Financing was declined...trying hard to not take it as a "sign"

[mmackeymouse]

I had an offer accepted, woo hoo!

So, I had submitted for a loan. I was stunned to get the response that it was declined. I have good credit. I have a decent amount of cash on hand....I could pay for the purchase in cash....I just would prefer not to. Our home and vehicles are owned outright. Yes, there is some credit card debt, but not a massive amount, and we have exactly one credit card. It's not like there are 5 credit cards with debt on them. Just one. So, again, I'm a little shocked I was declined.

I'm working with a local bank on getting a loan against my vehicle. If that doesn't come through, and I can't imagine why it wouldn't, but who knows...then at that point, I'm not sure what to do. I could go with Monera. I could just pay it outright. I'd rather not do either of them. But...it is what it is. BUT...at that point (I am one of those people who believe in "signs") I start to wonder if it's meant to be, it will be. And...if it's not working out the way I want it....maybe it's not meant to be.

Any other alternatives I haven't thought of?

 

[MrsBooch]

Who declined you?

 

[Brett Wyman]

Whoever declined you will send a reason in 7-10 business days. Or you can even call during business hours to find out. And lenders all use different models/methods for determine approval. Once you get your answer, if its nothing that would affect your credit greatly, try another lender.

 

[CanadaDisney05]

Not exactly sure how the credit system works in the US (I know there are some differences), but in Canada, not having any loans is not a positive for your credit score.

Your assets and net worth don't factor into your credit. Only debt.

Credit utilization is important. If you have 1 credit card with a $500 limit, but have have a $400 balance that is 80% utilization. Your better off having 3 cards with a total of $10,000 limit because your utilization would be 4%.

Do you pay the minimum balance on your card every month? Even if its a small amount, bankers don't like to see non-payments. They have a big effect

 

[Marionnette]

I had an offer accepted, woo hoo!

So, I had submitted for a loan. I was stunned to get the response that it was declined. I have good credit. I have a decent amount of cash on hand....I could pay for the purchase in cash....I just would prefer not to. Our home and vehicles are owned outright. Yes, there is some credit card debt, but not a massive amount, and we have exactly one credit card. It's not like there are 5 credit cards with debt on them. Just one. So, again, I'm a little shocked I was declined.

I'm working with a local bank on getting a loan against my vehicle. If that doesn't come through, and I can't imagine why it wouldn't, but who knows...then at that point, I'm not sure what to do. I could go with Monera. I could just pay it outright. I'd rather not do either of them. But...it is what it is. BUT...at that point (I am one of those people who believe in "signs") I start to wonder if it's meant to be, it will be. And...if it's not working out the way I want it....maybe it's not meant to be.

Any other alternatives I haven't thought of?

Credit card balance transfer check that can be deposited in your bank account? If you’ve got a good offer (like 0% for 18 months) and available credit on your card, this could work for you. You will pay a balance transfer fee of 2%-5% of the transferred amount, depending on the offer.

Just be aware that if you do this, it will affect your credit score because it is outstanding debt, using a huge chunk of your available credit and you absolutely cannot be even a single day late with your monthly payments. If you do not pay it off before the end of the promotional period, you will pay interest calculated all the way back to the date that you took out the transfer. In all, it can be extremely risky unless you are highly disciplined and can pay it off with extra cash on hand if the need arises.

It’s not something that I would recommend to everyone but you asked for alternatives.

 

[mmackeymouse]

Who declined you?

LightStream

Whoever declined you will send a reason in 7-10 business days. Or you can even call during business hours to find out. And lenders all use different models/methods for determine approval. Once you get your answer, if its nothing that would affect your credit greatly, try another lender.

They actually already sent me something, most of which didn't make a lot of sense. "Insufficient credit history" was one, in spite of the fact that I have had a credit card for 20 years, and had multiple loans during that time as well. That didn't make any sense to me at all.

Lack of credit repayment history was another, which again...didn't make a lot of sense to me, because any debt that I have or have ever had has been on an autopay basis.

And lack of revolving credit was another, which makes the most sense of anything, because with only one credit card, it makes sense that there is not much revolving credit. So, I get that one.

Not exactly sure how the credit system works in the US (I know there are some differences), but in Canada, not having any loans is not a positive for your credit score.

Your assets and net worth don't factor into your credit. Only debt.

Credit utilization is important. If you have 1 credit card with a $500 limit, but have have a $400 balance that is 80% utilization. Your better off having 3 cards with a total of $10,000 limit because your utilization would be 4%.

Do you pay the minimum balance on your card every month? Even if its a small amount, bankers don't like to see non-payments. They have a big effect

Absolutely. My card is set to autopay the minimum each month. And, I usually pay extra sometime throughout the month to keep the balance either paid off or relatively low.

 

[Brett Wyman]

LightStream





They actually already sent me something, most of which didn't make a lot of sense. "Insufficient credit history" was one, in spite of the fact that I have had a credit card for 20 years, and had multiple loans during that time as well. That didn't make any sense to me at all.

Lack of credit repayment history was another, which again...didn't make a lot of sense to me, because any debt that I have or have ever had has been on an autopay basis.

And lack of revolving credit was another, which makes the most sense of anything, because with only one credit card, it makes sense that there is not much revolving credit. So, I get that one.

It can be counter intuitive to what seems like responsible credit usage, but it's better, credit wise, to have several cards you use with low balances. That helps to both lower your debt to income ratio and it increases your "credit history and repayment history". If you're good with your finances NEVER use a debit card, get a few cards with excellent point benefits, and put all of your purchases there, paying off the cards each month. We have 3k-4k in cash back every year across 3-4 cards we use. We probably have 10-12 active cards (this helps by increasing your MAX available credit.)

 

[soniam]

They actually already sent me something, most of which didn't make a lot of sense. "Insufficient credit history" was one, in spite of the fact that I have had a credit card for 20 years, and had multiple loans during that time as well. That didn't make any sense to me at all.

Lack of credit repayment history was another, which again...didn't make a lot of sense to me, because any debt that I have or have ever had has been on an autopay basis.

And lack of revolving credit was another, which makes the most sense of anything, because with only one credit card, it makes sense that there is not much revolving credit. So, I get that one.

As a previous poster suggested, I bet the lack of a home/car loan is dinging you. It seems silly, but they like to see that you can pay off large debt besides just credit cards. That's one reason we keep our home loan. The rate is incredibly low, so there's really no incentive to pay it off. Having the cash on hand is nice.

 

[CanadaDisney05]

LightStream





They actually already sent me something, most of which didn't make a lot of sense. "Insufficient credit history" was one, in spite of the fact that I have had a credit card for 20 years, and had multiple loans during that time as well. That didn't make any sense to me at all.

Lack of credit repayment history was another, which again...didn't make a lot of sense to me, because any debt that I have or have ever had has been on an autopay basis.

And lack of revolving credit was another, which makes the most sense of anything, because with only one credit card, it makes sense that there is not much revolving credit. So, I get that one.






Absolutely. My card is set to autopay the minimum each month. And, I usually pay extra sometime throughout the month to keep the balance either paid off or relatively low.

Do you have a high credit limit? Or is your balance close to your limit?

 

[mmackeymouse]

It can be counter intuitive to what seems like responsible credit usage, but it's better, credit wise, to have several cards you use with low balances. That helps to both lower your debt to income ratio and it increases your "credit history and repayment history". If you're good with your finances NEVER use a debit card, get a few cards with excellent point benefits, and put all of you purchases there, paying off the cards each month. We have 3k-4k in cash back every year across 3-4 cards we use. We probably have 10-12 active (this helps by increasing your MAX available credit.)

Yeah, I have been shopping around for credit cards. It's just so overwhelming figuring out what the best option(s) are. I had always steered clear of multiple credit cards because I know that opening up new accounts will drag down credit, at least for a bit. Also, it's just easier for me to keep track of "cash back" when it is just one card I am keeping track of. I definitely need to get out of the habit of using my debit card.

As a previous poster suggested, I bet the lack of a home/car loan is dinging you. It seems silly, but they like to see that you can pay off large debt besides just credit cards. That's one reason we keep our home loan. The rate is incredibly low, so there's really no incentive to pay it off. Having the cash on hand is nice.

I am sure you are right. But, in my pea brain, I would think that the fact that I have paid off those loans in the past should be proof that I can pay off large debt.....because we already did it! Plus college loans. Does that make sense?

Do you have a high credit limit? Or is your balance close to your limit?

No my credit limit is not particularly high. And also, no the balance is not close to the limit. I guess all those numbers and everything are relative, but in my estimation, I'd say no to both questions.

 

[ocdb8r1]

I'd also consider the current coronavirus situation as having an impact. Lenders are tightening loan underwriting standards as they conserve cash to offset any potential wave of defaults coming in (and to be extra careful about anyone they're lending to). Lightstream was even part of a recent panel discussing this. (Sorry, DIS won't let me post the link to the article on LendAcademy)

"Adjusting underwriting criteria was a central theme as lenders have tightened up on who they lend to..."

 

[Sandisw]

Did you go foe the short term loan with them? I found when I used them the approval for 3 years was instant and was told for longer it needed a different layer?

 

[cvjw]

OP, I feel your pain. I tried to open up a $500 credit card, co-signing for my son at my bank of 30 years. They denied it even though I probably had $50,000 sitting in their bank. It was crazy. I almost changed banks over it. I have an over 800 credit score, but no debt. Lending institutions can have some rules that don’t make much sense

But, I would never keep a home loan if I could pay it off. It feels really good not having a mortgage paymet.

 

[Yankee626]

Use Monera . They don't look at your credit.

 

[Merida'sTwin]

I agree with the above post about creditors tightening the underwriting requirements. Banks need to make sure they also have enough cash on hand to deal with the upcoming months so they are probably being more stringent with loan applications.

If you have the cash on hand, another option to consider is a CD secured loan. You put the money in a certificate of deposit and the bank uses that for collateral. The loan rate is a certain amount above what the CD is earning (maybe 3%). I would personally be more inclined to do this than an auto loan at this time. If something happens and you default on the CD loan, the bank closes the CD and pays off the loan balance. But if you default with the auto backed loan, you could lose your car (which would be tougher if you rely on it for work/daily commute).

This could potentially help your credit as well as it will show up as an installment loan. This along with your revolving credit history is all used for the credit rating.
And as far as student loan debt, I think it is considered less and less on credit history. More people these days have it and the majority of it is high (compared to 30 years ago when it was mostly doctor's and lawyers who had astronomical student debt).

 

[My3kids1989]

Moneras rates are high but if you’re going to pay it off in the short term anyway, I don’t think it’s worth pulling your credit over and over, over. They aren’t as high as some credit card rates either. The 3 year rates, with a decent amount down, are about the same as the other DVC lenders and as high as some personal loans I’ve seen as well.

 

[spunkylouamanda]

Moneras rates are high but if you’re going to pay it off in the short term anyway, I don’t think it’s worth pulling your credit over and over, over. They aren’t as high as some credit card rates either. The 3 year rates, with a decent amount down, are about the same as the other DVC lenders and as high as some personal loans I’ve seen as well.

vacation club loans is another option to monera

 

[mmackeymouse]

I'd also consider the current coronavirus situation as having an impact. Lenders are tightening loan underwriting standards as they conserve cash to offset any potential wave of defaults coming in (and to be extra careful about anyone they're lending to). Lightstream was even part of a recent panel discussing this. (Sorry, DIS won't let me post the link to the article on LendAcademy)

"Adjusting underwriting criteria was a central theme as lenders have tightened up on who they lend to..."

Yeah good point. I actually think I read that now was a really good time to get a loan for sort of the opposite reason...they need to have some income and people paying off those loans is at least something, so they would be really relaxing loans and rates for that reason. Clearly, that's not always the case.

Did you go foe the short term loan with them? I found when I used them the approval for 3 years was instant and was told for longer it needed a different layer?

I believe I chose 48 months. It may have been 60. 48 or 60.

OP, I feel your pain. I tried to open up a $500 credit card, co-signing for my son at my bank of 30 years. They denied it even though I probably had $50,000 sitting in their bank. It was crazy. I almost changed banks over it. I have an over 800 credit score, but no debt. Lending institutions can have some rules that don’t make much sense

But, I would never keep a home loan if I could pay it off. It feels really good not having a mortgage paymet.

That is absolutely crazy. I do wonder if maybe some lenders shoot for some sort of middle ground. Like...they want someone who is going to pay them back. But...maybe they also want someone who they might get some late payments out of over the way. So...almost like....if you are TOO good on payments, they know they aren't going to get extra fees and interest, so you just aren't worth it. They want someone in between.

Use Monera . They don't look at your credit.

Yeah, I'm thinking that's where I will end up.

I'm not crazy about the interest rates, although I would expect to pay off sooner. Also not crazy about the $199 fee they charge.

The main thing that I don't like is it is so limited on how much you can borrow and length of time. The selections are 3, 7, 10...when I would probably be in the 4-5 year range. It also doesn't give me the choice of a lower loan amount. I want a higher down payment and lower loan than what Monera will offer me. But...this may be my only path, so....gotta play their game.

I agree with the above post about creditors tightening the underwriting requirements. Banks need to make sure they also have enough cash on hand to deal with the upcoming months so they are probably being more stringent with loan applications.

If you have the cash on hand, another option to consider is a CD secured loan. You put the money in a certificate of deposit and the bank uses that for collateral. The loan rate is a certain amount above what the CD is earning (maybe 3%). I would personally be more inclined to do this than an auto loan at this time. If something happens and you default on the CD loan, the bank closes the CD and pays off the loan balance. But if you default with the auto backed loan, you could lose your car (which would be tougher if you rely on it for work/daily commute).

This could potentially help your credit as well as it will show up as an installment loan. This along with your revolving credit history is all used for the credit rating.
And as far as student loan debt, I think it is considered less and less on credit history. More people these days have it and the majority of it is high (compared to 30 years ago when it was mostly doctor's and lawyers who had astronomical student debt).

Thanks for the tip about the CD Loan. I feel okay with the loan against my car, so I will probably wait and see what my bank says about it. I may inquire about a CD Loan as an alternative though.

 

[mamaofsix]

I'm surprised no one has mentioned what stuck out to me right away with your original post: that you have the ability to pay for it in cash, but you'd "prefer not to." I'm not sure I understand why taking out a loan would be better than paying in cash????

 

[lovethesun12]

I'm surprised no one has mentioned what stuck out to me right away with your original post: that you have the ability to pay for it in cash, but you'd "prefer not to." I'm not sure I understand why taking out a loan would be better than paying in cash????

I was waiting for someone else to ask. I'm not much of a leader