CU Denied, what next?

[Anonymous]

I joined a local credit union in late January with the intent to get a auto loan for "new" car. This is the first auto loan I've had since I paid one off in 2004. Anyway, I waited a few weeks & then applied for a pre-approved auto loan. However, I was denied due to supposedly not enough good credit. They said they saw my good credit from my home mortgage & a student loans. But I don't have any credit cards except for a Discover Card that was closed & has zero credit but still has a balance that I've slowly been paying off each month. I was told to wait until I was a member for 3 months & re-apply for a special loan they offer first time car buyers. Anyway, I just received today my paper notice in the mail & saw the credit score they received from Trans Union: 673. This is the same FICO score reported on last month's Discover bill. I decided to get a copy of all 3 of my credit reports & then signed up for a Credit Karma account to get my scores. They are reporting TU 703 & Equifax 635. Not sure why my TU went up, but I'm at a loss on what to do next. Should I pay off my Discover card? Or should I ask to open the account back up? Or should I transfer the balance to a new credit card? I have been considering a credit card. I really would like to have a Lowes card for emergencies where I buy everything for my home. I got a sizable income tax refund & need to buy a range/stove & hot water heater since they are both going out. I could pay them with cash, but figured a credit card with 6 months same as cash might help build my credit back up. I do have a PayPal account & Business Debit card & considered a credit card through them too. If anybody has any good advice, I would love to hear it. Thanks in advance.

[Anonymous]

Sorry to hear about your denial. That sucks.

I too, was denied by a CU and the reasons they gave were I didn't make enough money for the loan amount I wanted. What I then did was, apply through Capital One. They instantly approved me for a car loan. So either try that or go to a dealership directly. And best of luck to you!

Hopefully, someone else can give you advice about increasing your score (I think it's just fine personally).

[CH-7-Mission-Accomplished]

You need to apply for three credit cards and your score will jump a lot within 30 to 60 days -- as soon as they report.  You will get the biggest jump from card number 1, second biggest jump from card number 2, and third biggest jump from card number 3.

I would go to the Cap 1 prequalifier site right now and enter your details.  Then apply for a Cap 1 Platinum and a Cap 1 Quicksilver 1.  

For number 3 you can try to apply for a Barclay's card -- either the Apple financing Visa or the Barclay Rewards for average credit.  

Lastly you can apply for Lowes or Walmart.

You can also use the shopping card trick and apply for ONLY ONE OR TWO store cards like J. Crew or Victoria's Secret.  They will give you an approval without a hard pull to your credit report if your Equifax is not frozen and you are not opted out of credit card offers.

Cap 1 can take a month or more to report so I would do some combination of the above to get things moving.  Barclay's reports right away.

It is when this stuff starts to report that your scores will pop up.

You could also get a small credit builder installment loan from a credit union -- something like $300 to $500 for 24 months (like a $20 payment) at 2% or 3% interest.  You can get one if you join Allliant and most credit unions offer them.  DO NOT let a credit union do a hard pull for a credit builder installment loan -- that is not normal and not acceptable.

You will seriously be great in very short time if you follow these steps.

[Anonymous]

If the credit union wants you to have a credit card, apply for a credit card with them.  I'd also sugest asking them about a personal line of credt.  I would not suggest capital one for your first credit card.  I'd go with a Barclay Rewards Mastercard or the Barclays Apple card.  Those were my first two cards out of bankruptcy and while now they are my lowest limit cards, they do increas the credit limit often.  

I know how exciting it is to get into a new car, but if you can please try to be patient.  Show good financial decisions to the credit union, try not to have any overdrafts and then re-apply in the next 3 months.  You will get a much better rate with a credit union than a private for profit bank.  

The credit union will grow with you and help you build amazing credit.  

If you get a credit card, try not to carry a balance and pay in full each month and make sure your balance is zero before the statement closes.  Just this year alone on my Barclays Reward Mastercard, I've racked up nearly $2500.00 in cash back.  I'm just letting it pile up and then I'm going to cash it out.  

Lastly, a securd credit card with a credit unio is also a good option.  You might also want to ask the credit union if they have a repo lot and if they offer special financing if you purchase a repo.  Usually your credit score won't matter if you buy one of their repos because the give everyone the same low rate.  A repo is usually a young car, with low miles and someone bought it and couldnt afford it or they didn't make payments.  

[CH-7-Mission-Accomplished]

OP,

You don't have a BK, you just don't have any revolving lines.  If you couldn't get an auto loan from your CU, they sure as heck aren't going to give you a credit card unless it is secured.

You want 3 revolvers ASAP.  That will boost your score probably 50 or more points.  Then when those report you can likely qualify for low rate financing.

The information provided in the sgnature of the other post strains credulity.   Ask yourself, does it sound reasoable?

Don't take it from me, get some other tips from other people.  When someone makes claims that sound too good to be true, they usually are.  

Good luck!

[CribDuchess]

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@CH-7-Mission-Accomplished wrote:

OP,

You don't have a BK, you just don't have any revolving lines.  If you couldn't get an auto loan from your CU, they sure as heck aren't going to give you a credit card unless it is secured.

You want 3 revolvers ASAP.  That will boost your score probably 50 or more points.  Then when those report you can likely qualify for low rate financing.

The information provided in the sgnature of the other post strains credulity.   Ask yourself, does it sound reasoable?

Don't take it from me, get some other tips from other people.  When someone makes claims that sound too good to be true, they usually are.  

Good luck!

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+1  Yeah, that other poster had my BS detector going off non-stop at full audible!  Truly sad.

[patrick00032001]

Your credit union didnt consider your mortgage credit as a way to qualify you for a car loan? Thats insane! Its an installment line, should be viewed as such, I would check with DCU or a few more credit unions, while not having a mixture of different credit accounts can certainly affect your score, your credit union should have had no issues qualifying you for an auto installment loan.

[Anonymous]

I think my biggest problem with the CU denial was the status of my Discover card. So I was hoping for some guidance on how to handle that. I don't think paying $50/mo for the next 4+ years is the best plan. If anybody has any suggestions on that, that would be great. I'm considering calling them tomorrow to see what my options are.

Also, on my CU notice it said my principal reason for denial was "Limited Credit Experience". Getting additional revolving line of credit seems like a sure fire way to fix that, but it did say that the key factors that adversely affected my credit score was: serious delinquency 2, too few accounts currently paid as agreed, proportion of balances to credit limits is too high on revolving accounts & proportion of loan balances to loan amounts is too high.

My USDA loan is coming up on 3 years in April out of the 33 year mortgage. So I think that's the problem with my proportion of balances to loan amounts. The proportion of balances to credit limits is probably due to my house mortgage too. I might have all my credit limit taken up by that. The too few accounts is because I haven't seeked out additional lines of credit. After my Discover card fiasco I quit paying for things on credit. Been doing it for 15 years. In fact, I was flabergasted when I found out USDA said they would give me a loan for my house. And lastly, the serious deliquency is due to Discover. They reported 30, 60 & 90 days delinquent in the past 5 years, my account has been closed since Dec 2008, but I thought it was later than that.

As for trying to open 3 credit cards & possibly more, that's just not my style. I don't like the idea of opening credit cards for which I will never use. Especially not a Barclays, J Crew or Victoria's Secret cards. If anything I will most likely use Walmart or Lowes for most of my purchases. And why would they approve me for those when the CU had problems? If the Capital One site doesn't do a hard pull for pre-qualifying, then I'll consider checking out their cards. Does anybody know if Walmart, Lowes or Paypal do hard pulls for their credit cards?

Thanks in advance for the help!

[dabrian]

You should pay that Discover in full tomorrow if you can. That being your only card and being closed with a balance is going to kill your score not to mention it's going to look bad on manual review. Your credit isn't that bad and can be repaired pretty quickly.
I would call Discover tomorrow and attempt to reopen the account you have closed, even if they won't reopen the account it is definitely best to pay in full the account for score reasons.
After Discover reports your hopefully zero balance to your creditors I would apply for a Lowe's card. Take advantage of their zero apr promos and rebuild your credit at the same time.
Also after Discover reports a zero balance I would apply for membership with DCU and if approved go ahead and apply for your car loan.

[mtrsprt]

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@Anonymous wrote:

 Just this year alone on my Barclays Reward Mastercard, I've racked up nearly $2500.00 in cash back. 

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Did you mean $250.00 in cash back?

Every 2500 rewards points = $25.00..........  On average, $1250.00 spent = $25.00 in cash back.   In other words, you would have to have charged over $115,000.00 on your Barclays card in 12 months..... (and thats assuming you were recieving 2X the points for EVERY purchase.....