credit question (please help)?

Question

Hi everybody!! i have a serious question, yesterday i went to buy a furniture package in ashley and citifinancial didn't want to help me finance $ 700.00. THAT'S INSANE!!, I have a good credit, it is new, but good almost 700, my bf too and we apply together, we actually have financed other things with them before, up to $1,500. and we paid on time and we are financing another one right now with the same card, we already paid a car full and we are financing now a mustang of 23.000. we have a great income i make like 2,500 monthly and my bf 1,500, i mean is better than last year when they lend me the first 1,500, can i please know what is the reason why i did'nt get approved for 700 dolars????
i talk to a customer services representative and she said that i don't have enough credit history!! WHATTTT!!!!
please can anybody educate me on this??
thanks in advance.
i checked my credit and i'ts ok and everything paid on time.
not that many inquires

Answer 1

I don't know what you're credit history looks like as far as the types of accounts that you have, but based on what you've told me, there's a chance that although that you may have a score in the 7 range, it's what's in it that makes it up. From what I've gathered, you have possibly more installment loans than revolving. I can only assume that you have only one credit card, since you only mentioned the one. I'll break down what actually makes up your score

35% payment history- This makes up more than a ⅓ of your score and carries the most weight. So it's important to always pay on time

30% total debt owed vs. available credit (utilization)- How much you owe (everything that you're currently financing) vs. the available credit that you have. There's what's called good debt and "dead" debt. collection debt is dead debt it can throw your utlitzation completely out of whack and if you don't have enough available credit, although you pay on time it may show that you're having trouble maintaining it. Also, with that Mustang on your report, it will shoot this through the roof, especially if you don't have credit cards with available credit to offset it.

15% Length of time establishing credit- Accounts that are 3 years or newer are considered newer accounts and will not carry as much weight as a more "seasoned" account (5 years or more)

10% Types of credit established- Typically 3 revolving (credit cards) and 1 installment (car loan, furniture loan, appliance loan, mortgage, personal loan) accounts make for a balanced mix of credit usage. Let's say that you're finanacing that Mustang for $23K, and you have one credit card with a limit of $1.5K, there's not enough of a mixture of credit. Let's say that you had a dept store card and another major credit card, then that would be a different story because there would be 2 additonal positive trade lines and more available credit.

10% Inquiries and New Account vs. Seasoned Account Ratio- Whenever you formally apply for credit, a hard inquiry is created, and this portion is affected. Like I mentioned earlier recently approved and opened accounts and accounts newer than 3 years are affected here.

So having said that, there's a chance that you may not have enough credit cards or revolving accounts, the accounts you have may be too recent (3 years or less) or the limits you have may not be high enough.

It's hard to determine what really happened without more information, but hopefully my explanation helps


Good luck!

Answer 2

I seriously doubt you have a FICO score of 700 with new credit. And yes , if you havent established an ongoing history of at least two years, that could be the reason you may not have gotten financed. Lenders want to see a "track record" of steady, on time payments. I too, recently have that problem. I have a home and a new car but both were bought the same year (2005) and I got turned down for credit due to the same problem. However the 2 year mark is approaching and I will try again.

Another stumbling block can also be it you aren't a homeowner, it's harder to get furniture than someone who is a homeowner. This secures the probability that they can 'come back and get' the furniture if you default on the loan because you have an established residence, and could be more likely to pay by refinancing your home to satisfy debts.

The easiest thing to get with bad or even no credit, oddly enough is a house and a revolving credit card. It is much harder to get financed for a car and furniture. If your income is $4k a month, just pay cash for the furniture and wait it out for a bit. Good luck!

Answer 3

I'm glad to hear that you pay your bills on time and have a solid history with that.
Perhaps you were turned down for a combination of reasons...does the company you financed your car with report to the credit bureaus? It may not show up on your credit report if it's a small company.
You mentioned that you have other debts....the denial could also be because you have a high debt ratio right now. That just bascially means that you have a lot of monthly obligations already and the company was afraid that they might not be paid down the line (if times get tough).
If everything else checks out, I'm thinking that it could be that your debt load is just too high right now.