04-29-2013 02:54 PM
@revelate..you say income is #3 on the list....
I would question what is meant by "income". There are some people who have a great deal of money, yet do not technically have "income".
The creditor in such a case, would be more likely to base their lending decision on the available assets - although such a wealthy applicant would probably not be applying for credit in the first place, and would preferably be issued a "charge card".
I should've put assets there in my post, absolutely on target NSF; thank you for keeping me honest .
04-29-2013 03:00 PM
Ok so it all depends.
@revelate..you say income is #3 on the list....
If someone makes 35k a year but has a, lets say, 720 FICO and a perfect payment history with no derogs...would the limited income override the rest and result in a smaller CL or possible denial with certain companies? Would it all depend on the credit card company?
This is excellent info =)
To add to some other posts, there are certain cards which are generally unobtainable by us financial mortals, and it's not an isolated case. I'd be stunned if a 5K/year part time income for a student could qualify for a Chase Sapphire Preferred for example (high end card from a lender that's near the bottom in student-friendliness factors, Amex similar).
Chase might give them a Freedom though.
Virtually all lenders have different tiers of credit products, and income is going to be a floor on some cards: if they don't think you can realistically repay 5K worth of CC debt, they won't extend you any Visa Sig or World MC product at all where the minimum tradeline is 5K, and typically those are their flagship products from many lenders.
04-29-2013 03:04 PM
Oi vey, underwriting shell game, I'll play! Just regards to credit cards in the current market:
- FICO: You don't even make it to underwriting if you don't pass the filter
- Payment history: derogs can be death sentences
- Income: heals all wounds cept major derogs
- Current debt: pyramiding is scary!
- Existing tradelines: number and quality
- Length of recent history: Too many folks ran into issues and dropped off the map, it's evidently not a big factor except for newly established credit users
- Length of complete history: Given fluxutations in the market I don't think it's that relevant.
Approvals are not individual factors, denials can be. Also many of these categories are tied together, payment history accounts for length as well in some respects as an example.
Can you explain pyramiding to me?
Pyramiding is a term that I think Penfed stuck into our lingo.
Basically let's say I go run up a card; then I go apply for another card, I can make minimum payments on the first, while running up the second. Repeat this a few times, and I've got a bunch of lenders that may be holding the bag for a likely default or BK from yours truly.
Credit cards as a product were designed for short-term float, lenders that see increasing long-term balances will start wondering if the individual will pay them back... if they even can.
May be some additional refinements to the term I'm not aware of.
04-29-2013 09:32 PM
Put simply, their estimate on how much money they'll be able to make from you.
Things like higher income and solid repayment history increases this estimate, while late payments or previous defaults lower this (since there's a chance they may end up with bad debt should you CO or BK).
Others have already done a good job summing up some of the things they use to make this estimate.
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