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Do Banking Relationships Still Matter?

Contributor

Do Banking Relationships Still Matter?

In this age of automation, I think there is the lost benefit of a personal banking relationship between customer and bank. Your credit is now just a number calculated by machines. Your credit applications are run through algorithms that look at numbers instead of other important factors that take into account your ability to pay. FOr example, education level is not taken into account. Yet, studies have shown that employment is higher among those with secondary degrees. Which means there will be less disruption to income streams. 

 

I feel that if your relationship with a bank has been great such as no late payments and everything is paid off on time, then your rate shouldn't depend solely on your credit rating. Especially if you have clean credit with no late payments and your utilization is not high. Then why do banks rely so heavily on your credit report instead of the long history where you paid your debts to that bank on time and in full? SHouldn't you be able to get a lower rate than what the computers gave you? 

 

Have any of you receive a reconsideration for lower rates when applying for loans from banks where you have a good credit history? For example, I have been a customer of BMW Financial Services for over 12 years. Paid on time and purchased a number of cars. So, shouldn't I be able to get the lowest rate possible even if my credit my tell the computer to charge me 3 points higher? I'm not looking to buy another BMW. THat's just an example. I just want to know if anyone belongs to a bank that takes into account your relationship with that bank as much as what your credit rating says about you. 

Message 1 of 21
20 REPLIES
Super Contributor

Re: Do Banking Relationships Still Matter?


adelphi_sky wrote:

In this age of automation, I think there is the lost benefit of a personal banking relationship between customer and bank. Your credit is now just a number calculated by machines. Your credit applications are run through algorithms that look at numbers instead of other important factors that take into account your ability to pay. FOr example, education level is not taken into account. Yet, studies have shown that employment is higher among those with secondary degrees. Which means there will be less disruption to income streams. 

 

I feel that if your relationship with a bank has been great such as no late payments and everything is paid off on time, then your rate shouldn't depend solely on your credit rating. Especially if you have clean credit with no late payments and your utilization is not high. Then why do banks rely so heavily on your credit report instead of the long history where you paid your debts to that bank on time and in full? SHouldn't you be able to get a lower rate than what the computers gave you? 

 

Have any of you receive a reconsideration for lower rates when applying for loans from banks where you have a good credit history? For example, I have been a customer of BMW Financial Services for over 12 years. Paid on time and purchased a number of cars. So, shouldn't I be able to get the lowest rate possible even if my credit my tell the computer to charge me 3 points higher? I'm not looking to buy another BMW. THat's just an example. I just want to know if anyone belongs to a bank that takes into account your relationship with that bank as much as what your credit rating says about you. 


IMHO the answer to your question is "no". Banks don't have "relationships".

 

They like to say they do, but the minute it suits they're interest they'll cut you off at the knees. And instead of saying "sorry" will say "it's in the fine print".

 

 

FICO8 EQ 721 TU 772 EX 769 Total revolving credit 500k
Message 2 of 21
Community Leader
Epic Contributor

Re: Do Banking Relationships Still Matter?

With the convenience of electronic banking comes the disadvantage of lack of personal relationships.

 

As an alternative, many consumers maintain accounts with a local credit union.

Most still have the old-time personal relationship established by walking in the door an speaking with a real rep, and some consider the fact that you technically have a share in their business as being more than lip service.

Message 3 of 21
Senior Contributor

Re: Do Banking Relationships Still Matter?

This topic has been debated quite a bit in the past and when all the dust settles by the end of one of these threads, typically you have opinions on both sides.  Some feel that relationships don't exist or matter, where others will swear they do to some degree.

 

I sort of land somewhere in the middle I suppose.  I agree with most of what SJ said, that regardless of any "relationship" a bank won't hesitate to cut you off for any reason that they or their computer system deems worthwhile. 

 

Where a "relationship" may be a positive thing could be during the application process.  This could be an application for a credit card, loan, or other product.  If you have a previous favorable relationship with that bank and the product you apply for involves a manual review, that relationship (assuming it's positive) could only help.  Or, in the event of an automated process (no manual review) for the application of a product, if the result isn't desireable there's a chance with a recon (manual review) that again the favorable relationship could slightly impact the outcome in a positive way.

 

If you've got say 10 years of history with a bank, have an account or two already with them on your credit report that's perfect and have a bunch of assets with them I can only see that as being a positive thing compared to someone with zero history with that bank that's gunning for the same product.

Message 4 of 21
Super Contributor

Re: Do Banking Relationships Still Matter?


BrutalBodyShots wrote:

This topic has been debated quite a bit in the past and when all the dust settles by the end of one of these threads, typically you have opinions on both sides.  Some feel that relationships don't exist or matter, where others will swear they do to some degree.

 

I sort of land somewhere in the middle I suppose.  I agree with most of what SJ said, that regardless of any "relationship" a bank won't hesitate to cut you off for any reason that they or their computer system deems worthwhile. 

 

Where a "relationship" may be a positive thing could be during the application process.  This could be an application for a credit card, loan, or other product.  If you have a previous favorable relationship with that bank and the product you apply for involves a manual review, that relationship (assuming it's positive) could only help.  Or, in the event of an automated process (no manual review) for the application of a product, if the result isn't desireable there's a chance with a recon (manual review) that again the favorable relationship could slightly impact the outcome in a positive way.

 

If you've got say 10 years of history with a bank, have an account or two already with them on your credit report that's perfect and have a bunch of assets with them I can only see that as being a positive thing compared to someone with zero history with that bank that's gunning for the same product.


You seem to be saying that years of history with the institution should count for something.

 

And with that, I agree wholeheartedly.

 

But in your own experience do you  have any evidence that it does count for something?

 

I don't.

FICO8 EQ 721 TU 772 EX 769 Total revolving credit 500k
Message 5 of 21
Frequent Contributor

Re: Do Banking Relationships Still Matter?

Relationships matter when you keep a large amount of money (7+ figures) at the financial institution. If you have that, they will give you slack and benefits.
Message 6 of 21
Regular Contributor

Re: Do Banking Relationships Still Matter?


tacpoly wrote:
Relationships matter when you keep a large amount of money (7+ figures) at the financial institution. If you have that, they will give you slack and benefits.


Realistically, it doesn't matter if you've had over $1mm in the bank for years if you've fallen on hard times. A 'relationship' with a bank won't help you if you've lost your shirt in the stock market and need to get a mortgage in your depleted state and without sufficient income. They'll treat you well when times are good but won't be happy to work with you again until you've picked yourself back up off the floor!

I just wrote a high six figure check at the bank to fund a new account today. Everyone knew my name before I left, but they would forget me in a heartbeat if I lost everything.


Gardening from 10/1/2017 to 4/1/2018.
Message 7 of 21
Senior Contributor

Re: Do Banking Relationships Still Matter?


SouthJamaica wrote:


You seem to be saying that years of history with the institution should count for something.

 

And with that, I agree wholeheartedly.

 

But in your own experience do you  have any evidence that it does count for something?

 

I don't.


I am saying that it does count for something in these situations.  The problem is, there's no way to quantify it.  Short of an employee actually saying the words, "we can work with you on that because you've been a great customer of ours for years..." I don't know how anyone would ever be able to quantify it.  Since those words have never been spoken to me, I can't say for sure.

 

About 2 months ago I applied in branch for a Chase credit card.  Aside from my local credit union, Chase is the bank I have checking/savings accounts with, have my weekly pay check direct-deposited at, etc.  When I applied for the credit card, the person I went through the process with knew me, about my family, where I worked and so on.  That "relationship" made me feel better about applying.  Can I quantify how much better?  Nope.  Is that relationship the reason for an approval on the card rather than a denial?  More than likely not.  Had I run into an issue with the app or needed a recon, do I think the guy I had dealt with several times in the past would have been in my corner?  Absolutely.  Would it have mattered?  Who knows.  Again, there's no way to quantify these things or be sure, so much of what I go off of are stories I read on here that are similar to the blurb I shared above.

 

Based on those stores, there are a handful of people (say 25%) that swear that their prior relationship "helped" them in some way, where the remaining majority may feel that it didn't matter.  I can assure you, though, that I've read zero stories about a prior relationship actually hurting anyone in these sort of situations.  Based on that and the fact that plenty of people have shared favorable stories regarding prior relationships, I'd think it's a fair assessment to say that "it can only help" even if the degree of help cannot be quantified.

 

I wholeheartedly agree that any time something adverse happens with any relationship, all bets are off and years of favorable history can go right out the window.  And, that's not just with big banks.  I had around 20 years of perfect history with my local credit union.  Checking/savings accounts, several auto loans, credit card, etc. all with perfect account history.  When I received a late payment on a couple of other accounts (not my CU accounts) my CU was the only person to take AA against me, closing my CC with 15+ years of flawless history on me.  The CU would not recon the decision, even after talking to probably a half dozen different people including the highest-ups that I could get to.  The 20 year relationship I had with them was no better than a 20 minute relationship in that case.

 

The bottom line is that if you have a favorable relationship with a bank, make sure it says that way if you'd like any chance at all of it meaning anything.   

Message 8 of 21
Super Contributor

Re: Do Banking Relationships Still Matter?


BrutalBodyShots wrote:

SouthJamaica wrote:


You seem to be saying that years of history with the institution should count for something.

 

And with that, I agree wholeheartedly.

 

But in your own experience do you  have any evidence that it does count for something?

 

I don't.


I am saying that it does count for something in these situations.  The problem is, there's no way to quantify it.  Short of an employee actually saying the words, "we can work with you on that because you've been a great customer of ours for years..." I don't know how anyone would ever be able to quantify it.  Since those words have never been spoken to me, I can't say for sure.

 

About 2 months ago I applied in branch for a Chase credit card.  Aside from my local credit union, Chase is the bank I have checking/savings accounts with, have my weekly pay check direct-deposited at, etc.  When I applied for the credit card, the person I went through the process with knew me, about my family, where I worked and so on.  That "relationship" made me feel better about applying.  Can I quantify how much better?  Nope.  Is that relationship the reason for an approval on the card rather than a denial?  More than likely not.  Had I run into an issue with the app or needed a recon, do I think the guy I had dealt with several times in the past would have been in my corner?  Absolutely.  Would it have mattered?  Who knows.  Again, there's no way to quantify these things or be sure, so much of what I go off of are stories I read on here that are similar to the blurb I shared above.

 

Based on those stores, there are a handful of people (say 25%) that swear that their prior relationship "helped" them in some way, where the remaining majority may feel that it didn't matter.  I can assure you, though, that I've read zero stories about a prior relationship actually hurting anyone in these sort of situations.  Based on that and the fact that plenty of people have shared favorable stories regarding prior relationships, I'd think it's a fair assessment to say that "it can only help" even if the degree of help cannot be quantified.

 

I wholeheartedly agree that any time something adverse happens with any relationship, all bets are off and years of favorable history can go right out the window.  And, that's not just with big banks.  I had around 20 years of perfect history with my local credit union.  Checking/savings accounts, several auto loans, credit card, etc. all with perfect account history.  When I received a late payment on a couple of other accounts (not my CU accounts) my CU was the only person to take AA against me, closing my CC with 15+ years of flawless history on me.  The CU would not recon the decision, even after talking to probably a half dozen different people including the highest-ups that I could get to.  The 20 year relationship I had with them was no better than a 20 minute relationship in that case.

 

The bottom line is that if you have a favorable relationship with a bank, make sure it says that way if you'd like any chance at all of it meaning anything.   


Smiley Happy Those words have never been spoken to me either.

FICO8 EQ 721 TU 772 EX 769 Total revolving credit 500k
Message 9 of 21
Established Contributor

Re: Do Banking Relationships Still Matter?

Those words have been spoken to me.  I went into my credit union last year year right when I started rebuilding and talked to them about an auto loan.  They told me that the only reason I was approved at all was because of my relationship with th e CU at that time.  When this happened I had no credit score and the only thing on my credit report was a 14 year old auto loan from Chase.  I didn't get the best interest rate but it still came in at 60% of what the dealer's offer was.

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