Reasons for denied loan and how can I change them?

**disneysteve** · 10-04-2016, 04:57 PM

Originally posted by Mouse View Post

the bank teller who was helping me said that because I pay 100% every time is the reason, I need to not pay the full amount so they can charge me interest and then I need to pay that off to prove I can pay whats owed because paying my bill on time apparently is not good enough.

This is absolutely, positively false and personally, I would go back to that bank and speak to the manager and complain about the tellers giving out such horrendous financial advice.

100% on time payments doesn't mean you pay 100% of the bill. It means you pay on time 100% of the time. That's all they care about. You never need to carry a balance to build credit. You never need to pay interest to build credit.

It sounds like the problem is simply that you are young and have a short credit history. Only time can fix that. Another thing that could help if you have this option is for a parent to add you to one of their accounts. Then you get the benefit of their longer credit history.

**Jluke** · 10-04-2016, 05:03 PM

I've never paid a penny in interest on credit cards.

I've had plenty of auto loans and a mortgage; never denied.

I'm not buying the teller's reasoning.

**Mouse** · 10-04-2016, 05:59 PM

thank you for the responses, defiantly glad I asked in this forum with the fast responses.

I had a feeling the tellers info was false. because if I had to pay only the minimum in order to build credit I was going to pass on that offer.

If the only thing I am lacking is time in the credit card world then I guess the only thing I can do is wait. I was just making sure there wasn't anything I was doing wrong or if there is anything I can do to help speed up the process. someone suggesting trying to open another credit card account maybe like a business credit card like amazon, or home depot to show I can payoff multiple accounts at once

**MonkeyMama** · 10-04-2016, 06:46 PM

OP - Any banker will tell you that because it's in their best interest. So, it's good you came here for advice.

I will just add that the only debt I have ever had was paid off credit cards (paid off every month during grace period) and a mortgage. The mortgage is the only balance we have ever carried. We've mostly always had exceptional credit scores, but we started building our credit in our teens. (It wasn't until we added the mortgage, that our credit went from good to excellent, but we were also young without a ton of credit history).

If you could get a personal loan it would be good for your credit. Having different kinds of debt does help. But you don't need to have *all* kinds of debt. & I only recommend this because you were going to do it anyway. (I'd absolutely never carry a balance on any kind of loan for the primary purpose of increasing credit score).

I've never had a car loan, and people tell me all the time that is impossible to have a good credit score without any auto loans.

**97guns** · 10-04-2016, 07:20 PM

yes, if you become a frivilous spender with multiple accounts and pay on time you will get so much credit that you could live in a mcmansion, these are the banks "valued" customers

**Joan.of.the.Arch** · 10-04-2016, 07:35 PM

Find out if there is a credit union you could join-- a credit union that makes loans for used vehicles. Mine does and I'm pretty sure most do. The main point of credit unions is to actually help members with credit and banking equivalent services. (Just avoid the silly plastic surgery loans my credit union offers!

)

**kork13** · 10-04-2016, 08:30 PM

Originally posted by Mouse View Post

If the only thing I am lacking is time in the credit card world then I guess the only thing I can do is wait. I was just making sure there wasn't anything I was doing wrong or if there is anything I can do to help speed up the process. someone suggesting trying to open another credit card account maybe like a business credit card like amazon, or home depot to show I can payoff multiple accounts at once

Time is definitely the biggest factor. However, having multiple lines of credit can (again, over time) improve your credit history as a whole. Another option that could potentially help slightly is requesting a higher credit limit on the credit card that you do have. This is normally a simple, free request you make with the card company, and the worst they can say is 'no', and it doesn't hurt you at all.

Here are the factors that go into your FICO credit score (the one most commonly used):

- Payment history: Pay your bill on time, every time
- Credit utilization: Don't max out your credit limits -- preferably, keep your usage below 10-20% of your limit. So if your CC has a $5000 limit, don't put more than $1000 on the card. Also a factor here is your available credit.
- Length of credit history: Time. The longer you show that you're a good borrower, the more lenders will trust you.
- New credit: Don't try to get a bunch of new credit cards/loans all at once -- it looks like a red flag to a lender that you're desperate
- Credit mix: Having a history of good payment on a variety of different loan types... This mostly considers revolving (credit cards) vs. installment (car loan/mortgage/student loan) loans.

**Fishindude77** · 10-05-2016, 03:19 AM

I would say the denial is due to "Lack of credit history".
My son had a similar issue when buying his home, as he had never borrowed before, so no history of his debt repayment performance. I put him with my bank and he got the loan, but the banker suggested he use a credit card and consider a small car loan to develop history and not have to deal with that next time.
My suggestion was, don't borrow if you don't need to and to heck with credit history. If you need a loan down the road, worry about it then.

**bjl584** · 10-05-2016, 04:34 AM

You don't have enough credit history.

Try another bank or a credit union.

**GoodSteward** · 10-05-2016, 06:22 AM

Originally posted by bjl584 View Post

You don't have enough credit history.

Try another bank or a credit union.

Right. Here are my thoughts.

1. Credit history can weigh just as heavy (or more even)as on time payments for a new account.

2. Credit pulls are going to knock you out quickly, so if you got turned down twice just stop for now. Too much "seeking new credit" will single-handedly make you get rejected regardless of history or score or payments. It puts you into the high-risk category. Trust me, I've had that be the ONLY reason I was denied on things before years ago when I was in stupid land in credit card debt.

3. Wait 6 months and get another "Bad" credit card (no real benefits and high interested, these are easy to get) just to show another account in good standing. Or, you can go to the bank you have your savings with, put 1k$ in a CD and use that as collateral for a 1k$ loan. Pay it off over 6 months and that should help you with little to no interest. I've never done that, but I have read about it often.

4. You need to show the credit card is used. The lie is thinking you have to let the balance roll over a statement to create interest to show this. This is false. You just need to know how to work the system. You don't pay the card off month to month, you pay it statement to statement (which is a month, but not the end of the month). Here is how a credit card works.

- You buy something before the statement date.
- Statement is created the 15th reflecting that purchase and due date
- CC company reports statement balance a few days after this (usually 19th)
- Minimum amount is due by the following month on the 15th.
- As long as you pay the statement balance by the next due date you have no interest. You just need to let a little balance report before paying it off completely(but not too much, just 1-5%). You do not need to let it roll over a statement date, just the credit reporting date. There is a difference. Call your card company and find out when they report to the credit companies.

*As a side note, you can technically use a credit card for 60 days same as cash if you wanted. Because the purchase isn’t due until the due date after the next statement you can buy something the day after your current month’s statement. It won’t be due until the next statement is generated, and then you have 30 days more to pay that before it rolls into another statement creating interested. That gives you a total of up to 60 days to pay it without interest. Boom…work it baby!

**bigdaddybus** · 10-05-2016, 09:57 AM

Mouse, how long have you had your current job? I am guessing your issue is a combo of lack of credit history and employment history because 740's are far from a bad FICO score.

**Mouse** · 10-07-2016, 03:21 PM

thank you everyone for your responses, full of extremely helpful information that I could not find when I tried searching. I am glad I can ask peoples personal opinions and experiences that can give me pointers. and thank you for going into detail and explaining some of the processes and details I really appreciate it.

I am going to go to the local credit union next week and open a savings account and go from there. Since I still need time to build that credit trust best I can do I guess is keep saving.

bigdaddybus,
I have had my current job for about 7 months now, I started me first legit on the books job 8 years ago and I have had multiple jobs on and off the books (side work, helping people out)since then. Reason for multiple jobs was some of them were seasonal. But, I would usually work 2 jobs at once.

**snafu** · 10-07-2016, 04:36 PM

My 1st reaction was ...'sounds like Wells Fargo or a twin.' Deliberate misinformation for profit is downright dishonest. I wonder if that employee was meeting a quota.

I would e-mail the bank manager to create a 'paper' trail... just cut and paste your outline here, and add that you are considering sending an outline of events to the Federal Reserve Agency [in your state].

I applaud your plan to open an account at a Credit Union. You may prefer their system of making members share holders. Depending on the economy you may ultimately end up with a rebate.

**Mouse** · 10-08-2016, 08:44 AM

If I thought that were the case I would personally go to the bank and say something but I just personally don't think the bank teller who helped me had the correct amount of knowledge to answer the questions I had or to help explain the situation I was in.I would have absolutely assumed she was just saying that to reach a quota but the Loan I was trying to get the bank itself doesn't offer so she was just playing the middle person showing me a loan website, something I could have easily done at home. So even if I were to get that loan she or the bank wouldn't even have benefited from it regardless.

I might say something anyways nicely like "hey, just a heads up..." to them personally so they don't misinform anybody else without realizing it. but then again, who knows she could have absolutely said that to get more money out of me.

Thank you for letting me know about the member shareholder plan,I did not know about that and I will absolutely look into that and ask about that. That is an awesome feature they offer.

Reasons for denied loan and how can I change them?