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Established Contributor
wollepopolle
Posts: 545
Registered: ‎09-12-2010
0

Interest rate based on "credit worthiness"

I opened two recent accounts, one with Discover and another with BoA.

 

At the time of the application, the companies explained that based on my creditworthiness I will end up with a purchase APR between 11.99% and 19.99%. My score was EQ 764 when I applied for the cards, and for both cards I got the highest APR of 19.99%

 

I am wondering a.) what your credit profile has to look like to get the lowest APR at the time of application

                              b.) if these APRs will ever go down as I continue to build history with them

                              c.) if this "between X and Y" phrase is just there for show and if in fact most people get the highest APR when they apply.

 

My credit file at the time of application looked as follows:

available credit $20,000, two revolving accounts, utilization: 4%, AAoA: 4 years, oldest account 6 years

 

Thankfully, I have always paid in full, so I am not worried at this point. It doesn't matter to me whether the APR is 10% or 30%. Also, these are rewards cards, and they're not known for having good APRs anyway. However, it would be nice to have a lower APR just in case.

 

Ironically, my lowest APR is my Amex CC with 13.25% APR. I have had a PNC CC for many years and the APR has always remained at 18.99%. My gripe is that once you have received a high APR, the banks won't change it even if in the meantime your "creditworthiness" improves over the years.They just leave it at where it is. Or am I wrong? Do I have to wait another 6 years to see my APR at PNC decreased from 18.99% to 17.99%? :smileymad:

 

 

 

Moderator Emeritus
beamMEup
Posts: 4,470
Registered: ‎12-31-2008
0

Re: Interest rate based on "credit worthiness"

Hi wolle,

 

Hard to tell what their internal specs are.  :smileysad:

 

FWIW, DH has a BofA PowerRewards Visa - it's one year old and he came out of the app with a 12.24% which was on the low end of their range (at the time they offered 12.24%, 16.24% or 20.24%).  His EQ was 765 at the time of app.  He has low utilization, an AAofA similar to yours, but his oldest account is 20 years.

 

Their decision making criteria is frustratingly invisible to the consumer, and basically we're often a little dumbfounded at what the outcome is.

Luckily, you always PIF so your APR is somewhat inconsequential.

 

And, some folks, with some cards, have had good results when making calls to get their APR lowered.  Can't recall which - perhaps some experienced folks will chime in.

 

This just reminds me of how helpful these FICO forums are.  It wasn't that long ago that folks couldn't understand what was affecting their FICO scores - much the same feeling that you currently have with not knowing what's affecting the APR you're receiving.  Makes me thankful that in FICOland, we understand much more about what goes into making a great FICO score - thanks Barry and everyone for helping us better understand at least the FICO part of our financial worlds.

 

Wish that we could understand this part of the CC universe a bit better.

 

And congrats again, wollepopolle, on being a PIF'er.  Makes the APR thingy not quite so frustrating - or at least not quite so damaging.

Just puttin' syrup on something, don't make it pancakes.
Valued Member
CorporalCaptain
Posts: 46
Registered: ‎08-23-2010
0

Re: Interest rate based on "credit worthiness"

Well, you could always call the credit card folks and ask for  a rate reduction.  The most they can say is no.  But you also might be able to knock a few points off your rate.

Equifax FICO: 811 on 5/3/2013
-----------------------------------------
USAA World MasterCard - $8,000
American Express SPG - $15,000
NFCU CashRewards Visa Sig - $15,000
PenFed Platinum Rewards Visa - $5,000
Moderator Emerita
Community Leader
Epic Contributor
haulingthescoreup
Posts: 28,098
Registered: ‎04-01-2007
0

Re: Interest rate based on "credit worthiness"

I'm guessing that it's your relatively short length of history/ AAoA.

 

It's not bad, by any means, it's just short.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Valued Contributor
casinoannie97
Posts: 1,986
Registered: ‎08-17-2007
0

Re: Interest rate based on "credit worthiness"

Hard to figure.  Cap 1 raised mine from 14.9 to 17.9

last year.  I've called them and they refuse to lower it.

I always pif so don't really care.  If I have a big purchase

that I'm going to use a few months to pay off I use my

Credit Union which is at 10%.

EX 782

EQ 800

 

 

Super Contributor
marty56
Posts: 5,696
Registered: ‎10-06-2007
0

Re: Interest rate based on "credit worthiness"

[ Edited ]

Look at a CU.  They have much lower rates.  Also you should not revolve balances on a CC unless it is at 0% or because of some great financial need.

11/28/2014 FICO: EQ: 796 EX:788 TU:803
Valued Contributor
JM-AM
Posts: 3,302
Registered: ‎06-09-2010
0

Re: Interest rate based on "credit worthiness"

BoA lowered mine about a week ago with-out me even requesting it. I don't leave a balance on the card, so really have no reason to explain why they lowered it. Maybe I crossed over some internal ratings they perform since I did notice a soft pull a few days before I received the rate decrease.

 

 

Good Luck
May all your dreams and wishes become a reality!
Established Contributor
wollepopolle
Posts: 545
Registered: ‎09-12-2010
0

Re: Interest rate based on "credit worthiness"

 


marty56 wrote:

Look at a CU.  They have much lower rates.  Also you should not revolve balances on a CC unless it is at 0% or because of some great financial need.


Did you even read my post?

 

Established Contributor
wollepopolle
Posts: 545
Registered: ‎09-12-2010
0

Re: Interest rate based on "credit worthiness"

 

Interesting and good to know! Perhaps, your creditworthiness has increased. That probably means that it might happen to me, too.
I will definitely not call up anyone at my CCC. I have no need for a lower APR right now. However, one call to the wrong person might rouse suspicion about me for no apparent reason. I am skeptical to call them.
HtSU, you are probably right that my AAoA is the reason for the higher APR. That makes sense. I guess I have to be patient and wait.



JM-AM wrote:

BoA lowered mine about a week ago with-out me even requesting it. I don't leave a balance on the card, so really have no reason to explain why they lowered it. Maybe I crossed over some internal ratings they perform since I did notice a soft pull a few days before I received the rate decrease.

 

 


 

Moderator Emeritus
beamMEup
Posts: 4,470
Registered: ‎12-31-2008
0

Re: Interest rate based on "credit worthiness"


wollepopolle wrote:  that my AAoA is the reason for the higher APR. That makes sense. I guess I have to be patient and wait.

 If it's age related, I'm going to guess it has more to do with your oldest open account rather than AAofA, as DH's AAofA was similar to yours - if anything his was a tad lower.  Seems funny, though, that oldest account could have THAT much impact on APR.  ??

Just puttin' syrup on something, don't make it pancakes.

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