Rough Day of Denials

[whocares]

I thought I had turned a corner with my credit enough to get a $40k auto loan but it was a day of denials.  I had paid all 3 collections in full and reduced my debt down to $6k (originally $22k) over the past few months.  The last of my major CC payoffs ($9k) payment just reported to all the bureaus yesterday.  I re-ran my scores and saw 10-15 point bump in my FICO 8.  My FICO 9 (and FICO 9 Auto) also had a major jump.

I applied with PenFed because they use FICO 9 and was hoping the exclusion of my paid collections from the score would help.  I was denied with the reason "DELINQUENT PAST/PRESENT OBLIGATIONS."  My FICO 9 score was 705.  Tried the reconsideration route and was still declined.

I then applied at a local credit union San Diego County Credit Union (SDCCU), but also was declined with exactly the same score FICO 9 Auto 705 (they pulled Experian) and same reason.

Scores from myFICO:

FICO 8:  EQ 645 TU 646 EX 636

FICO 8 AUTO:  EQ 633 TU 643 EX 638

FICO 9:  EQ 705 TU 688 EX 705

FICO 9 AUTO:  EQ 705 TU 684 EX 705

I don't really have a shot with anyone that uses FICO 8, which is most, unless I'm willing to accept an outrageous interest rate.  No thanks.

My last payment deliquency was 3 years ago, my income is over $200k, DTI is <8%, and I have a very thick file of CC and auto loans, but my misfortune in 2015 still haunts despite all my efforts to reduce debt.  I had A LOT of missed payments across multiple credit lines including auto, 3 CC charge-offs, etc.  I am at fault and I don't blame the underwriters for not wanting to take the risk.  I wrongfully thought 3 years was sufficient time to get larger auto loan amounts.

In the end, I will just have to wait and continue to save for a larger downpayment.  My excess funds went to paying off CC debt. Just proves it is more than income and score, especially for anything manually reviewed.  Going to take a few years for the baddies to drop which will put me in a much better place credit wise.

The ironic part is I just got an E-mail from Discover tonight thanking me for my responsible credit management.  They auto increased my limit by $1300 to $10k without me requesting it.  Go figure!

[SoundoftheSuburbs]

I think some change is afoot in the auto finance market. I believe credit in that space is tightening due to rising defaults. Unfortunately, I think you are getting caught up in it. The $40k is probably a little aggressive, even with your income. You did not mention a downpayment. With compromised credit, I'd definitely want to see at least 20% down, preferably 30% down. I think you should be able to be approved at the $20-25k mark. You might also need to accept a higher interest rate and try to refinance at a later date if you need the car immediately.

[Loquat]

I would agree that there must be something that has changed.  I've financed several cars with PenFed...2 of them DURING my BK13 and since since discharge and my BK13 is still alive and well on my reports and will be for some time to come.  

[Anonymous]

What car are you trying to get. The reason I’m asking is because they use some appraisal system that takes into account MSRPs. I got my Sierra SLT Crew Cab auto loan for 45K, because of factory rebates, Penfeds system appraised it for 53500. Since they hold the title for collateral they had more equity on the car. Instant approval with 0 money down and 3.25%. When I got my wife a Prius prime they only valued it at 28K even though MSRP is 33K. I’m assuming because it’s a plug in and the difference is almost exact to the federal and state tax incentives. I had to put more money down to get the 3,25%.

Moral of the story is look for something with a good factory rebatte and see what they appraise it for. The bigger difference the better your chances. My profile and income similar to yours. Of course the biggest rebates are usually from American cars like. GMC, Chevy, Ford, Buick, Lincoln, Cadillac.

Hope this helps.

[Anonymous]

Let me start by saying I'm sorry about those denials and I hope things turn in the right direction shortly. The single reason for those denials is NOT because of your credit card payment history: financing companies are more concerned with present and past auto loan payments. Based on the information you disclosed above, we have almost identical profiles with past auto history: I've had two auto chargeoffs, BUT are showing "paid" or current on my EXPERIAN, TRANSUNION, and EQUIFAX; 120 DAY late on my mortgage in 2017; and180 days late on my NAVIENT student loans in 2015. Now the last auto chargeoff was reported as a chargeoff in March 2018, but it was "paid". Just recently, I had an approval from audi financial for 5.2% with an auto score of 630. My income is nowhere close to yours (approx. 110,000 per year). Again, there could be other underlying factors such as job STABILITY and residency stability which generally play a key role in approvals. The finance manager told me that audi could not care less about credit card payment history--it boils down to how you pay past and present auto loans. Even though I had those chargeoffs, they were eventually reported as "paid" . The 2018 charge-off was a joint loan with my wife on a cadillac. At one point , we even had a repossession on that car-- we went back and got it and still was going through a tough time with the payments. Eventually, I took some money out my retirement ($3300) and paid it off. As we were struggling with that auto, I had my own auto loan in my name with 16.99% rate (subprime) for 3 years with no later. Audi finance was able to look at that and not the other derogs and approve me with a third of the interest I was paying. Even at the time of this approval, all three bureaus showed my chargeoff AMEX card for 5100 (from 2015); banana republic card (from 2015); PayPal smart connect (2015); and so on. If you could give me more specifics on those past auto loans I could give you a better analysis as to what specifically is going on. How long ago were those late payments? Are those car loans being reported as "paid"? If not, that's the central reason.
In addition, job and residency stability are central. Those factors could play a role. Keep in mind, that any further request for auto loan credit will keep generating the same denial reason. This is a cool off period. Let things marinate by allowing those derogs to age a few months and keep those c.c. utilization below 5% every billing cycle to maximize your scores. Then give it a shot again. These things take a lot of patience.
Best wishes