Credit Report Puzzle

[WornOut]

I used to be an underwriter. The bank will calculate an estimated payment for that account that does not currently have a balance. It doesn't have a balance now, but it will at some point, so that needs to be factored in somehow. They are taking a % of the total balance and inputting that as the monthly payment. They do that with deferred student loans also. The % they use depends on how their risk people view that type of account. The monthly payment they calculate could be much higher than what it will be in real life.

 

[RunningBum]

I just got turned down on an AA mileage card from Barclays for the same reason, "Debt to income ratio too high". They used TransUnion. I was scheduled to get my annual free report for them in 5 days so I did it today, and see nothing unusual. I guess it's because I have a few cards with high limits. My credit score is 779.

 

[cantlogin]

I used to be an underwriter. The bank will calculate an estimated payment for that account that does not currently have a balance. It doesn't have a balance now, but it will at some point, so that needs to be factored in somehow. They are taking a % of the total balance and inputting that as the monthly payment. They do that with deferred student loans also. The % they use depends on how their risk people view that type of account. The monthly payment they calculate could be much higher than what it will be in real life.

That insight from the inside is really helpful, and the banks position on a loan or line of credit is understandable.
The loan account in question does have a large balance, definitely not zero.

The thing that makes this credit card issue distinct from the circumstance in your description is that the loan is secured by certificates of deposit at the credit union that has provided the loan. There are no monthly payments on that balance. There will NEVER be any payment on that loan that isn't covered by funds already held by them.