THis question was inspired by another poster's question about credit, and I guess its really aimed at people working in the lending institutions or those who know a little bit about it.
I really want to know why firms will not tell you why you have been refused credit for something. i have often been told that my credit score is too low for certain storecards but the providers will never tell me why. Instead they refer me to Experian or whoever, but even when I refer to the credit report, I dont really know exactly why it is low. I have no CCJs, have never been bankrupt, I am on the electoral roll. I have a credit card which I alsways pay off in full, save for a couple of occassions when I accidentally paid late.
I DO understand that previous residents at my address may affect my score, blah blah, but what I really want to know is why cant stores/lenders give SPECIFIC reasons for their refusal rather than me having to guess?
2006-12-18 06:25:05 · 6 answers · asked by Chimera's Song 6 in Business & Finance ➔ Credit
There are a ton of factors that go into credit scoring and approval for credit cards and store cards.
Make sure you get a copy of your credit report, whether you get it from Experian or from the official www.annualcreditreport.com
Take a look at the credit depth and history, since you say you've got no derogatory accounts. If you only have one credit card that you pay on time, it may not be enough to prove to other creditors that you're a solid borrower.
You need to have credit history, and multiple lines of credit to prove yourself. That's why it is important to open several lines of credit, whether they be credit cards, utilities, cell phone, mortgage, auto, etc, and keep them open and active.
No one wants to lend to someone with only one credit card with a limit of $500. People want to see a solid credit history with plenty of activity.
If this isn't the reason, it could be that you have a random collection or some other misinformation on your report that you need to clear up. Either way, reviewing the credit report is the only way to solve this.
Learn more about credit and mortgage:
http://www.thetruthaboutmortgage.com
2006-12-18 07:10:42 · answer #1 · answered by Todd S 3 · 1⤊ 1⤋
You're going to have to get to know the FICO scoring model intimately. You can go out to myFICO.com and download information on how they calculate the score; needless to say it's a PAIN. They don't really share how they do it, but I have a few secrets for you. Revolving debt is highly weighted, so use your credit cards sparingly, if at all. Don't go over 30% of your available credit, or your score will drop.
Previous residents are your address do NOT affect your score. The best thing for your score is time, and keeping low balances relative to how much was initially loaned. Only apply for credit once or twice a year and you'll be in good shape in no time.
2006-12-18 14:42:06 · answer #2 · answered by Kevin K 3 · 1⤊ 0⤋
Fair & Issacs creatd the score and until they were recently forced by the US Supreme Court to loosen their secrecy, they would reveal very very little about the calcualtion. In court, they argued that there are people that are smart enough to figure out how to fully manipulate the equation in that they can create a massive amount of debt, not ever pay it back and still maintain a good score. They also argued that these people would also be able to manipulate the debt itself. If that was fully possible, companies and possibly people everywhere would have drastic negative effects upon their score, available credit and their financial reports...very few number people would hold massive massive power.
The US Supreme Court agreed in principal, but forced Fair & Issacs to provide more information to the general public regarding how their score is figured. The courts argued that people are unable to find adequate information and were left as to almost guess on things to do in improving their scores.
FICO agreed and they decided on what information can be released without endangering the equation.
2006-12-18 16:33:59 · answer #3 · answered by dougzinboston 4 · 1⤊ 0⤋
The person who deals with your application for credit doesnt know specifically why you've been refused. The computer programme bases the decision on other factors as well as credit score - income, rent/mortgage, level of credit required. You may have a low score because you only have one line of credit - your credit card.
2006-12-18 18:10:00 · answer #4 · answered by jeanimus 7 · 1⤊ 0⤋
The stores set a standard number below which they won't provide a card.
You can call someone at the credit reporting agency to have them explain what has lowered your score. Late payments on a credit card, while they may seem minor to you, are extremely damaging to your credit score.
2006-12-18 14:34:03 · answer #5 · answered by Anonymous · 0⤊ 0⤋
They cannot tell you b/c the information is confidential. You need to obtain a FREE credit report from one of the credit bureaus. If you were refused credit, you can obtain one for free through whichever bureau was referred to you. Paying late can cause yoru score to lower. If you want to know the true reasons, you can go to http://www.myfico.com/ and get a FRE 30-day trial for Score Watch. This will give you specific reasons as to why your score is the way it is. Ex: Short credit history, missed payments, etc.
2006-12-18 14:45:12 · answer #6 · answered by Anonymous · 1⤊ 0⤋