Discover CLI Denied

Anonymous · ‎03-23-2016

I hit the LUV button on my Discover IT card. I opened it in September 2015 and they gave my a $3k limit. My TU is a 784 with their free score. I was denied for "debt burden in relation to income". My utilization is less than 5% (pay all my cards including Discover in full every month). I have 1 mortgage ($2k a month all in); make $100k a year; and only have student loan debt (loans are deferred due to in-school status; though when i enter repayment it will not be more than 15% of my income; reporting as $0 monthly now). I have no idea how my DTI is so out of wahck as to be denied a CLI... It makes no sense to me.

I do not need any additional credit at all. I only use this card for the 5% categories (plus the double after during the first year). It is more the point that my limit is only $3k compared to my other limits (most are over $15k). Should I call and fight them on this? I have a good amount of new accounts and inquiries, otherwise squeaky clean.

FinStar · ‎03-23-2016

@Anonymous wrote:
I hit the LUV button on my Discover IT card. I opened it in September 2015 and they gave my a $3k limit. My TU is a 784 with their free score. I was denied for "debt burden in relation to income". My utilization is less than 5% (pay all my cards including Discover in full every month). I have 1 mortgage ($2k a month all in); make $100k a year; and only have student loan debt (loans are deferred due to in-school status; though when i enter repayment it will not be more than 15% of my income; reporting as $0 monthly now). I have no idea how my DTI is so out of wahck as to be denied a CLI... It makes no sense to me.

I do not need any additional credit at all. I only use this card for the 5% categories (plus the double after during the first year). It is more the point that my limit is only $3k compared to my other limits (most are over $15k). Should I call and fight them on this? I have a good amount of new accounts and inquiries, otherwise squeaky clean.

Don't know that you could "fight" them on the CLI. Typically, if your DTI is the actual issue, then it's likely they are not comfortable with extending any further CL. And, just because another lender has a higher CL, doesn't mean Discover or other lenders would follow suit. Discover is just quirky that way.

You can try appealing the decision, but if you want a higher CL, then you would need to be aware that they likely will do a HP with no guarantee of anything much higher. How heavily are you using the card every month?

Anonymous · ‎03-23-2016

Anywhere from $200 - $1,000 depending on the cashback cateogry bonus. So again, I don't need the credit - it is just the point.

I can't fathom how my DTI is anywhere near a problem for Discover or any bank. The only rationale I can think of is my deferred student loans. If Discover wants to deny a CLI because I have substantial deferred federal student loan debt then I am willing to get my cashback from them and walk away. I won't do business with a bank that does not understand how professional degrees are financed. It's very basic stuff.

I think I'll let it go and be happy with the $3k, though I am tempted to call, but don't want another HP. I've never been out right denied for any credit card, CLI, loan, etc - so I was just shocked. I wasn't expecting a $20k limit, just something more reaosnable than $3k.

Anonymous · ‎03-23-2016

edit: I was denied for the Citi Premier card for too may inquires. Forgot about that.

FinStar · ‎03-23-2016

@Anonymous wrote:
Anywhere from $200 - $1,000 depending on the cashback cateogry bonus. So again, I don't need the credit - it is just the point.

I can't fathom how my DTI is anywhere near a problem for Discover or any bank. The only rationale I can think of is my deferred student loans. If Discover wants to deny a CLI because I have substantial deferred federal student loan debt then I am willing to get my cashback from them and walk away. I won't do business with a bank that does not understand how professional degrees are financed. It's very basic stuff.

I think I'll let it go and be happy with the $3k, though I am tempted to call, but don't want another HP. I've never been out right denied for any credit card, CLI, loan, etc - so I was just shocked. I wasn't expecting a $20k limit, just something more reaosnable than $3k.

You can do whatever is suitable for your needs OP but I would keep the card. Not all lenders play by the same rules and some are more conservative than others. A variety of lenders do capture deferred loans under the DTI algorithm context because technically it is still debt you owe, while of course on deferred terms. They have to balance risk as well, it's not about "basic" stuff" - it's an unsecured loan on plastic at the end of the day. Perhaps others can provide you more insight on what has worked for them given a similar DTI scenario but Discover is just a finicky lender in some cases.

I would imagine that if you used it a bit more than the categories you might see a little bit of movement. We'll see what others recommend.

Anonymous · ‎03-23-2016

When I purchased my home in the fall my DTI was 31% with all obligations. Nothing has changed since then. Deferred student loans are "basic" in my opinion. First, when I purchased my house I had two options (1) take 1% of the balance as a monthly payment or (2) pull the loans out of deferrment apply for income based repayment and factor that payment into my DTI. I went with the IBR method and my payments are capped at 15% of my income. I have subsequently put the loans back into deferrment after closing.

My point is that Discover should not take a blanket stance against student loan debt. Whether you agree or not Congress has enacted a method to pay for education and specifically graduate and professional degrees through federal stafford and GRADPlus loans. Congress has provided a vairety of repayment methods, including income driven plans. These range anywhere from 10-15% of your "discretionary" income. Congress has then decided that after 10-20 years (depending on who you work for) any outstanding balance will be forgiven. This is well established and well known throughout the banking industry. While I agree that federal student loans is "debt" it has very different contractual repayment terms than traditional debt or private student loans. For example, you have $150k in federal student loans you may only pay $300 a month becuase of the repayment plans. You should not be denied a CLI or credit card because the bank thinks that you should be paying more. You are paying what you agreed to. I'm not saying that Discover should ignore deferred student loan debt, but deferred federal student loan debt in most future cases will not be paid back at face value. P.S. it sucks that my law school costs $55k a year plus books, etc. I thought that I was doing the right thing by keeping my job and going to school at night. I digress.

Anyway - I will call tomorrow at work to see what the heck Discover was thinking. This is all just an assumption at this point.

Anonymous · ‎03-24-2016

Just spoke with a Credit Analyst at Discover. They approved a CLI from $3k to $5.5k. I told them that I don't put large purchases on the card because of the limit (which is true). It was a hard pull But, I was correct about the reason for the SP denial. Apparently they use an "algorithm", but when I explained the student loans they did not seem to have any issues with it at all. Overall, I have got a ton of value out of this card between the Apple Pay promo, 5% categories, and double cash back at the end of the first year. So I'll keep it until the end of the first year - after that I think that I that I'll be fine with just my Citi Double Cash and Freedom cards. I do think that it is incredibly shady that I had get a manual HP review to get a reasonable credit line just because I have a large amount of student loans.

Officer737 · ‎03-24-2016

One of the things is.....it's a private/personal debt so we have to pay the game by their rules if we want to play on their field. If we don't like the rules on the field, we can always find another field that we like their rules better. House rules rules all.

Anonymous · ‎03-24-2016

Totally agree. They can lend money to whomever they want under whatever criteria. I don't agree with their stance on student loans - so once my cashback is doubled I am out. I walked away from a potential mortgage and existing accounts at PenFed for the same reason. At the end of the day there are enough banks with enough competitive products that they need us - not us needing them.

Officer737 · ‎03-24-2016

@Anonymous wrote:
Totally agree. They can lend money to whomever they want under whatever criteria. I don't agree with their stance on student loans - so once my cashback is doubled I am out. I walked away from a potential mortgage and existing accounts at PenFed for the same reason. At the end of the day there are enough banks with enough competitive products that they need us - not us needing them.

Agreed! Its free will on both sides. I also agree that the system should be for them to fight over us and not the other way around.