8/10/2012 4:34 PM ET|
10 reasons you can't get credit
When an application is turned down, you should know why. Here are some of the common reasons, and what you should do next.
If you've never been rejected for credit, count yourself fortunate. Somewhere between 25% and 35% of credit card applications are typically approved, "depending upon the pricing value proposition and other factors," according to Robert Hammer, the president of R.K. Hammer and Associates, a consultant to the card industry.
With some issuers, the approval rate may be a mere 10% or so.
If you're not turned down for credit, you may be told instead that you didn't qualify for the best rate. Either way, if a credit score (or credit-based insurance score) was used in the decision, you must be told the main factors that contributed to your score.
Deciphering those reasons can be maddening, though. "What do you mean, I have no recent revolving balances?" Or, "So it says my account balances are too high. What does 'too high' mean anyway?"
Here's a guide to some of the main reasons you may be turned down -- and what you can do about them.
Keep in mind that these are just some of the factors that may be used to evaluate your credit. Not all of them will apply in all situations, and there may be variations on these as well.
'Proportion of balances to credit limits is too high on bank revolving or other revolving accounts'
What it means: The score likely looks at your total available credit limits and compares them with your outstanding balances, individually and in the aggregate. The greater the percentage of your available credit that you are using, the greater the impact on your scores. There's no magic number here, though. In other words, getting your balances below 30% or 50% of your available credit doesn't automatically eliminate this factor.
What you can do about it: Focus on paying down balances that are close to the credit limits as quickly as possible. What about transferring a balance from a maxed-out card to one with a smaller balance? While that might help, it's not likely, since you still have just as much debt as before (another factor). If you can't make headway on paying down your credit cards, you may want to talk with a credit counseling agency.
'Amount owed on accounts is too high'
What it means: This factor may look at your debt in comparison with that of other consumers, and if your debt is higher than optimal, it could show up as a reason why you weren't approved.
What you can do about it: This one is particularly frustrating because you probably have no idea how much debt is too much, nor do you know which balances to try to pay down first. Typically, though, you'll get the most bang for your buck, credit-wise, by focusing first on paying down your credit cards with balances that are closest to the limits.
- Calculator: How long to pay off your credit cards?
'Too many recent inquiries in the past 12 months'
What it means: This reason appears when your credit report indicates a high number of credit applications (inquiries) within the past year. But not all are counted the same. Checking your own credit reports doesn't count; nor do promotional inquiries, inquiries from employer and insurance companies, and account reviews by your current creditors. The impact of inquiries on your credit will vary, depending on your overall credit profile, but the typical inquiry can be expected to affect your score by about five points.
What you can do about it: This reason is more likely to appear when you have a limited credit history or strong credit, simply because there are fewer other significant negative factors affecting your scores. But it doesn't hurt to lay low for a while. Avoid opening new retail cards. While inquiries resulting from shopping for a mortgage, student loan or auto loan aren't as likely to hurt your score as the same number of inquiries for credit cards, limit your applications to a short period of time, such as 14 days.
'Level of delinquency on accounts'
What it means: Delinquency refers to payments that were late. The general rule of thumb is that the further you fall behind, the greater the impact on your credit score.
What you can do about it: If the information is inaccurate, you can dispute it. If it's correct, you're going to have to live with it for a while; usually up to seven years. Focus on making your current payments on time. If cash is tight, remember that all you have to do is make the minimum payment on time to avoid a delinquency on your report.
'Time since delinquency is too recent or unknown'
What it means: Recent late payments will have a greater impact on your score than older late payments. Typically, delinquencies within a year or two will hurt your scores the most. If an account was delinquent a while ago but the credit report doesn't indicate the date, this factor can pop up as well.
What you can do about it: The good news is that as time passes, these delinquencies will carry less weight, especially when you are paying current bills on time. But the date is important here. If an inaccurate date (or no date) is reported for a charge-off or collection account, for example, make sure you dispute that with the credit-reporting agency.
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When was it, that the value of a fine human being became directly connected to a financial 'score' put together by the greatest thieves in history? What standards were used to do this? Does anyone know when we voted to have our lives ruined, and why it was allowed to exist? Was it another hidden agenda on a ballot somewhere in the 80’s? Why, has it anything to do with forcing on some, the inability to be mobile in a wasteful, 'urban sprawl' society? How, has someone's misfortune, possibly due to a rotting economy caused by ... ah, the banks, kept the person from ever working again? And when this downward spiral eventually begins to include one's home mortgage ... well you see the massive disaster today ! And it hasn't stopped yet, so down it all goes, like a house of cards .
I would like to know what evil, ''wizard ' behind the curtain ... (no don't look !! ) , came up with this idea, lovingly embraced by his peers, quietly, secretly, and for their great benefit. The banks have won ... big time, busy gambling with our lives, our real estate, and our ability to ‘pursue happiness’. The rest of all of us, even the wealthy, have lost, be sure ! " Let it roll, one more time, boys. Let's see if we can get double 7's with our bailout money from the government (Bush Administration), that we were supposed to use to give loans, ha ha !! "
Boycott them, fight for your rights, go to the cash system they want to abolish, and question every rejection for the basics needed in life , make 'demands' on our congressmen until they take down such horrible systems permanently . It's our only chance. Peace, and thank you for listening.
I have $20,000 in a CD, which I opened 3 years ago because the interest rate on it was a whopping 2.15 percent (unheard of in this lousy, seemingly endless depression this country is in: I remember when interest rates were at an AVERAGE of 5%! Those days are clearly over!). I didn't touch it - no additions or withdrawals - for 3 years. Last week, I received a letter in the mail from the bank that houses this $20,000 CD, informing me that there has been "..no activity on your CD for more than 3 years," and unless I either add to it or withdraw from it or notify the bank that there has been no activity on my CD because of my choice, the state of CT would confiscate the money! Can you imagine that?? Twenty-thousand dollars of my money would go to the tax-mad state of CT unless I notified this bank - within 2 weeks - that I still owned the CD and it was still mine, even though there was no activity on it! What a thieving, coniving financial climate this country espouses!
Personally, I can't wait to retire and leave this country... a country of which I was once so proud. I'll be happy living in a beach shack in Costa Rica ...where they have better health care than we currently have in the U.S. to boot!
in NY,insurance companies now calculate your premiums based on your credit score,their excuse is,and im quoting the insurance agent,"people with bad credit are usually bad drivers".biggest bunch of b.s. i ever heard of.WE ARE BEING SCAMMED,PEOPLE!!!
I'm happy to see so many of you living debt free and paying CASH. Since our votes dont count, this is the best way to sock it to the system. Plus, you get the added peace in your life.
Like many of you, I am also debt free but with the ******iest score on the planet. I have never been in a wreck or had a ticket, nor have I ever been late on rent. However I pay a high premium and no landlord will accept me to move. (Ive only checked with rental companies though.)
The jokes on us. We need to eliminate our debts and show the big guys we will not be slaves to them any longer. Let them fall, see if I care.
I hate credit. I save my money and pay cash. The thing is to start with a POS car, ugly but running well. Every month put back what you would normally spend on a car payment and put it in a savings account or what ever you think will get you the best return. After a very short time you will have saved enough to buy a better car and pay CASH for it. Then start this process all over again and save until you can buy a great new/used car or truck. Keep doing this and about every 4-5 years you will be buying a new/used car or truck with cash without any problems. Besides you have great bargaining position when you pay cash. I'll save thousands on a new truck when I walk in with cash. I love the look on the sales MANAGERS face, don't talk to a salesmen, they are commission, the manager isn't. He just wants to sell the vehicle. You can also do this with homes. Look for foreclosed sales. You can buy homes for penny's on the dollar this way. Keep doing the same thing. Put the money back just like a house payment and it too will add up until you can pay cash. If you do need to borrow money us Credit Unions. They tend to look at you and not the credit report so much. Also be very frugal with your tax return. Deduct everything. If you buy cloths for work it is a business expense. Work boots, tools, pens, lap tops, what ever. Even driving miles to work count. With all the driving I do for work I got to deduct 48,000 miles at .58 cents a mile a few years ago equaling a $27,840 deduction from my taxes for mileage, the deduction now is .50 1/2 cents per mile. The best time to start doing this is now. Whether you are young or old. Good luck and I hope this helps you as much as it did my family.
1 reason I don't WANT CREDIT!
It's a RIP OFF!!
As one who used to have credit cards I got my first card at 21, Bt 23 I had 2 more. By 27 I was holding 5 different credit cards. Juggling each one I'd keep each of them at about the same balance of between $1500 and $3000. When I got the cards the banks offered me an interest rate of 6% to 11%. By spacing the due dates on payments at different times of the month I was always able to make payments on them on time and never missed a single payment so never had any late fees and the interest rate remained steady. Sometime around the mid 90s the credit card companies decided to include a new clause in my statement which said if you have a late payment on a utility bill the credit card company deems you to be in bad standards and can raise your interest rate. Apparently I sent in a phone bill a day late and within my next billing statement saw my rates on all five cards go to 24%!! With the rate tripled I attempted to make larger payments immediately but in as little as 6 months the minimum payment due was equal to what I owed in interest somwhere around $200 per card. I played along and kept making payments for a few months and came to realize I was basically paying out toward something that was out of control. Even more so due to the credit limit had been reached and the cards had no value whatsoever.
With no options left I decided to file a Chapter 7 Bankruptycy and within 2 months all my cards were voided and with no balance due. It was a great relief to find there was an option to this madness and had I abided by my obligation to pay the balance back I would have gone into hock.
Today I do not own a single credit card other than a bank debit card used for air travel and cash withdrawls. I only deposit enought money in my bank to cover my bills and have no access to further credit. The feeling of being debt free is something I never dreamed I would ever get to experience. The years of feeling I needed credit to obtain "status" are long gone. In looking back at what I used that credit on it was mostly toys to impress and keep up with the so called "in crowd" in my early day. From feeling I had to have the latest mountian bikes to travel to Europe it was all a big front that made me look waelthier than I was. Today I pay cash for every purchase. My 2000 Chevy is paid for in full and I choose to rent an apartment over owning a home with a mortgage. To describe being free of debt is probably as close as one can come to being born again without religion..
I paid off my car last month and my credit score dropped this month, but my insurance score went up. We have 3 paid in full vehicles and I don't care how much they want installment accts. I am not going to borrow just so I can borrow. DUMB Catch-22
It's amazing how many people have set themselves up for financial disaster before they turn 21 by racking up debt on credit cards and also not understanding the rules/how they work/and the consequences that can come from this. My brothers and I were fortunate that our dad took time to drill into our heads that a credit card means responsibility, there is no such thing as free money.
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