Denied for credit for lack of debt???

[Retire2023]

We have not had a mortgage in over 20 years and no car payments since ~2005 (0%offer). I do have over $90K in available credit card limits over 4 cards, which of course we use frequently, and payoff monthly.

Situation: I opened (online) a money market account at my credit union to transfer excess funds ($250K) out of our checking account to make a "little" more interest. Apparently this triggered the credit union to run a credit check (without my knowledge) to see what other products/services they might offer us. I get a letter from them saying that I was denied any other offers because of "insufficient credit history", and mentioning there was no mortgage history.

Last week, something very similar happened with my husband!

Questions: Has this happened to any of you? What did/can you/I do to address this? Would opening a HELOC without drawing on it work, or would we have to actually take on debt?

Who would have thought being debt free was a bad thing!

 

[ShokWaveRider]

Retire2023 did they by any chance share you credit score?

 

[Ready]

What offers were you expecting to get? As long as they opened your money market that’s all you wanted, right? Of course I never understood why they have to check your credit before they accept your money.

We also have no debt and haven’t had a mortgage for over a decade. I recently opened a Best Buy credit card to take advantage of the 10% discount and I had no problem getting approved. They asked me what my income was and I just went with the approximate number I can withdraw based on my savings. As far as I know they just accepted it and opened the credit line without any further questions.

 

[ivinsfan]

Despite the the angry face obviously you aren't really mad. So I'll file this one in the humble brag category

 

[Sunset]

It may be your high $90K in credit limits that has used up the space available to you for new credit.

We have not had a mortgage or loan over 20 years.
I get 1 ->3 new credit cards each year.
Currently I have about 5 credit cards, as I cancel ones I don't want depending upon circumstances.
My credit score is over 800 .

I call BS on the mortgage.

What might help is HOW you pay off your credit card. I used to pay off the entire thing every month, now on 2 of them I pay off the statement balance. This allows them to see the amount and payments, other CC I pay off fully might show up as zero balance month to month.

I have had a credit card company tell me, when I asked for an increase in the limit, that they would need to lower the limit on some other card. So I actually now pay attention to the limits as some CC for me should have a high limit for travel, but the ones for home use paying netflix can have a low limit.

 

[Time2]

I applied for an Amazon credit card and was denied for lack of credit cards, ( I have one) and no money in their bank. It's been 28 years since I've had a mortgage.

Six or eight months after I was denied by Amazon, I went to my bank to get a HELOC. My first words to the loan officer were, I have little credit history and I don't have any income.
It didn't matter, they found my credit score was 810 and requested I show a few months of my Vanguard statements. I got the loan, but I wish I had the Amazon card. Maybe after I show payments on my Heloc!

 

[RxMan]

I’m about to apply for loans for an RV purchase. I guess that’s different from applying for a credit card. We’ve been mortgage free for years now but I do have a low interest car loan which I’m hoping will help my credit history. It’s crazy how being good with money and not be drowning in debt can actually hurt you in certain situations.

 

[grayv]

I applied for an Amazon credit card and was denied for lack of credit cards and no money in their bank.

do credit checks show bank balances?

 

[Aerides]

This is not uncommon. Lenders want to know that you can manage debt, not just that you haven't been bad.

 

[Retire2023]

Retire2023 did they by any chance share you credit score?

They did not, but I checked the big 3 and all were well over 800. I had actually not heard of the one they showed on the letter.

 

[Retire2023]

What offers were you expecting to get? As long as they opened your money market that’s all you wanted, right? Of course I never understood why they have to check your credit before they accept your money.

We also have no debt and haven’t had a mortgage for over a decade. I recently opened a Best Buy credit card to take advantage of the 10% discount and I had no problem getting approved. They asked me what my income was and I just went with the approximate number I can withdraw based on my savings. As far as I know they just accepted it and opened the credit line without any further questions.

I wasn't expecting any offers, as I had not requested any, and in fact did not even know they were pulling credit history. I was just dumbfounded at the response.

Your experience is what I am used to. This has taken me by surprise.

 

[Retire2023]

Despite the the angry face obviously you aren't really mad. So I'll file this one in the humble brag category

You can file as you please, however, I was and am quite angry.

 

[ivinsfan]

You can file as you please, however, I was and am quite angry.

Why? They denied something you didn't ask for and don't need. It was most certainly done by a computer ....why waste time being angry.

On the credit pull we wrote a check for our last car. The dealer said they would run a credit check before we drove it away but we had to sign for the credit pull

 

[TrvlBug]

We applied for the Amazon cc a couple of years ago and were denied because we had too much unused credit. With $200K in cc limits and a HELOC with no balance, they decided we were too risky . No mortgage for 20 years, cars always paid in cash and cc paid off monthly, credit score 800+. We recently applied again and were approved by a different bank.

 

[Sunset]

To be fair to CC companies, a few years ago, after I read about a fellow that had a lot of credit cards:
"Walter Cavanagh of Santa Clara, Calif. has earned the Guinness World Record title of "Mr. Plastic Fantastic" by keeping 1,497 credit cards in his name, amounting to a $1.7 million line of credit."

I realized I could get a lot of CCs, then use them to buy gold coins from the mint one month, and fly to Venezuela South America and FIRE

I'm not surprised they limit how much someone can borrow.

 

[Time2]

do credit checks show bank balances?

I doubt it, I carry a large checking account balance and it didn't help.
I put my whole years spending into checking sometime in December
of the previous year, and then it dwindles down. Looks like I will have about $13k left
at the end of this year.

 

[Time2]

This is not uncommon. Lenders want to know that you can manage debt, not just that you haven't been bad.

It's a shame that water, electric, insurance, cable, don't show up, those have been managed without fail. And the fact that we have 150% of our lifetime earnings in our nest egg should mean something, but they don't look at that. ie, we manage debt, we keep it minimized.

Ya, I'm a little pissed that I was denied! The time I finally applied was when they offered me $100 to get the card, usually it was only $60. It didn't hurt them, I still buy from Amazon, but without the 5% discount.

 

[Aerides]

Paying monthly utility bills, however, doesn't show that someone can trust you with a few thousand bucks and pay that off.

Lenders all have their own criteria for managing risk. And some people who haven't had much debt to manage before aren't very good at it when they finally get it. Enough that some lenders will pass. Others will just go by a score, or lines open, or debt to income ratio, there are a lot of ways to evaluate a potential account holder. Different lenders use different criteria.

To the OP, I'd only be annoyed that they pulled a credit report without your request.

 

[bada bing]

As an aside on how the mechanical aspects of the FICO algorithm works. The debt and payments you manage are divided into types, the two main ones being revolving and installment. Not having current accounts in both categories is a ding to your credit report. Lots of financially secure people don't have open accounts of both types, particularly installment accounts. Installment accounts are things like mortgages and car loans, so it seems counter-intuitive that not having open installment debt is considered a negative. But in the FICO algorithm it is.

If you don't have an active installment type account, one hack if you want to better fit your credit report into the programmed FICO criteria is to open what is called a shared secured loan at a credit union. This is a common method to synthesize an active installment loan for your credit report without actually taking on any debt. I personally wouldn't bother unless you anticipated a problem getting a mortgage you wanted. I also wouldn't spend a minute fretting about a computer generated assessment of your reports.

Don't shoot the messenger, I'm not defending how financial businesses do their customer vetting. That is how it works though.

 

[audreyh1]

do credit checks show bank balances?

No. Only credit history.

 

[Freedom56]

If you are debt free, why are you concerned? We froze our credit at all agencies after the Equifax breach and we also opted out of credit card offers although we still receive them. We have three credit cards (Discover, M/C, Visa) that we always pay in full every month. We have never borrowed money to buy a car and we have not had a mortgage in over 14 years. However, we still get loan and line of credit offers from our bank. It all has to do with your credit score and regular income deposited into your account (I.e. pension). Our credit scores fluctuate between 828-843 and it always states "lack of mortgage history" on the adverse impact the credit score. I really wouldn't worry and in fact you should take steps to freeze your credit if you have not done so already. This will mitigate any adverse impact from identity theft.

 

[Time2]

If you are debt free, why are you concerned? We froze our credit at all agencies after the Equifax breach and we also opted out of credit card offers although we still receive them. We have three credit cards (Discover, M/C, Visa) that we always pay in full every month. We have never borrowed money to buy a car and we have not had a mortgage in over 14 years. However, we still get loan and line of credit offers from our bank. It all has to do with your credit score and regular income deposited into your account (I.e. pension). Our credit scores fluctuate between 828-843 and it always states "lack of mortgage history" on the adverse impact the credit score. I really wouldn't worry and in fact you should take steps to freeze your credit if you have not done so already. This will mitigate any adverse impact from identity theft.

I have my credit froze also, I had to unfreeze in order to get reviewed just to be denied for the Amazon Card

I'm now $243,000 in debt, maybe that will get me an Amazon credit card.
Nah, probably not, $100k is secured by my home and $143k is secured my stocks. But the Heloc, may show up on my credit history and sometime down the road I will get an Amazon cards like the adults!

 

[Chuckanut]

Who would have thought being debt free was a bad thing!

Welcome to the ranks of the undesirables.

Obviously, you are not going to generate a lot of extra interest charges, late charges, cash advance charges and other fees that generate a lot of bank income these days. People like you (and I also) are known as 'deadbeats'. Shame on us.

Deadbeat is a slang term for a credit card user who pays off their balance in full and on time every month, thus avoiding the need to pay off the interest that would have accrued on their accounts. A deadbeat is also called a "nonrevolver" or a "transactor."

And here, I thought deadbeats were people who did not pay their debts. Foolish me. We should be swept up and put in the dust bin.

 

[jazz4cash]

Once I accepted the fact (IMO) that credit scoring is a scam and a sham, it was much more understandable why so many credit practices by financial institutions just don’t make sense.

As far as getting denied for something that you did not apply for, the letter you received sounds familiar. I bought a used car from a dealer and paid with a personal check. I was in the middle of a home refi and did not want any activity on my credit file from a car dealer. A month later i got a denial letter from the dealer. Anyone reading the letter would assume I had applied for credit and been denied. It felt bad to be rejected even though I had not applied and I was furious because it could’ve screwed up my refi (it didn’t). I called the dealer and they said tendering a check entitled them to run my credit. Once they get the credit report if no action is taken it expires and the denial letter is auto generated. Stupid.

 

[MarieIG]

No, this hasn't happened to me, i.e., receiving a letter stating that I am not qualified for something for which I did not apply.

Last time I looked at the credit score/ mini report which comes with my credit card, I noticed my credit history had become shorter, down to 15 years. Since my mortgage was paid off 20+ years ago; record of that dropped off.

I expect I'll join the club of having some difficulty obtaining new credit cards when I retire, but we'll see. I don't apply often. I am not going to take out a HELOC now when I don't need or want one, so as to be able to obtain more credit in the future.

YMMV