Loans Answers

Credit question

Question: I’m trying to pay off some credit card debts, and I have one card that

charges 30% interest! Of course, it didn’t start off that way, but when I suddenly was desperate and didn’t have any income, they raised the rates, and I couldn’t get another card with a better rate. Now I have a much better paying job, and I’m paying off the debt as fast as I can, but it will take another six to nine months. The last time I applied for a credit card, I was declined for “high income/credit ratio” and a

semi-bad credit record (a few late payments). How bad is it to apply for credit and be turned down? I’d love to transfer the balance to something with a lower rate, but not at the expense of screwing up my credit further with too many “inquiries”. I don’t think most credit companies check your place of employment (and salary) – I had someone falsify a credit card application, and they put a phony employer, and no one ever caught it.

Answer: If you were applying for a “extra low rate” credit card, those companies usually have much stricter guidelines for approval. Most have higher income requirements and view even a few late payments as undesireable. They can afford to. Everyone in the country wants a card that only charges 12-13%.

“A few late payments” depends on how many trade lines (different companies reporting in your credit bureau report) show late payments. If you have 2-3 late payments (no more than 30 days) in 1 trade line, most companies might view that as something going on with that company only. If for example, you have 6 trade lines and 4 or 5 show late payments, that may indicate a problem with your paying ability (or willingness to pay promptly). Both of which are very scary for companies granting credit.

A high income/credit ratio means that they think you have as many (or more) bills than you can handle right now. If your income is 1600.00/month and your credit bureau report shows you pay out 1000.00 in bills each month (rent, credit cards, car loan, whatever), you don’t have enough left over for utilities, food, entertainment and their credit card payment too. Narrow minded I know but that’s the way it is.

Falsifying a credit application is FRAUD! While it might slip by, if something happens and you can’t pay (or some people don’t intend to) you can end up in severe legal trouble. More and more companies are pursuing legal action.

Sorry this is so long. I’ve working in credit for over 20 years. It’s very confusing and appears unfair alot of the time.

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Filed under: Bad Credit Loan