topic Re: Too much new credit in Credit Cards

Too much new credit

ecxpa — Sun, 02 Mar 2014 18:54:00 GMT

This may be in the wrong forum but just wondering...........why is it that some lenders seem to care more about new credit than others. What is too much new credit anyway? It seems to me the most important thing should be is how one manages his/her credit period. Lots of folks here have high CL's which is the goal for most seeking credit and the only way to get it is to ask for it. I know that many blogs say a lot of new credit is a sign of despiration; it may be if all current credit lines are maxed out, but just because you apply for a particular card or several cards does not mean you are despirate. I have a utilization of 8%, but that doesn't seem to matter to some lenders; all the new credit over the past year is an automatic denial for some, not so for others.

Also when you are denied credit you are usually given your credit score; however, the lender may pull all three CRA's. Why don't they have to give you all 3 credit scores. I'm sure there is a "sound reason" just doesn't make any sense to me.

Oh well, when you're in the garden I guess you think too much sometimes.

Re: Too much new credit

toi34 — Sun, 02 Mar 2014 20:16:36 GMT

@ecxpa wrote:
This may be in the wrong forum but just wondering...........why is it that some lenders seem to care more about new credit than others. What is too much new credit anyway? It seems to me the most important thing should be is how one manages his/her credit period. Lots of folks here have high CL's which is the goal for most seeking credit and the only way to get it is to ask for it. I know that many blogs say a lot of new credit is a sign of despiration; it may be if all current credit lines are maxed out, but just because you apply for a particular card or several cards does not mean you are despirate. I have a utilization of 8%, but that doesn't seem to matter to some lenders; all the new credit over the past year is an automatic denial for some, not so for others.

Also when you are denied credit you are usually given your credit score; however, the lender may pull all three CRA's. Why don't they have to give you all 3 credit scores. I'm sure there is a "sound reason" just doesn't make any sense to me.

Oh well, when you're in the garden I guess you think too much sometimes.

Right!!!! LOL....

Re: Too much new credit

sailor_mercury — Sun, 02 Mar 2014 20:23:45 GMT

I think it has a lot to do with the type of credit you are applying for. Mortgage, auto loan, unsecured loan, unsecured credit cards.

If you've recently acquired several new unsecured lines of credit or credit cards I could see where it would raise a red flag to the lender. If you're applying a Mortgage or Auto Loan they will likely have less of an issue with it, but they may still be concerned that if it's new you don't have a solid history with that particular trade line.

Regarding the three scores, I've never had a CC company run inqus on all three reports, but I know some do. I think 90% of CC lenders pull one CB and use that to make their decision, sometimes if someone is very borderline they will pull a 2nd CB to make their final decision. But I don't have any insight on why they only provide you with the score from a single CB.

Re: Too much new credit

gdale6 — Sun, 02 Mar 2014 20:40:10 GMT

I do not believe that one can have too much credit, in the old days yes opening multi cards with cards already over 50% was a red flag, with the technology we have today opening multi cards with low balances on current cards is not a sign of one in trouble. The only way you get credit is not to "need" credit, you must have it well in advance of any event that may occur that would cause you to run up some big balances for a period of time. If you show self to be responsible the creditors will bang down your door trying to get on the bandwagon..

Re: Too much new credit

NonSufficientFunds — Sun, 02 Mar 2014 20:44:56 GMT

Credit issuers have many years worth of well-researched, statistical data, which has proven to be very reliable in determining consumer behavior patterns.

The CARD Act places even more pressure on them to exercise appropriate "due-diligence" in their decisions to grant, extend, or decline applications for new credit.

A pattern of behavior which deviates too far from what is considered "normal" (i.e. applying for inordinate amounts of credit in a relatively short amount time) is a warning sign that something just isn't right with that particular consumer, and should probably not be considered for additional credit, until a long pattern of responsible account management has been established.

The creditors know exactly what they are doing, and the recent experience of forclosures and "strategic bankruptcies" has forced them to pay even more attention to new applicants who just might be trying too hard to game the system.

Re: Too much new credit

ecxpa — Sun, 02 Mar 2014 22:48:26 GMT

@NonSufficientFunds wrote:
Credit issuers have many years worth of well-researched, statistical data, which has proven to be very reliable in determining consumer behavior patterns.

The CARD Act places even more pressure on them to exercise appropriate "due-diligence" in their decisions to grant, extend, or decline applications for new credit.

A pattern of behavior which deviates too far from what is considered "normal" (i.e. applying for inordinate amounts of credit in a relatively short amount time) is a warning sign that something just isn't right with that particular consumer, and should probably not be considered for additional credit, until a long pattern of responsible account management has been established.

The creditors know exactly what they are doing, and the recent experience of forclosures and "strategic bankruptcies" has forced them to pay even more attention to new applicants who just might be trying too hard to game the system.

That's the mentality of a lot of creditors.....and I think completely unfounded despite their claim of "well researched, statistical data". I just don't think anyone who is handling their credit responsibly should be denied new credit. I have several cards that have poor or no rewards; why should having these cards prevent me from getting a card with better rewards.

Re: Too much new credit

NonSufficientFunds — Sun, 02 Mar 2014 22:59:27 GMT

@ecxpa wrote:
@NonSufficientFunds wrote:
Credit issuers have many years worth of well-researched, statistical data, which has proven to be very reliable in determining consumer behavior patterns.

The CARD Act places even more pressure on them to exercise appropriate "due-diligence" in their decisions to grant, extend, or decline applications for new credit.

A pattern of behavior which deviates too far from what is considered "normal" (i.e. applying for inordinate amounts of credit in a relatively short amount time) is a warning sign that something just isn't right with that particular consumer, and should probably not be considered for additional credit, until a long pattern of responsible account management has been established.

The creditors know exactly what they are doing, and the recent experience of forclosures and "strategic bankruptcies" has forced them to pay even more attention to new applicants who just might be trying too hard to game the system.

That's the mentality of a lot of creditors.....and I think completely unfounded despite their claim of "well researched, statistical data". I just don't think anyone who is handling their credit responsibly should be denied new credit. I have several cards that have poor or no rewards; why should having these cards prevent me from getting a card with better rewards.

I don't think anyone is going to prevent you from getting more credit.

But I also don't think anyone is going to force a bank into extending credit to someone who they view as a potential risk.

The notion that just because a person happens to be handling his finances well, while times are good, doesn't necessarily mean that he should be granted unlimited access to the bank's money.

The "bank" doesn't actually OWN the money - it belongs to the bank's investors - and the bank has a legally binding fiduciary obligation to protect the interests of it's stockholders.

If that means declining a credit application from someone who doesn't satisfy their lending criteria, then so be it.

Re: Too much new credit

Leadberry — Sun, 02 Mar 2014 23:22:14 GMT

@NonSufficientFunds wrote:
Credit issuers have many years worth of well-researched, statistical data, which has proven to be very reliable in determining consumer behavior patterns.

The CARD Act places even more pressure on them to exercise appropriate "due-diligence" in their decisions to grant, extend, or decline applications for new credit.

A pattern of behavior which deviates too far from what is considered "normal" (i.e. applying for inordinate amounts of credit in a relatively short amount time) is a warning sign that something just isn't right with that particular consumer, and should probably not be considered for additional credit, until a long pattern of responsible account management has been established.

The creditors know exactly what they are doing, and the recent experience of forclosures and "strategic bankruptcies" has forced them to pay even more attention to new applicants who just might be trying too hard to game the system.

People around here seem to think banks are out to get them, hate them, or are judging their credit. This is a highly mathematical process rooted in probability and statistics. A lot of money is invested in market research and risk mitigation. These organizations know what they're doing.

Re: Too much new credit

ecxpa — Sun, 02 Mar 2014 23:24:47 GMT

Errr right!.........that's why we had the big bank bailouts a few years ago

Re: Too much new credit

Leadberry — Sun, 02 Mar 2014 23:27:35 GMT

And why do you think people were so angry about that? Because the banks made honest mistakes? No, it was because they knew exactly what risks they were taking and decided to take them anyways. My statement still holds.

Re: Too much new credit

-Wade- — Sun, 02 Mar 2014 23:30:25 GMT

@ecxpa wrote:
Errr right!.........that's why we had the big bank bailouts a few years ago

Also that's the reason they have tighten down on lending, if they see risk that they don't like

Re: Too much new credit

NonSufficientFunds — Sun, 02 Mar 2014 23:32:12 GMT

@Leadberry wrote:
@NonSufficientFunds wrote:
Credit issuers have many years worth of well-researched, statistical data, which has proven to be very reliable in determining consumer behavior patterns.

The CARD Act places even more pressure on them to exercise appropriate "due-diligence" in their decisions to grant, extend, or decline applications for new credit.

A pattern of behavior which deviates too far from what is considered "normal" (i.e. applying for inordinate amounts of credit in a relatively short amount time) is a warning sign that something just isn't right with that particular consumer, and should probably not be considered for additional credit, until a long pattern of responsible account management has been established.

The creditors know exactly what they are doing, and the recent experience of forclosures and "strategic bankruptcies" has forced them to pay even more attention to new applicants who just might be trying too hard to game the system.

+1

People around here seem to think banks are out to get them, hate them, or are judging their credit. This is a highly mathematical process rooted in probability and statistics. A lot of money is invested in market research and risk mitigation. These organizations know what they're doing.

And it's most unfortunate that so many members here, who think they're "credit wise", have very childish notions about how the banking & finance system actually works - as if they should be somehow "rewarded" for good behavior, by a paternalistic benefactor.

Then they get their feelings hurt when their applications are declined - as if they were being punished or deprived of something deserved.

Hogwash!! - It's all about business and risk assessment. The numbers must work, or there is no deal. That's how grown-ups operate.

Re: Too much new credit

ecxpa — Sun, 02 Mar 2014 23:37:13 GMT

So be it........

Re: Too much new credit

mattmix36 — Mon, 03 Mar 2014 00:19:17 GMT

This thread has some good info in it! Thx everyone