Credit underwriting rant

[trying_to_fix]

Let me preface this by saying that I understand filing BK is a huge deal from a financial perspective. I also know that you are seen as a high risk from this point on until all traces of it drop from your credit report. But I also believe creditors are not exercising common sense when it comes to a lot of underwriting practices.

My rant is this: I wanted to buy some electronics from a local Best Buy store. They have an offer for a few months interest-free financing so I thought I'd use it. I can pay cash for these toys but if you can finance something over time for free then why not? So I decided to apply for a Best Buy credit/store card. I get the "Under review" message and when I do get a decision in about an hour it's a denial.

I was honestly quite shocked. Why? Because HSBC used to issue this card and it's now owned by Capital One. Sure I did BK both of these about 4 years ago but since then have both an Orchard (HSBC) and Capital One Platinum card (each with about $1500 credit limits) that I have had a perfect history with for the past 3 years.

Since the BK I've doubled my income to just under $200k, acquired over $30k in new credit lines, maintained an under 10% DTI, and have not made a late payment. But even with this profile I still don't qualify for a little store card?

I called them to ask for reconsideration and they acknowledged that they see I have perfect history with them for the past three years, but their system will kick out anyone who has IIBed their accounts. Since each store makes their own rules that is why I get different criteria.

I was blown away by this because it does seem to lack some common sense. I am a much better risk now then I was when I got the original two cards that were IIBed. But I guess rules are rules and I didn't fit their idea of the perfect date.

The good news is, I still got the electronic toys I wanted but just elected to pay cash for them. So I guess in a way the story has a happy ending but I just wanted to publicly air my grievance.

[Floridagail]

We bought a Home 200K in 2005 , went thru with no hitches, (no bkrptcys no late pmts on credit report) we attempted to buy a Ref at best buy got denied, We laughed , Hubby had 6 ccs, probably near their limit. We got a house , but could not get the Ref. We ended up at Sears.

[Charlie777]

These things are all so unpredictable. I discharged a substantial amount to CapOne and a Best Buy (HSBC) card. I was able to get a BBRZ card (HSBC) and one CLI about two years after BK, got one CLI from the BBRZ card from HSBC and another after CapOne took over. All this without recon.

I'm not sure where you went for recon, call from store, one provided by others here or ???

[justbroke]

There is such a think known as "black listing" in the credit industry. It is very common when you either defaulted on a debt or filed bankruptcy and discharged a debt. American Express is the most well known for this type of denial. A creditor does not have to extend credit to anyone, so long as they have a reason based on sound business principles. Each individual "store" credit card issued by a bank will have criteria specific to that particular store. There are creditors out there that just see your BK and deny you, even if your score is 740.

I don't fault the creditors for this reason.

[Logan]

Let me preface this by saying that I understand filing BK is a huge deal from a financial perspective. I also know that you are seen as a high risk from this point on until all traces of it drop from your credit report. But I also believe creditors are not exercising common sense when it comes to a lot of underwriting practices.

My rant is this: I wanted to buy some electronics from a local Best Buy store. They have an offer for a few months interest-free financing so I thought I'd use it. I can pay cash for these toys but if you can finance something over time for free then why not? So I decided to apply for a Best Buy credit/store card. I get the "Under review" message and when I do get a decision in about an hour it's a denial.

I was honestly quite shocked. Why? Because HSBC used to issue this card and it's now owned by Capital One. Sure I did BK both of these about 4 years ago but since then have both an Orchard (HSBC) and Capital One Platinum card (each with about $1500 credit limits) that I have had a perfect history with for the past 3 years.

Since the BK I've doubled my income to just under $200k, acquired over $30k in new credit lines, maintained an under 10% DTI, and have not made a late payment. But even with this profile I still don't qualify for a little store card?

I called them to ask for reconsideration and they acknowledged that they see I have perfect history with them for the past three years, but their system will kick out anyone who has IIBed their accounts. Since each store makes their own rules that is why I get different criteria.

I was blown away by this because it does seem to lack some common sense. I am a much better risk now then I was when I got the original two cards that were IIBed. But I guess rules are rules and I didn't fit their idea of the perfect date.

The good news is, I still got the electronic toys I wanted but just elected to pay cash for them. So I guess in a way the story has a happy ending but I just wanted to publicly air my grievance.

Why not get a credit card that gets you cashback then pay it in full when the bill comes? I get about $800 every January because I use my CC and it's tax free .

Logan

[trying_to_fix]

We bought a Home 200K in 2005 , went thru with no hitches, (no bkrptcys no late pmts on credit report) we attempted to buy a Ref at best buy got denied, We laughed , Hubby had 6 ccs, probably near their limit. We got a house , but could not get the Ref. We ended up at Sears.

Gotta love it huh? We can trust you with hundreds of thousands of dollars but not with $1000!

These things are all so unpredictable. I discharged a substantial amount to CapOne and a Best Buy (HSBC) card. I was able to get a BBRZ card (HSBC) and one CLI about two years after BK, got one CLI from the BBRZ card from HSBC and another after CapOne took over. All this without recon.

I'm not sure where you went for recon, call from store, one provided by others here or ???

A number was provided to me when I received the denial message. It is (302) 327-2816. I did get right through to someone after going through a few of the menus.

Is there a better number to call for recon? It's probably beside the point now but still might be helpful in the future.

There is such a think known as "black listing" in the credit industry. It is very common when you either defaulted on a debt or filed bankruptcy and discharged a debt. American Express is the most well known for this type of denial. A creditor does not have to extend credit to anyone, so long as they have a reason based on sound business principles. Each individual "store" credit card issued by a bank will have criteria specific to that particular store. There are creditors out there that just see your BK and deny you, even if your score is 740.

I don't fault the creditors for this reason.

Yes I'm familiar with the blacklisting concept and I also don't fault them for using it. But at times they should probably reevaluate the list and make sure their exclusionary criteria is not too restrictive. Again, completely in their right to deny those of us who have wronged them but just wishing that wouldn't be the case forever.

Why not get a credit card that gets you cashback then pay it in full when the bill comes? I get about $800 every January because I use my CC and it's tax free .

Logan

That is actually what I did. I just didn't want to give the impression that I was incurring additional debt because I'll pay off the charge in full once the bill comes in. In fact I use my cash-back card for almost every expense in my daily life for the same benefit you mentioned. It actually does add up over time!

[Logan]

I don't consider a credit card debt when I pay it in full. To me it's just a bill just like electricity and I charge on my credit card within my budget. There are many here who don't agree but in the end I reap the rewards of cashback and the protection from using a credit card. I used a debit card for a while but after I had my card compromised and over 1k was taken from my checking account I switched back to credit cards.

[dmc-2008]

I thought the bk only stays on report for 7 years. So in a chap 13 it would be only 2 more years after discharge right? Thank you

[LadyInTheRed]

I thought the bk only stays on report for 7 years. So in a chap 13 it would be only 2 more years after discharge right? Thank you

By law BK can stay for 10 years. My understanding is that by policy of the agencies, Chap 7 stays for 10 and Chap 13 for only 7. Yes, 2 years after discharge for a 60 month Chap 13. Actually, 2 years after you complete your plan, since the 7 years run from the date you file your petition and it takes some time after your last payment to get the discharge.

[iswmle]

I don't consider a credit card debt when I pay it in full. To me it's just a bill just like electricity and I charge on my credit card within my budget. There are many here who don't agree but in the end I reap the rewards of cashback and the protection from using a credit card. I used a debit card for a while but after I had my card compromised and over 1k was taken from my checking account I switched back to credit cards.

QFT

Yeah, I am a sucker for the cash back cards, though I hate applying for new credit and like to just stick with what I think is the best. Logan, I seem to remember you favor USAA, my mom does as well. I think they are totally worth it when it comes to customer service.

For us, I find Capital One to be our best fit. My fiance has excellent credit, has literally never paid a dime of interest in his life. We get credit cards offers for him on a daily basis, everything from Amex to Citi... but for our own personal use and expenditure we think the Capital One Venture card is his best fit, mostly because we travel by plane at least twice a year.

I like the Capital One Cash Back. Apparently they give a 50% of however much you earned the previous year. Rewards cards are the bestest as long as they are PIF.

[Logan]

QFT

Yeah, I am a sucker for the cash back cards, though I hate applying for new credit and like to just stick with what I think is the best. Logan, I seem to remember you favor USAA, my mom does as well. I think they are totally worth it when it comes to customer service.

For us, I find Capital One to be our best fit. My fiance has excellent credit, has literally never paid a dime of interest in his life. We get credit cards offers for him on a daily basis, everything from Amex to Citi... but for our own personal use and expenditure we think the Capital One Venture card is his best fit, mostly because we travel by plane at least twice a year.

I like the Capital One Cash Back. Apparently they give a 50% of however much you earned the previous year. Rewards cards are the bestest as long as they are PIF.

I Use USAA because I get 1.25 % back on everything but I also have a few cards that I use for specific reasons. Capital One when traveling out of the country, AMEX for costco, gas and restaurants, target and lowes for 5% off, CFNA for $14 oil change and tire rotation, and Chase Freedom for 5% cashback on the current promotion.
Haven't added it all up but I probably save/get back $1500 a year.
Logan

[trying_to_fix]

I use my NFCU Cash Rewards card for almost everything and then I also have a Capital One Platinum that offers me cash back but doesn't have as much of a credit limit.

All cash rewards between the two of them go into a savings account. Not earning much interest there but at least it's something that is saving up over time.

[justbroke]

I love my NFCU nRewards and Flagship cards. I save up money all year and get one of the VISA giftcards at the end of the year. I usually have about $600 in cash back at the end of the year.

[IBroke]

So, after having my Capital one cash back rewards for 6 months now, they just raised my CL from $500 to $750. Not bad.

BTW, an interesting cash back DEBIT card is the one offered with a PayPal account. You get 1% cash back on every credit transaction and the funds are debited from your PayPal account - or, they way I have set it up, gets debited from your linked checking account.

So if you don't want to go the credit card route, this is an interesting option.

[justbroke]

I have a grandfathered 1.5% Cashback PayPal debit card! It is what I used throughout my Chapter 13!