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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: shelfins on March 31, 2014, 09:30:38 PM

Title: Denied credit for gaming the system??
Post by: shelfins on March 31, 2014, 09:30:38 PM
Here's my story: After reading up a bit on travelhacking, I decided to apply for a Chase Sapphire Visa Signature credit card, thinking I could do the minimum spend in the next 3 months, get the bonus points, then cancel the card before I have to pay the annual fee a year from now. I did this to great success with the Chase Visa Southwest Reward cards a couple of years back. I signed up for two cards they had that gave a huge number of Southwest miles upon signing, got the miles, kept one, and cancelled the other and rolled the credit line for the second onto the first. On the one I kept, I have of course always paid off my balance in full each month, so I've never paid interest or a late fee on the card, and I've earned more money in miles each year than the annual fee I pay, so they have only lost money on me over the time I've been their customer. I bring this up because after applying for the Chase Sapphire Visa last week, I got a notice from Chase Bank that they were denying me credit!

The letter read:

"Our decision was based on the following specific reasons:
--One or more revolving accts have a high balance compared to the credit line
--New mortgage opened in the past two years
--Recent requests for new credit
--Too many credit cards with balances greater than $1000"

None of these reasons are true. I have two credit card accounts, one of which (my Amex) was carrying ~2% of its credit line, and the other (the Chase Visa) was carrying ~10%. I'm a renter and have no mortgage, new or otherwise. The last time I made a request for new credit was a year and 10 months ago, when I applied for the second of my two Southwest cards, and neither of my credit cards had a balance of greater than $1000. I check my credit rating regularly on CreditKarma, and according to them, my credit score is 782, but according to the letter I received, based on Chase Bank's "Card Acquisition Risk Score," my credit rating is 624! Since you can check your credit report for free when you are denied credit, I did so, and confirmed that everything on there is correct, so it's not an issue of a mistake on my credit report or something like that.

So here are my questions for you Mustachians:
1. Is there some reason that I might not be credit-worthy that I'm missing? Is this something I should be worried about? Should I have brought down my balances even lower or waited even longer before applying for the card?
2. Is it possible that they're just denying me credit because they have reason to believe I'm going to take the bonus points and run, and they won't make any money off of me? Have any of you ever heard of this happening?
3. If so, is there anything I can do about it? Am I just SOL on travelhacking using any Chase credit cards?

What do you all recommend I do?
Title: Re: Denied credit for gaming the system??
Post by: MDM on March 31, 2014, 09:45:19 PM
Call Chase and ask someone in person to explain?  Don't know if they will talk to you about it, but you could at least ask them to explain what you believe are erroneous statements on their part.
Title: Re: Denied credit for gaming the system??
Post by: Another Reader on March 31, 2014, 09:46:36 PM
My guess is either Chase or the credit reporting agency has mixed you up with someone else.  I would get a copy of the report from the agency that Chase used, and try to correct the error with whoever made it.  If Chase used the wrong SSN to pull the report, they may or may not make the effort to fix the problem.  It depends on whether they value you as a customer and who is answering the phone or reading the mail that day.  A certified letter might get the problem bumped up to someone with authority.  However, if the credit agency that supplied this report to Chase has merged your file with someone else's, that needs to be straightened out ASAP.  A screw-up at one of the big three reporting agencies will follow you until it is fixed.  That's certified letters and multiple follow ups until the erroneous information is removed.
Title: Re: Denied credit for gaming the system??
Post by: Thegoblinchief on April 01, 2014, 07:31:39 AM
Weird, but I'd definitely make sure your credit file hasn't somehow been messed up.
Title: Re: Denied credit for gaming the system??
Post by: Jomar on April 01, 2014, 11:13:31 AM
Looks like there was likely a mix-up on their end. Also, Chase isn't losing money on you by any means. Just because you personally aren't directly giving them as much money as they are giving you value, all of the merchants at which you use your card are handing Chase a percentage of that purchase, and that percentage is likely to be higher than average since you are using a high-rewards card. Likely Chase is getting a 2% or more cut of every purchase you make. In the long run, there's no doubt, even with the churning, that credit card companies are making boat loads of money.
Title: Re: Denied credit for gaming the system??
Post by: Prairie Stash on April 01, 2014, 11:27:30 AM
Your credit report score (782) might not be the same thing as "Card Acquisition Risk Score" (682).  Companies are allowed to have profiles of past customers, separate from the credit reporting.  It sounds like you were flagged in the system as not worth the hassle.

It's entirely legitimate, why would they want to deal with you? If I suspected you're just signing up for bonuses I would deny you. It's possible they're getting smarter. Also, you did have a recent request, 22 months ago.  Reason #3 applies directly to you.
Title: Re: Denied credit for gaming the system??
Post by: nawhite on April 01, 2014, 11:47:23 AM
Get your credit report immediately. Gloom and Doom FUD, but seriously, at the very minimum sign up for and make sure all of the accounts on there are yours.
Title: Re: Denied credit for gaming the system??
Post by: dragoncar on April 01, 2014, 01:09:10 PM
Agree with the above, but will add that in some cases (probably not yours) they will deny new credit for gaming the system.  Like if you are constantly opening and closing accounts, I could see them saying "no more."  But I doubt they would make up fake reasons that aren't true.
Title: Re: Denied credit for gaming the system??
Post by: kendallf on April 01, 2014, 01:19:02 PM
Ask Chase specifically which agency they use, and check for mistakes/mixups. 

I have been gaming the cards, and specifically Chase's cards, for a couple of years now.  I currently have three Chase cards and about 40k of credit limit with them alone, all with zero balances after taking all of the points from the initial spend on each card.  Additionally, I called and converted my Sapphire Select to a regular Sapphire card before the annual fee due date.  My credit score is in the 760s-780s, depending on who pulls it and when.   

All that to say, that I don't believe your profile would even raise an eyebrow at Chase.  I'd be looking for a mixup.
Title: Re: Denied credit for gaming the system??
Post by: GuitarStv on April 01, 2014, 01:26:55 PM
Potential identity theft scenario.
Title: Re: Denied credit for gaming the system??
Post by: shelfins on April 01, 2014, 09:05:25 PM
Thanks everyone for the feedback! I checked my credit report as soon as I got the letter, which looked correct, so it wasn't an identify theft/fraud thing. I called Chase today and indeed it looks like it was a mix-up on their end. They looked at my real credit report and approved me for the card. So it looks like all's well that ends well.