Denied for credit for lack of debt???

[ivinsfan]

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.

I wonder if this varies by state. We most definitely had to sign a permission to pull credit request. It has to do with the semantics of how they run the check ,in our case several manufacturer rebates and such had to run through and yada, yada... They just wanted a quick birdeye's view of our credit history.

 

[Chuckanut]

Just a thought, if you receive a letter rejecting you for credit you didn't apply for that could be a sign that bad guys are stealing your identity. Put a freeze on all you records in the big three (or is it now four) credit reporting agencies, ASAP.

 

[blueskyk]

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

This is one of my pet peeves for purchasing a car when you have secured your own financing or pay cash - this credit check is for the sole purpose of offering you some kind of financing package (DH was a desk manager at a dealership for a time) through the dealership.

I always refuse (on principal) and they always say it’s required. I always say “no it’s not - I’m not financing through you”. They say they need to check with their manager and, a bit spitefully it seems, make you wait for a while.

Then they return and say I don’t need to do it.

 

[rodi]

How does this work if you have your credit locked with the credit bureaus? Can they even run a credit check without your knowledge in that case?

Last time I unlocked was when I got a zero interest car loan in 2017 and switched cell phone providers at the same time. Locked it back up when those items were taken care of. I still monitor my credit but afaik, no one can run a hard credit report because my files are locked.

 

[Sunset]

How does this work if you have your credit locked with the credit bureaus? Can they even run a credit check without your knowledge in that case?

Last time I unlocked was when I got a zero interest car loan in 2017 and switched cell phone providers at the same time. Locked it back up when those items were taken care of. I still monitor my credit but afaik, no one can run a hard credit report because my files are locked.

If you have a credit FREEZE (this is the free one mandated by Congress) . They cannot check your credit.
I've had a credit card application denied as I didn't unfreeze my scores first.
Now I always temporarily (24hrs) unfreeze them , before I apply for a CC.

 

[EastWest Gal]

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.

They couldn't make any money off of you, so you were denied. They probably figured you would only use it for Amazon purchases. You carry no interest, and if you are using an Amazon credit card for credit card purchases, the seller (Amazon) pays the fee and the credit card company gets the fee (also Amazon). It costs them to pay themselves the fee; they gain nothing extra, since they already have your business.

 

[CSdot]

I see this as a positive.

I keep a 6-figure emergency fund, so similar to the concept of self-insuring, I self-bank. I paid off my house last year, have zero debt, and since 2000 when I decided to cut up and pay off all credit cards, I only use cash, debit cards and checks to pay for things.

The last time I allowed someone to pull my credit was earlier this year to move the electricity to my name (which turned out to be unnecessary because it rented right away) between tenants on a rental property. Before that was in 2019 when I bought my last car. I pay cash for vehicles, but have always heard that you lose bargaining power if the salesman learns you are paying cash before you agree on a price. They said my credit was good both times.

 

[Sunset]

They couldn't make any money off of you, so you were denied. They probably figured you would only use it for Amazon purchases. You carry no interest, and if you are using an Amazon credit card for credit card purchases, the seller (Amazon) pays the fee and the credit card company gets the fee (also Amazon). It costs them to pay themselves the fee; they gain nothing extra, since they already have your business.

I don't think that is the reason.

I believe Amazon thinks that having an Amazon card has a positive influence about shopping on Amazon. They make profit on everything you buy even paying a 1% fee to the CC issuer. Amazon's fee may even be smaller as there are not many Billion dollar sales in other companies. So Amazon would want to give a CC to just about anyone.

All other CC companies give me credit cards when asked, and they ALL pay me to take the CC. None make money off me as I pay all mine in full and have zero debts.

I sometimes am amazed they all do it for decades, giving me money, but then I talk to relatives & friends and realize they are all paying interest, and indirectly paying for me

 

[RobbieB]

No, they can't run your credit if you're locked. I tried;

Car dealer said locked and neither Home Depot or my own bank would issue a card when I applied.

Pretty cool, I can't even get credit -

 

[rodi]

If you have a credit FREEZE (this is the free one mandated by Congress) . They cannot check your credit.
I've had a credit card application denied as I didn't unfreeze my scores first.
Now I always temporarily (24hrs) unfreeze them , before I apply for a CC.

Yes. Freeze.

 

[ivinsfan]

This is one of my pet peeves for purchasing a car when you have secured your own financing or pay cash - this credit check is for the sole purpose of offering you some kind of financing package (DH was a desk manager at a dealership for a time) through the dealership.

I always refuse (on principal) and they always say it’s required. I always say “no it’s not - I’m not financing through you”. They say they need to check with their manager and, a bit spitefully it seems, make you wait for a while.

Then they return and say I don’t need to do it.

I didn't have a problem with it. It was a dealership 80 miles from home that we had no history with. We had only dealt with them by text. It was a brand new car and I understand they can't run the check ASAP. They were very pleasant to deal with, did not push their financing, so were AOK with agreeing to the pull.

 

[Fleur58]

I have no debt. Credit scores was in the 800s. In March I bought a SUV and paid 20K down and financed the rest (9K) to get a better deal. I didn't want to do it but did. I now have a payment of $157 month for 5 years, which I could easily pay in full now. But since then, my credit score has increased to the highest it has ever been. I'm going to keep the payment for a while just in case I decide to make another move with my housing situation.

 

[Closet_Gamer]

The credit rating systems are a mess.
They're not optimized to reward the chance that you will pay it off.

They're optimized to reward the chance that you're a good investment return for a lender.

My brother was in a difficult marriage for decades. His spouse was a consumption beast and they lived on credit cards...but paid at least the minimum every month on time. Credit card company dream.

Once he was single and focused on getting his house in order, he paid everything off...but that long history stays with him.

I have zero debt and many multples of his assets.
I've never missed a payment on anything.

He has a higher credit score than I do.

 

[youbet]

He has a higher credit score

Makes sense. It’s a credit score, not a Dunn and Bradstreet rating.

 

[Momcpa]

Years ago I was denied a certain credit card. Their explanation was "under-utilized available credit". Okay then.....guess I didn't really want your credit card. No problem. Carry on.

 

[jazz4cash]

I don't think that is the reason.

I believe Amazon thinks that having an Amazon card has a positive influence about shopping on Amazon. They make profit on everything you buy even paying a 1% fee to the CC issuer. Amazon's fee may even be smaller as there are not many Billion dollar sales in other companies. So Amazon would want to give a CC to just about anyone.

All other CC companies give me credit cards when asked, and they ALL pay me to take the CC. None make money off me as I pay all mine in full and have zero debts.

I sometimes am amazed they all do it for decades, giving me money, but then I talk to relatives & friends and realize they are all paying interest, and indirectly paying for me

I agree to some extent but isn’t Chase Bank the approver and issuer? They are the ones actually extending credit so I’d be surprised if Amazon has a vote.

 

[youbet]

^^^^^. This

 

[Sunset]

I agree to some extent but isn’t Chase Bank the approver and issuer? They are the ones actually extending credit so I’d be surprised if Amazon has a vote.

True.

I was responding to the red herring of Amazon denying it.
Chase is one bank I'm careful with on CC as they have the 5/24 rule across the board , and some special rules for Sapphire CC.

Thanks for pointing that out.

 

[Alex The Great]

Lately, my Bank of America CC application has been denied. My score is 804, no debt but 28 accounts with 15 years length of service and just 2% revolving utilization. It looks like my problem is that I have multiple credit cards but no desire to buy anything

 

[Closet_Gamer]

Makes sense. It’s a credit score, not a Dunn and Bradstreet rating.

True, but perhaps it should be.

My brother's view is "I've done a great job, look at my bullet proof credit rating" and yet for a long time he was one illness away from financial disaster and he's limping towards retirement trying to undo the damage of the long term behaviours that have given him this gold plated rating.

Its yet another example of the financial industry sending self-serving signals to people. An entire sub-industry now exists to help manage this score and optimize your ability to be a good debtor.

One can say that's the job of the financial industry -- to maximize its profits -- but its very damaging to people/society and is one more reason I despise the finance industry.

 

[jazz4cash]

True, but perhaps it should be.



My brother's view is "I've done a great job, look at my bullet proof credit rating" and yet for a long time he was one illness away from financial disaster and he's limping towards retirement trying to undo the damage of the long term behaviours that have given him this gold plated rating.



Its yet another example of the financial industry sending self-serving signals to people. An entire sub-industry now exists to help manage this score and optimize your ability to be a good debtor.



One can say that's the job of the financial industry -- to maximize its profits -- but its very damaging to people/society and is one more reason I despise the finance industry.

Credit history is a reasonable metric. Credit scores are just a fabrication.

How can my ability to repay be scored with no inputs to represent my income or assets?

IMO, it’s all about generating revenue from giga bytes of garbage data clogging their servers.

 

[Sunset]

True, but perhaps it should be.

My brother's view is "I've done a great job, look at my bullet proof credit rating" and yet for a long time he was one illness away from financial disaster and he's limping towards retirement trying to undo the damage of the long term behaviours that have given him this gold plated rating.

Its yet another example of the financial industry sending self-serving signals to people. An entire sub-industry now exists to help manage this score and optimize your ability to be a good debtor.

One can say that's the job of the financial industry -- to maximize its profits -- but its very damaging to people/society and is one more reason I despise the finance industry.

To be fair to the financial industry many other industries also try to maximize profits.

Look at the food industry, lots of advertisements showing fun laughing thin people eating huge calorie meals, a full days worth of calories per meal.

I cannot tell you how often at the restaurant the waitress will ask this Chubby fellow if I'd like some booze or a desert with my lunch. She is not asking me out of concern for anything other than to maximize the sale.

Bottom line is People are responsible for their actions.

 

[SecondAttempt]

...so it seems counter-intuitive that not having open installment debt is considered a negative.

On one level it is counterintuitive. But for some people credit is like a drug. Not currently being an addict because you have not used drugs does not predict what will happen when you start using. A person who has demonstrated responsible use is lower risk that someone who has never used and could get hooked.

 

[INTJ10]

Banks are not (too) evil, they are just risk adverse. The OP is risky because they haven't demonstrated that they can manage debt in the past. If you want to get credit in the future, it is best to get a smaller loan and pay it off to demonstrate that. Banks don't care about your assets much either, just cash flow. If you have a large amount of money in a bank account you could possibly remove it before the bank could seize it as collateral. Real estate is better collateral because it is difficult for a debtor to quickly liquidate it.

 

[Rambler]

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!

I had this happen two years ago. I was thinking about financing a new truck, just because I hadn’t financed anything for a long time. My credit score came back 815, but financing was denied because I hadn’t had a mortgage nor a big ticket item like a car financed for over 20 years. I just said “fine, give me the $1000 financing incentive and I’ll just write a check”. They balked…I got up and headed for the door, and then they said ok, ok, ok…you win”.