 02:30 PM   #1
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Banks and credit card weirdness

I had an interesting experience today at Macy's. I was buying an expensive travel bag and the clerk offered a 15% discount if I opened a charge card. So I said ok. They tried to run it but their bank rejected me! That was a real surprise because my FICO is over 800. So I told the clerk I didn't want to buy the bag if there was no discount. She tried to find out why my credit application was rejected but they wouldn't tell her.

So the upshot is that she gave me the discount anyway! I guess haggling over price at dept stores is now part of the American shopping experience.

Then at home I checked my credit report with Equifax. FICO is still over 800. But now they figure your debt to credit ratio by including your mortgage balance. Is that a new twist? Now my ratio is 91% and that apparently is not looking good to Macy's.

Both my bank credit cards recently lowered my available credit lines by 50% so that has definitely affected the ratio.

But I just refinanced my mortgage in April and my bank obviously thought my credit was good. But apparently Macy's thinks I'm a deadbeat even though I pay all my bills on time, never carry a balance, and have never had a late payment on ANYTHING.

The only thing I can think of that might be another factor is if the Macy's bank is Citibank. I recently closed a J.jill card from Citi because they kept charging me little fees for no reason. I also sent them a "scr*w you" message along with the cut-up charge card. So they probably don't like me anymore

Suze Orman gave some advice recently to up your FICO score by getting another bank credit card. But if the banks are looking at the debt to credit ratio and that includes your mortgage there's nothing I can do about that.
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Old 05-28-2009, 02:32 PM   #2
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Then at home I checked my credit report with Equifax. FICO is still over 800. But now they figure your debt to credit ratio by including your mortgage balance. Is that a new twist? Now my ratio is 91% and that apparently is not looking good to Macy's.
The utilization ratio includes the mortgage? That seems weird.

Is it a true garden-variety mortgage or is it a HELOC?
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Old 05-28-2009, 02:34 PM   #3
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The utilization ratio includes the mortgage? That seems weird.

Is it a true garden-variety mortgage or is it a HELOC?
It's a regular 30 yr fixed mortgage. I'm wondering if all the credit reporting agencies do the debt/credit ratio the same.
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Old 05-28-2009, 02:38 PM   #4
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Welcome to the new 2009 US Government access to credit rules. We are just protecting your consumer rights, comrade.

Good job on the negotiations though. End result = one less annoying worthless store CC and one nice new reasonably priced item!
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Old 05-28-2009, 02:41 PM   #5
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That's really weird because traditionally Macy's has been the easiest place to obtain credit. All us expats with no credit rating at all would get our first credit card at Macy's - it would only be a $100 limit - but they would take a chance when no-one else did.
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Old 05-28-2009, 02:44 PM   #6
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It's true that Macy's used to be really easy. They gave me several cards in the past!

Now I'm wondering if they looked at my part time income and my income from investments and thought that part looked sketchy. Oh well, who knows?
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Old 05-28-2009, 02:44 PM   #7
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Maybe a ripple effect of housing mess and rampant foreclosures, plus people in debt up to their eyeballs, both and all at once? Retailers are usually the first stopping place for generic credit abusers (definitely not you!). So maybe Macy's made a corporate decision to look at the whole picture of a new credit application, not just consumer debt.
Add to that a retired status (no earned income, correct?) and your application might have blended right in with the recently unemployed profile they want to avoid extending credit to.
I'm just guessing here...
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Old 05-28-2009, 02:45 PM   #8
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I think they have figured out that if you refinance and extend your mortgage term then you are about to go under. If you refinance and reduce the term, then you are a better risk.

So if you are 8 years into a 30-year mortgage and refinance to another 30-year mortgage, you have signed up to take 38 years to pay off your house. If you refinanced to a 15-year mortgage, then you have signed up to pay off your house in 23 years.

So far this year, my credit cards have increased my credit limits. That is, folks who don't need credit can easily get it. But since they don't need it, what's the point?
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Old 05-28-2009, 02:58 PM   #9
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I think they have figured out that if you refinance and extend your mortgage term then you are about to go under. If you refinance and reduce the term, then you are a better risk.

So if you are 8 years into a 30-year mortgage and refinance to another 30-year mortgage, you have signed up to take 38 years to pay off your house. If you refinanced to a 15-year mortgage, then you have signed up to pay off your house in 23 years.

So far this year, my credit cards have increased my credit limits. That is, folks who don't need credit can easily get it. But since they don't need it, what's the point?
Ah ha! Well, that makes sense, sort of, although the assumption that I may be about to go under is totally wrong. I just wanted the lower rate and lower payments. I will probably call the Macy's bank and find out the story after I get my rejection letter.

Lucky you to get increased limits. From what I understand almost everyone including those with excellent credit is having their limits reduced.
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Old 05-28-2009, 02:58 PM   #10
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So far this year, my credit cards have increased my credit limits. That is, folks who don't need credit can easily get it. But since they don't need it, what's the point?
But isn't that true to the old saying that banks are in business to lend money to people who can prove they don't need it?
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Old 05-28-2009, 05:41 PM   #11
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I seems likely that Macy's is using an older ratio that excluded martgage loans and applying it to a number that includes mortgage loans. I wouldn't think too many people would qualify if you wanted a number below 90% including mortgages.
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Old 05-28-2009, 07:46 PM   #12
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But isn't that true to the old saying that banks are in business to lend money to people who can prove they don't need it?
First, last and only rule of lending.
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Old 05-29-2009, 12:53 AM   #13
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Macy's is pretty efficient, in my experience. I stopped shopping there at the beginning of '08 and they caught on right away, stopped sending out the glossy mailers; yay! Even though I rarely use the card, it is still useful when a sale doesn't go thru on my main card. My card must have also started out with a low limit; when I went to buy some furniture, they just increased the limit to make the sale, that happened twice but it was well before the subprime issue.
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Old 06-12-2009, 08:31 PM   #14
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Got the letter in the mail. They said they couldn't verify information I supplied on the application. That would be my income from investments. Well, that explains it, sort of.

I subsequently applied for another VISA card from my bank and it came right away with a $10K credit limit. So the Macy's response is still pretty lame.

I am, BTW, trying to restore the credit limit that I enjoyed before my two credit cards slashed my limits by 50%, not that I need/want the credit. I just would like to keep my same high FICO score.
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Old 06-12-2009, 09:08 PM   #15
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Hmmm, I got my annual 0%-interest no-balance-transfer-fee offer from USAA this week. I will pay off last year's 0% loan to clear it from my card, then immediately take them up on their offer to the card's credit limit. I guess my credit score won't be improving any time soon.
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Old 06-12-2009, 10:09 PM   #16
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Most of these banks have their heads spinning they have been hit hard so many times they don't know which way is up.
Their quicky approval system on a dept. store card is weak. If you really want the card, working with the issuing bank and at least a supervisor you should be able to get it. Good job getting the discount.
I refi'd LY and took a little money out to put in the market and also noticed the percent utilization on my credit report a little higher including the mtg... (only debt). I also had several cards reduce my limit (never carry a balance). I have reponded by paying online almost immediately so card balances don't show as a significant % of available and I have dusted off and started using a few old cards I haven't used in years hoping they won't cancel me as being a non user. My hope is using the card at least yearly I would miss an inactivity search and cancellation letter.
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Old 06-12-2009, 10:59 PM   #17
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DH took up a department store clerk's offer of open an account, get a discount a couple of years ago. He was quite embarrassed when he was denied while standing at the cash register.

The reason, according to the letter we received a couple of weeks later? Unable to verify his social security no., which the department store clerk had screwed up by transposing a few numbers.

So OldBabe, your rejection might have nothing to do with your mortgage, investments, or credit score--it could just be an error in inputting the information on the clerk's part (of course, now the wrong info is in there and it would probably take a few miles of red tape to correct it!).
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