Several threads are popping up this afternoon of people curious as to why despite a "high" score they still got denied a loan.
Obtaining credit is more than just a credit score. Additionally what you THINK is your credit score may just be your FAKO score. One of the only reliable places to get a true FICO score is via myfico.com and you do have to pay to get it. I also find my score through my Discover IT card statement to be accurate.
A FAKO score, something obtained from a place like Credit Karma can be wildly off! It can be higher than your true FICO or lower than your true FICO. My CK score has been up to 40 points incorrect!
So I know my FICO score is 850 but I was still denied?! WHAT? This is because a lender looks at more than just that number. Common things looked at when determining to lend is:
Average Age of Accounts (AAoA) how long have your credit accounts been open? Did you just get a car loan last month that is going to lower your AAoA, ever new tradeline added to your account lowers the Average Age of Accounts.
Debt to Income Ratio (DTI) what does your DTI look like? You get this number by adding up all of your monthly debt responsibilities and dividing them by your gross monthly income. An ideal DTI is going to be under 36%. If your DTI is at or over 36% you are going to have a hard time obtaining financing. This is seen as a risk to the lender.
Hard Inquiries on your credit report. Have you been trying to obtain financing for a car? for a house? Gone on a recent "app spree" to obtain new credit cards or loans? A majority of the time when you reach out to obtain credit you get what is called a hard inquiry on your report. Too many of these in a short time sends a red flag to your potential lender that you may be trying to obtain a lot of credit in a short period of time due to some pending crisis. Lenders do not like to see a lot of hard inquiries in short periods of times, it looks like trouble.
These are the big 3 I can think of off the top of my head and they all play a major part in determining if you are to be approved or not. Apply this to outside of Macrumors as well and your financed Apple phone, not enough people know the game that is credit and it can be very confusing why you didn't get approved.
Mods if this isn't appropriate move it to wasteland but I figured this could help someone who isn't as credit savvy or confused. I know it's frustrating to get denied and not know why right away.
EDIT: I want to add, no I of course do not have an 850 score only about 10% of Americans do. I wrote 850 as a means to show that no matter that number you can be denied. An 850 or even an 800 does not mean a guaranteed loan. A 720 could get a loan over 800, it's very dependent on your profile. etc
Obtaining credit is more than just a credit score. Additionally what you THINK is your credit score may just be your FAKO score. One of the only reliable places to get a true FICO score is via myfico.com and you do have to pay to get it. I also find my score through my Discover IT card statement to be accurate.
A FAKO score, something obtained from a place like Credit Karma can be wildly off! It can be higher than your true FICO or lower than your true FICO. My CK score has been up to 40 points incorrect!
So I know my FICO score is 850 but I was still denied?! WHAT? This is because a lender looks at more than just that number. Common things looked at when determining to lend is:
Average Age of Accounts (AAoA) how long have your credit accounts been open? Did you just get a car loan last month that is going to lower your AAoA, ever new tradeline added to your account lowers the Average Age of Accounts.
Debt to Income Ratio (DTI) what does your DTI look like? You get this number by adding up all of your monthly debt responsibilities and dividing them by your gross monthly income. An ideal DTI is going to be under 36%. If your DTI is at or over 36% you are going to have a hard time obtaining financing. This is seen as a risk to the lender.
Hard Inquiries on your credit report. Have you been trying to obtain financing for a car? for a house? Gone on a recent "app spree" to obtain new credit cards or loans? A majority of the time when you reach out to obtain credit you get what is called a hard inquiry on your report. Too many of these in a short time sends a red flag to your potential lender that you may be trying to obtain a lot of credit in a short period of time due to some pending crisis. Lenders do not like to see a lot of hard inquiries in short periods of times, it looks like trouble.
These are the big 3 I can think of off the top of my head and they all play a major part in determining if you are to be approved or not. Apply this to outside of Macrumors as well and your financed Apple phone, not enough people know the game that is credit and it can be very confusing why you didn't get approved.
Mods if this isn't appropriate move it to wasteland but I figured this could help someone who isn't as credit savvy or confused. I know it's frustrating to get denied and not know why right away.
EDIT: I want to add, no I of course do not have an 850 score only about 10% of Americans do. I wrote 850 as a means to show that no matter that number you can be denied. An 850 or even an 800 does not mean a guaranteed loan. A 720 could get a loan over 800, it's very dependent on your profile. etc
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