Why is a High Credit Score Alone No Longer Enough??

[Morning Glory]

It's perfectly reasonable to be annoyed by having to do a bunch of extra paperwork even if you understand the reason behind it.

Like writing your income in box?   If you are being irked by things like that you are doing life wrong.

I think OP was talking about mortgages and other installment loans, not credit cards lol.

 I've never had a mortgage (primary or refi) where the bank gave me a list of all the documentation they would need up front. The pre-approval is pretty easy but then after the offer is in there are always multiple rounds of emails back and forth with one more bank statement or two more paystubs or a letter explaining why income was higher in January than February. That sort of thing.  Sometimes up until the day before closing. It was worse back in the day when the documents had to be faxed. 

It's been 20 years since I've had a car loan but I assume those are somewhere in between???

[GilesMM]

It's perfectly reasonable to be annoyed by having to do a bunch of extra paperwork even if you understand the reason behind it.

Like writing your income in box?   If you are being irked by things like that you are doing life wrong.

I think OP was talking about mortgages and other installment loans, not credit cards lol.

 I've never had a mortgage (primary or refi) where the bank gave me a list of all the documentation they would need up front. The pre-approval is pretty easy but then after the offer is in there are always multiple rounds of emails back and forth with one more bank statement or two more paystubs or a letter explaining why income was higher in January than February. That sort of thing.  Sometimes up until the day before closing. It was worse back in the day when the documents had to be faxed. 

It's been 20 years since I've had a car loan but I assume those are somewhere in between???

No, the OP said they were denied cards, perhaps for churning purposes?

[Metalcat]

It's perfectly reasonable to be annoyed by having to do a bunch of extra paperwork even if you understand the reason behind it.

Like writing your income in box?   If you are being irked by things like that you are doing life wrong.

I think OP was talking about mortgages and other installment loans, not credit cards lol.

 I've never had a mortgage (primary or refi) where the bank gave me a list of all the documentation they would need up front. The pre-approval is pretty easy but then after the offer is in there are always multiple rounds of emails back and forth with one more bank statement or two more paystubs or a letter explaining why income was higher in January than February. That sort of thing.  Sometimes up until the day before closing. It was worse back in the day when the documents had to be faxed. 

It's been 20 years since I've had a car loan but I assume those are somewhere in between???

No, the OP said they were denied cards, perhaps for churning purposes?

Yep, and I don't think they're pissed about needing to provide extra info, I think they're pissed that the high credit score isn't enough to be given credit if the company has a reason not to.

At least that's how I understood it. They're pissed off that the credit score doesn't encompass everything the cc company needs to make a decision.

[Telecaster]

It's perfectly reasonable to be annoyed by having to do a bunch of extra paperwork even if you understand the reason behind it.

Like writing your income in box?   If you are being irked by things like that you are doing life wrong.

I think OP was talking about mortgages and other installment loans, not credit cards lol.

When you get done laughing, re-read the title of the thread  "Why is a High Credit Score Alone No Longer Enough??


Have banks ever made mortgages based solely on credit score?  Of course not.  FICO alone has never been enough for a mortgage.   The OP is clearly talking about consumer loans.  But if that weren't clear enough, he then specifically says he's talking about credit cards.   

[Morning Glory]

It's perfectly reasonable to be annoyed by having to do a bunch of extra paperwork even if you understand the reason behind it.

Like writing your income in box?   If you are being irked by things like that you are doing life wrong.

I think OP was talking about mortgages and other installment loans, not credit cards lol.

When you get done laughing, re-read the title of the thread  "Why is a High Credit Score Alone No Longer Enough??


Have banks ever made mortgages based solely on credit score?  Of course not.  FICO alone has never been enough for a mortgage.   The OP is clearly talking about consumer loans.  But if that weren't clear enough, he then specifically says he's talking about credit cards.

He did mention a motorcycle loan in the first post. I must have incorrectly inferred that either a motorcycle loan is more similar to a mortgage than to a credit card, or that he was talking about lending in general because he mentioned being irked that banks care about income more than net worth, and a mortgage is the only time I've ever heard of that making a difference. There have been multiple threads on here about the hoops required to get a mortgage without regular income so it's a valid topic even if only tangentially related to the original post.

The lol was because you are right that credit cards are ridiculously easy compared to any other lending.

[Mustache ride]

Pretty sure OP posted the same thing on Bogleheads and the thread was locked after it was obvious they were upset about not being able to churn CCs.

[cowman]

sorry to get involved as a stummbin drunk but my buddy beside me who works in ....."finance"...tells me that people like me(and probably)you are fucking leeches(and many other  derogitory terms) because we  know what we owe and pay it off before it costs us therefore they never make money.So to them we are not a good customer.They want someone who will pay them eventually..... with interest

[Ron Scott]

This is a great example of why AI currently sucks.  It ignores the actual intent of the original question in order to spew out useless but vaguely related information.  What a waste of time.

Ugh, so true.

Too funny!

In order to logically make a comment like this—or nod in agreement with it—you’d have to know the question that was actually posed to the AI, which neither of you do.

I should have posted the question I posed to Bard originally as it was an attempt to reflect a few comments on the thread. It was “ Why do people with high credit scores routinely get denied credit when they apply for a loan?”

Pro Tip: Most AI’s will paraphrase the original question in the intro to their response, which Bard did in this case.

In any event, please continue with your criticism. Sorry to interrupt with details…

————-

PS: For convenience, this was the AI’s response—


There are a number of reasons why people with high credit scores may be denied credit when they apply for a loan. Some of the most common reasons include:

Too much existing debt. Even if you have a good credit score, lenders may still deny you credit if you have too much existing debt. This is because they want to make sure that you can afford to repay the new loan in addition to your existing debt obligations.
Not enough income. Lenders will also consider your income when making a decision about whether or not to approve your loan application. If your income is too low, they may be concerned that you will not be able to afford to repay the loan.

Too many recent hard inquiries. When you apply for a loan, the lender will perform a hard inquiry on your credit report. This type of inquiry can temporarily lower your credit score by a few points. If you have too many hard inquiries on your credit report in a short period of time, lenders may be concerned that you are taking on too much debt.

Other factors. In addition to your credit score, income, and debt-to-income ratio, lenders may also consider other factors when making a decision about whether or not to approve your loan application. These factors may include your employment history, type of loan you are applying for, and the purpose of the loan.

It is important to note that lenders are not required to approve every loan application, even if the applicant has a high credit score. Lenders have their own underwriting criteria, and they may deny a loan application for any reason they choose, as long as it is not based on a discriminatory factor.

If you have been denied a loan despite having a high credit score, you should review your credit report carefully to make sure that there are no errors. You should also try to understand the lender's reasons for denying your application. Once you have a better understanding of the situation, you may be able to take steps to improve your chances of being approved for a loan in the future.

Here are some tips for improving your chances of getting approved for a loan, even if you have been denied in the past:

Pay down your existing debt. This will reduce your debt-to-income ratio and make you more attractive to lenders.

Avoid opening new credit accounts unless you absolutely need them. Each new credit application results in a hard inquiry on your credit report, which can temporarily lower your score.
Keep your credit utilization ratio low. This is the percentage of your available credit that you are currently using. A low credit utilization ratio shows lenders that you are responsible with credit.
Make sure that your credit report is accurate. You can get a free copy of your credit report from each of the three major credit bureaus once a year at annualcreditreport.com. Review your credit report carefully and dispute any errors.

Consider applying to multiple lenders. Different lenders have different underwriting criteria, so you may be more likely to be approved for a loan from one lender than another.
If you are still having trouble getting approved for a loan, you may want to consider working with a credit counselor or financial advisor. They can help you assess your financial situation and develop a plan to improve your credit score and get approved for the type of loan you need.

[Metalcat]

This is a great example of why AI currently sucks.  It ignores the actual intent of the original question in order to spew out useless but vaguely related information.  What a waste of time.

Ugh, so true.

Too funny!

In order to logically make a comment like this—or nod in agreement with it—you’d have to know the question that was actually posed to the AI, which neither of you do.

I should have posted the question I posed to Bard originally as it was an attempt to reflect a few comments on the thread. It was “ Why do people with high credit scores routinely get denied credit when they apply for a loan?”

Pro Tip: Most AI’s will paraphrase the original question in the intro to their response, which Bard did in this case.

In any event, please continue with your criticism. Sorry to interrupt with details…

————-

PS: For convenience, this was the AI’s response—


There are a number of reasons why people with high credit scores may be denied credit when they apply for a loan. Some of the most common reasons include:

Too much existing debt. Even if you have a good credit score, lenders may still deny you credit if you have too much existing debt. This is because they want to make sure that you can afford to repay the new loan in addition to your existing debt obligations.
Not enough income. Lenders will also consider your income when making a decision about whether or not to approve your loan application. If your income is too low, they may be concerned that you will not be able to afford to repay the loan.

Too many recent hard inquiries. When you apply for a loan, the lender will perform a hard inquiry on your credit report. This type of inquiry can temporarily lower your credit score by a few points. If you have too many hard inquiries on your credit report in a short period of time, lenders may be concerned that you are taking on too much debt.

Other factors. In addition to your credit score, income, and debt-to-income ratio, lenders may also consider other factors when making a decision about whether or not to approve your loan application. These factors may include your employment history, type of loan you are applying for, and the purpose of the loan.

It is important to note that lenders are not required to approve every loan application, even if the applicant has a high credit score. Lenders have their own underwriting criteria, and they may deny a loan application for any reason they choose, as long as it is not based on a discriminatory factor.

If you have been denied a loan despite having a high credit score, you should review your credit report carefully to make sure that there are no errors. You should also try to understand the lender's reasons for denying your application. Once you have a better understanding of the situation, you may be able to take steps to improve your chances of being approved for a loan in the future.

Here are some tips for improving your chances of getting approved for a loan, even if you have been denied in the past:

Pay down your existing debt. This will reduce your debt-to-income ratio and make you more attractive to lenders.

Avoid opening new credit accounts unless you absolutely need them. Each new credit application results in a hard inquiry on your credit report, which can temporarily lower your score.
Keep your credit utilization ratio low. This is the percentage of your available credit that you are currently using. A low credit utilization ratio shows lenders that you are responsible with credit.
Make sure that your credit report is accurate. You can get a free copy of your credit report from each of the three major credit bureaus once a year at annualcreditreport.com. Review your credit report carefully and dispute any errors.

Consider applying to multiple lenders. Different lenders have different underwriting criteria, so you may be more likely to be approved for a loan from one lender than another.
If you are still having trouble getting approved for a loan, you may want to consider working with a credit counselor or financial advisor. They can help you assess your financial situation and develop a plan to improve your credit score and get approved for the type of loan you need.

Actually I was just agreeing with the general sentiment that AI spews out shit. I didn't even read your original reply quoting AI content. I've just had ChatGPT produce so much BS nonsense that I feel comfortable agreeing with the general meaning of the quoted statement.

[GuitarStv]

This is a great example of why AI currently sucks.  It ignores the actual intent of the original question in order to spew out useless but vaguely related information.  What a waste of time.

Ugh, so true.

Too funny!

In order to logically make a comment like this—or nod in agreement with it—you’d have to know the question that was actually posed to the AI, which neither of you do.

I should have posted the question I posed to Bard originally as it was an attempt to reflect a few comments on the thread. It was “ Why do people with high credit scores routinely get denied credit when they apply for a loan?”

Yeah . . . that was what was being discussed, so it's roughly what I assumed - but thank you for confirming.  The 'answer' given remains a regurgitation of vaguely related information, and a total waste of time that did not address the question.

[MarcherLady]

The lenders are in competition & the credit score isn't granular enough, so they use the extra information to filter customers. Lender A wants to concentrate on a low volume of high-profit customers, so calculates that 'credit score plus factor x' gets that sector of the market. Lender B wants as high a volume of customers as possible, and cares less about any individual customer's profitability, because it hopes to cross-sell loads of other products & get brand loyalty, so uses 'credit score plus factor y'. Lenders C, D and E all have their own flavour of client-base they are trying to attract with other weightings of the data. And to tie it all back to previous comments, what 'factor x' or 'factor y' are in each case is probably made up of many different elements of repayment and spending behaviour and is being calculated by AI.

[mistymoney]

I think there might be a fundamental difference in POV. While we like to think a credit score is something we've "earned" (maybe only if its high!) and that certain privledges - such as eacy granting of credit - should follow.

The credit score was never about us. It is a tool that the lenders wanted and use for their own ends - however that may be.

I'm not understanding how walking into a place and getting credit right away is laid out as how it 'should' be. Likely that place determined that worked for them - or learned that it didn't - or even that particular person at the counter made a judgement call or mistake?

When you ask someone to lend you money, to extend you credit, it's up to them how they want to evaluate your credit-worthiness. They aren't judging your integrity so much as they are judging - are we going to make money, or lose money, on this person. I'm sure that credit card companies are really focused in on identifying and stopping churners.

So in that sense - those who have pressed to take advanage of sign up incentives may be making it a little more difficult for everyone to make a lot of changes in your credit, even if you aren't a churner.

[joer1212]

Pretty sure OP posted the same thing on Bogleheads and the thread was locked after it was obvious they were upset about not being able to churn CCs.

It's not just credit card companies that are responsible for this recent trend of nitpicking your credit, despite having a high credit score.

[Ron Scott]

This is a great example of why AI currently sucks.  It ignores the actual intent of the original question in order to spew out useless but vaguely related information.  What a waste of time.

Ugh, so true.

Too funny!

In order to logically make a comment like this—or nod in agreement with it—you’d have to know the question that was actually posed to the AI, which neither of you do.

I should have posted the question I posed to Bard originally as it was an attempt to reflect a few comments on the thread. It was “ Why do people with high credit scores routinely get denied credit when they apply for a loan?”

Pro Tip: Most AI’s will paraphrase the original question in the intro to their response, which Bard did in this case.

In any event, please continue with your criticism. Sorry to interrupt with details…

Yeah . . . that was what was being discussed, so it's roughly what I assumed - but thank you for confirming.  The 'answer' given remains a regurgitation of vaguely related information, and a total waste of time that did not address the question.

LOL…tell us more.

[nereo]

Pretty sure OP posted the same thing on Bogleheads and the thread was locked after it was obvious they were upset about not being able to churn CCs.

It's not just credit card companies that are responsible for this recent trend of nitpicking your credit, despite having a high credit score.

OFFS

1) it’s not a “recent trend”
2) why shouldn’t lenders use additional information to determine an applicant’s worthiness? Put another way, why would they limit themselves to a single, sometimes erroneous number?

OP - you seem very upset that you were denied, but I have not seen any retrospection about why.

[Gronnie]

They aren't denying you because you are unlikely to repay. They are denying you because they have (almost certainly correctly) identified that you won't be a profitable (or at least only slightly profitable) customer.

[Dicey]

It's likely they've figured out that folks have learned to game their system. It's not personal, you probably just fit the profile of a gamer. If the shoe fits...

In the big picture, who cares about perfect credit scores anyway? Mine's never been "perfect", probably due to lack of installment/car payments, and yet I've been approved for millions of dollars of mortgages. Meh.

[joer1212]

Pretty sure OP posted the same thing on Bogleheads and the thread was locked after it was obvious they were upset about not being able to churn CCs.

It's not just credit card companies that are responsible for this recent trend of nitpicking your credit, despite having a high credit score.

OFFS

1) it’s not a “recent trend”
2) why shouldn’t lenders use additional information to determine an applicant’s worthiness? Put another way, why would they limit themselves to a single, sometimes erroneous number?

OP - you seem very upset that you were denied, but I have not seen any retrospection about why.

1) It absolutely is, at least when it comes to vehicle purchases. That's been my personal experience, at least.
2) Exactly my point-- your "credit score" is not what it's cracked up to be.
 

[Telecaster]

1) It absolutely is, at least when it comes to vehicle purchases. That's been my personal experience, at least.
2) Exactly my point-- your "credit score" is not what it's cracked up to be.

1.  Your motorcycle loan was secured by the motorcycle. 

2. Cracked to be...by who?  You are the only one who seems mystified.

[nereo]

Pretty sure OP posted the same thing on Bogleheads and the thread was locked after it was obvious they were upset about not being able to churn CCs.

It's not just credit card companies that are responsible for this recent trend of nitpicking your credit, despite having a high credit score.

OFFS

1) it’s not a “recent trend”
2) why shouldn’t lenders use additional information to determine an applicant’s worthiness? Put another way, why would they limit themselves to a single, sometimes erroneous number?

OP - you seem very upset that you were denied, but I have not seen any retrospection about why.

1) It absolutely is, at least when it comes to vehicle purchases. That's been my personal experience, at least.
2) Exactly my point-- your "credit score" is not what it's cracked up to be.

Did you actually read any of the credit applications? Your score is just one input, and has been ever since I’ve been alive. Almost all applications also ask about income and your job (two things not included in your credit score) because - surprise! - those are important predictors. This forum is filled with posts of FIREes who were denied a ReFi or other LOC because they didn’t fit within the standard metrics define excellent credit.

Your credit score is a single metric. It is not and never has been the end all and be all of obtaining credit. An excellent score does not entitle you, nor does it require lenders to extend you credit.

[joer1212]

Pretty sure OP posted the same thing on Bogleheads and the thread was locked after it was obvious they were upset about not being able to churn CCs.

It's not just credit card companies that are responsible for this recent trend of nitpicking your credit, despite having a high credit score.

OFFS

1) it’s not a “recent trend”
2) why shouldn’t lenders use additional information to determine an applicant’s worthiness? Put another way, why would they limit themselves to a single, sometimes erroneous number?

OP - you seem very upset that you were denied, but I have not seen any retrospection about why.

1) It absolutely is, at least when it comes to vehicle purchases. That's been my personal experience, at least.
2) Exactly my point-- your "credit score" is not what it's cracked up to be.

Did you actually read any of the credit applications? Your score is just one input, and has been ever since I’ve been alive. Almost all applications also ask about income and your job (two things not included in your credit score) because - surprise! - those are important predictors. This forum is filled with posts of FIREes who were denied a ReFi or other LOC because they didn’t fit within the standard metrics define excellent credit.

Your credit score is a single metric. It is not and never has been the end all and be all of obtaining credit. An excellent score does not entitle you, nor does it require lenders to extend you credit.

Exactly my point-- your "credit score" is not what it's cracked up to be.

[joer1212]

2. Cracked to be...by who?  You are the only one who seems mystified.

The general public. They seem to think that a high credit score is a panacea. Where have you been?

[Telecaster]

The general public. They seem to think that a high credit score is a panacea. Where have you been?

I'm a member of the general public and I've never heard that a high credit score was a panacea.   And reading through this thread, you seem to be the only with this misconception. 

[Metalcat]

2. Cracked to be...by who?  You are the only one who seems mystified.

The general public. They seem to think that a high credit score is a panacea. Where have you been?

Who is telling them this? Why are folks walking around thinking a credit score is something it isn't??

It's not coming from any even remotely credible source, so where does this nonsense come from?

FTR, I've never heard anyone have this attitude except for a few posters here.

[joer1212]

The general public. They seem to think that a high credit score is a panacea. Where have you been?

I'm a member of the general public and I've never heard that a high credit score was a panacea.   And reading through this thread, you seem to be the only with this misconception.

You're a member of this forum; you're not the general public. The average person's idea of 'good credit' is a high credit score, not how many accounts he has open, how long he's had them, his income to credit ratio, etc.. C'mon, you know that.

[nereo]

The general public. They seem to think that a high credit score is a panacea. Where have you been?

I'm a member of the general public and I've never heard that a high credit score was a panacea.   And reading through this thread, you seem to be the only with this misconception.

You're a member of this forum; you're not the general public. The average person's idea of 'good credit' is a high credit score, not how many accounts he has open, how long he's had them, his income to credit ratio, etc.. C'mon, you know that.

Anyone who has filled out an application for a mortgage, a new car loan, or a business loan knows they ask about your income, assets, and employment record, among numerous other things. NONE of these things are reflected in your credit score. Anyone who has bothered to actually read a standard credit application has seen that lenders can deny credit or offer rates above prime for a variety of reasons. Heck, anyone following Trumps trial in NYC has heard that he’s in trouble for allegedly lying about the value of his assets to get better rates from his lenders (a crime if done intentionally, and has nothing to do with his credit score).

[Dicey]

The general public. They seem to think that a high credit score is a panacea. Where have you been?

I'm a member of the general public and I've never heard that a high credit score was a panacea.   And reading through this thread, you seem to be the only with this misconception.

You're a member of this forum; you're not the general public. The average person's idea of 'good credit' is a high credit score, not how many accounts he has open, how long he's had them, his income to credit ratio, etc.. C'mon, you know that.

@joer1212, If you don't know what a Rule #1 Violation is, please look it up before you type one more word. Thank you.