Reply With Quote
60% utilization is way too high, I would have declined them as well. Keep it at less than 30%.
Okay whatever you're going to get a good old fashioned rant because I'm ing sick of already.
The mentality on lending is beyond ridiculous. Not that it hasn't been ridiculous or broken for the past year (or decade) but its dipping into a new range of stupid. All we keep hearing is how much better its getting but the reality is that its getting much worse. Each new month brings revised criteria for qualifying and its making less and less sense as the days go by.
Point.
Customer Dirty Sanchez.
FICO 733 742 719 Squeaky clean bureaus. No collections. No late pays.
Debt to income 29%
Time at job 16 years
Salary 240k annual (mind you 29% debt to income)
Declined at two banks
Reason: They have 34k in credit card debt. High revolving with high potential for debt. Mind you they have a Ratio around 60% to limit.
Its as if the banks don't realize that the current FICO system takes into account credit card activity more than any other factor out there. Its approximately one third of how the score is tabulated. If the FICO says they're over 700 and the FICO says their a good lend then why disregard the system you so heavily rely on? Either you use the system to determine who to lend to or you make your own. With a debt to income ratio that low and a score that good its pointless, counter productive and down right ing unprofitable to even consider "potential debt" as a defining reason to decline someone. If they were irresponsible spenders they wouldn't score that high and have such pretty little perfect bureaus. How does common sense become void so easily?
Any ways I lost my temper this morning and yelled at the wrong person. I know ripping an underwriter makes no sense, even though its their call, its still based on the parameters that they have to work with. I'm so ing sick and tired of being surrounded by morons and am sick and ing tired of my paycheck resting on the mercy of a system that is broken beyond repair. I can not wait to quit this job.
I did ask what the cutoff point was. Apparently at 2 (I've been told its more) of the banks that lend nationally if you have over 20k in credit card debt or have the ability to run up beyond 40k in credit card debt you are an automatic decline.
Now of course I asked the obvious question. "What if you're a millionaire? What amount of income off sets high revolving debt? You can't logically punish someone for being well off? Can you?".
Answer (I'm quoting nearly verbatim): No amount of income changes things. Its a decline. If they're that rich they should pay cash or work with their own bank.
You have got to be ing kidding me.
Confirmed banks with this philosophy.
USBank
Bank of the West
Unconfirmed
Bank of America
Wells Fargo
60% utilization is way too high, I would have declined them as well. Keep it at less than 30%.
I understand your point, but all I can think is, "How do you make 240k a year and still manage to have so much in credit card debt? That's just stupid."
Also according to the numbers you mentioned, if they had been at 30% they would have had less than 20K in debt and would have been approved.
Damn. Here I am freaking out because I'm 1,300 in debt.
That sucks.
With income like that its logical to make big purchases such as a car or boat with a card. So long as the rate is low and the card benefits are high.
60% is a bit high but the reality is that in the big picture the FICO does take that largely into consideration. With perfect credit and a strong income its makes no sense to decline these people. 29% debt to income should weigh more than 60% credit card balance to limit. You can't punish somebody for utilizing their credit when they've shown a pattern of responsible spending.
Hey I work for one of those banks
Yeah but they should be paying it off, so tell them to come back next month when they have.
So people who make a lot of money DO spend a lot of money. Even money they don't have.
No. He makes 240k with approximately 6k going out each month. The exact figure was a 29% ratio.
I also didn't list the wife she brings another 30 something being a teacher. Has similar FICOs she actually scored a little better. Not that it matters.
They can do whatever they want. They have strong income. Low debt. Always pay on time. They a lenders dream. Working at a bank or being an underwriter or whatever it is that you are you should know that paying off a card each month doesn't typically show up on your credit report as a zero balance.
I don't think you're making a significant argument to support a decline.
and they don't need to come back I found a bank with some common sense.
Approved. 4.99% Navy Army.
In today's economy I guess one can never be too careful?
Are we talking about utilization or debt to income.
I'm talking about utilization, you said it was 60% which is too high, you said the debt was 34K, had the utilization been 30% the debt would have been less than 20K.
I don't have to, the bank already did.
I understand what you are saying. 30%ish for credit card balance to limit would be ideal. They weren't ideal because they have 60% to limit with a balance of 24kish.
Their income to overall monthly debt is at 29%.
The whole 30% balance to limit thing originated when the bureaus revealed that your optimal score would tabulate out at 30% or less. The high balance to limit shouldn't play a part in this scenario because their overall ulative debt to out going monthly income is low. Real low. The fact that they score as high as they do with 60% to limit on their cards only reinforces how good their credit really is. Because had they had the balances down around 30% they'd probably be scoring near the 800's.
My point is that the banks didn't make a good argument for the decline they simply implemented a policy based on illogical thinking.
The common sense question is.
With perfect credit. Clean bureau for the last 15 or so to 20 years. High salary with great time on the job and low overall debt. What real indication can you point to that would led anyone with common sense to believe that these people would default on a 20k dollar loan. They haven't defaulted on anything. Not so much as even been late in the last decade or longer.
They're declining on the most outlandish "what if" scenario possible. Its moronic.
You can be critical of anyone's bureau or how they utilize their credit but in the end it should be an assessment based on how risky they are.
These people are low risk.
But what "IF" happens?
But BoA would let ME buy a house? And this guy can't buy a flppin' RV?
That's a great DTI. I get what you're saying B2B. I'm completely on your side this time. Your rant it is completely justified. Carry on.
That's why the FICO was created. To assess the risk of the lend based on history and patterns.
Well, I've heard things have gotten tougher for new home buyers but I'm sure it doesn't apply to everyone.
But not all banks just go by FICO do they?
Its tough. Real tough. I'm working through a construction loan right now and its a ing nightmare. 6 weeks just to get an appraisal. ing insane.
The ones we use do. Most do.
Also the criteria for lending on recreation items is tighter than that of lending for say an automobile. I've had customers that had no issue purchasing a house but could in no way buy an RV at a 10 of the cost.
There are currently 1 users browsing this thread. (0 members and 1 guests)
Posting Permissions
