Navy Federal Denied Credit Card Application - Advice Needed on Paid Collections

[Anonymous]

Hello, I have been going through the forums here at MyFico and this is my first ever post as I cannot find anything specific in regards to circumstance. 

A little background is that I have NFCU, and have a "closed" GoRewards Signature credit card with them that still have a balance and reports to the credit bureaus. I have never missed a payment on this account, and payment history reports exceptional. I opened the card around 2016 and went through a rough patch in 2017-2018 with credit where my fico scores dropped to the high 500s from being at 678 due to missed payments, and a card being closed sent to collections. NFCU sent a letter to me stating they would not be renewing by credit card after it expires due to credit score decreasing. It has been carrying a balance of 5800 out of 6200. 

I have been diligent in trying to fix all my past accounts, I have been paying on-time with all accounts for 1.5 years now. Paid off all (4) collection accounts; and have been slowly lowering by revolving credit balances each month, however I still have a utilization of 80%. My fico 8 scores today are 638, 637, and 647 with equifax, transuion, and experian respectively. 

So I went on to NFCU and pre-qualified for all their cards; and reading here that this really doesn't mean a whole lot and obviously in my case it didn't mean anything. I applied for the Flagship rewards and got the 24-48 message; and was denied. Tried to recon, and was denied still. The rep stated I maybe should apply for a GoRewards instead, and again denied. I waited for the letter to arrive in the mail and it stated the reason for denial for the flagship card was due to "recent collection accounts or judgement". The collections are from 2019 and 2020; I paid them off recently 4/2021 and they were reporting as paid when I submiited my application to Navy. I do not have any judgements on any of my reports, and never have as I paid every creditor owed to date whether late, charge off, or collection. When I recon'd I did submit my collection paid letters as proof of payment and having these settled, but Navy stated they must stick to their original decision. 

Originally, I thought it was my closed Navy GoRewards account or my high utilization preventing me from approval; but the letter states recent collections. Does anyone now how long it may take for Navy to consider me again for a credit card, or any advice to go from here in regards to when or how long they will look past these "recent collections"? 

My plan currently is this; I will pay off the $5800 on my GoRewards in the next 4-5 months; which will clear me from any debt with NFCU and also help with my overall credit utilization. I am also hoping this bumps my fico scores up as well. I will wait a year or more before trying to apply again; however I am also needing a vehicle loan at the end of this year and want to see if Navy will help me with this, but again - not sure if they will continue to consider the paid collections on my report. Does anyone know?

Capital One pre-approved me for a new vehicle auto loan right now for 35k at 7.2% - but I am not taking any loan right now. I was curious to check what was possible, as it was a soft pull without affecting my score. So I am hoping 8 months from now, NFCU will help me - but since they denied me for a credit card, not sure what my chances are with the auto loan with them. Simulated scores around December 2021 suggest I should be around a 680 fico 8 if I continue to pay debt down and on time.

Thank you for anyone who read this long post with me jumping kind of everywhere, sorry in advance as this is my first posting. Thank You. 

[designated_knitter]

I suspect that you could get approved for a vehicle loan from Navy since it is different underwriting criteria (secured).  However, your interest rate is likely to be quite high.

I was able to refinance my car through them but the interest rate was 16 percent.  So Cap1 would be a much better option.

When does the GoRewards "expire" and close?  If at all possible, try to get that card paid off before it goes "poof".  Closed by credit grantor with a large unpaid limit will not be good for your reports or Navy's internal scoring.

You have to do aggressive damage control right now to salvage your relationship with Navy.  Make paying that off your priority.  Then focus on cleaning up baddies.  Then try again.  Maybe get an SSL with them to maintain the relationship and continue your history of on time payments.

Good  luck!

[Anonymous]

Thanks for your response and advice @designated_knitter. This is helpful to know; I was hoping NFCU would give me a similar rate or even better than Cap 1, but good to know nonetheless on what to expect. The GoRewards I had expired on 6/2020, so it's been closed just shy of a year now and really went on the backburner in terms of paying it off; I did however maintain on-time payments still. I will definitely make it a priority to get rid of this debt in the next few months so I do not owe Navy anything. It still shows up online; and it still calculated in my utilization and reporting monthly. I appreciate your advice and will focus on this. As for my credit report, most everything that is pressing is resolved - all accounts reporting current and paid as agreed. Now what's left is needing to send goodwill letters all the way to try to remove paid collections and past dues on my report. Thanks again for your help, much appreciated! 

[Heatt99]

Unfortunately, that GoRewards account must be paid in full before Navy extends you anymore credit.

Don't really worry about other collection accounts, instead hammer down the 5.8k. 

Navy is good restarting customers at high limits once they make their past accounts whole again.

My DD is in a similar situation, were she has to pay down X closed Navy card before she can apply for new card.

GL

[Anonymous]

Thank you @Heatt99 ; I figured that may be the case. Will definitely make it a priority to pay this account in full ASAP. That makes me feel a little  better in regards not worrying so much about the collections showing on my report. I have also switched my direct deposit to Navy as well to make this a little bit easier in paying down this large balance. Reading these forums, it sounds like Navy is great - but I do have to agree the closed GoRewards account has to go, first thing. Thanks again!

[OmarGB9]

Even though they didn't specifically mention it, you can bet that outstanding balance factored into the denial. That plus outstanding collections/charge offs, which, even if paid, are negative. As for how long "recent" is, well, it varies by lender, but "recent" can be as far back as 5 years or more.

Definitely pay that $5.8k, but also don't forget about any other unpaid collections/COs.

[Anonymous]

Thanks for your reply @OmarGB9 . Yes, I definitely figured the 5.8k balance played a role for sure in their decision, but I'm glad you pointed the fact that even though they didn't mention it, it was probably a good part of the issue. I only pulled the trigger because their pre-qualification tool said I could apply for other products - but of course found that it doesn't mean you'll get an approval. As everyone stated, definitely get rid of the 5.8k ASAP - believe me, this will be the priority. As far as any unpaid collections - I have none, as all are paid - however, like you said, this still hurts your score and is negative. There was a lot of back and forth whether to pay collections or not (quite the headache because there is differing opinions everywhere about it). It came down to this, personally, if I owed it, I have to pay it whether it helps me or not . Also, I'll know that no one can come after me with a judgement since all debts were legally paid, so that's a nice feeling to put it behind me. I am just hoping and praying that goodwill letters will help to knock some baddies off my report. Thanks again! 

[OmarGB9]

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@Anonymous wrote:

Thanks for your reply @OmarGB9 . Yes, I definitely figured the 5.8k balance played a role for sure in their decision, but I'm glad you pointed the fact that even though they didn't mention it, it was probably a good part of the issue. I only pulled the trigger because their pre-qualification tool said I could apply for other products - but of course found that it doesn't mean you'll get an approval. As everyone stated, definitely get rid of the 5.8k ASAP - believe me, this will be the priority. As far as any unpaid collections - I have none, as all are paid - however, like you said, this still hurts your score and is negative. There was a lot of back and forth whether to pay collections or not (quite the headache because there is differing opinions everywhere about it). It came down to this, personally, if I owed it, I have to pay it whether it helps me or not . Also, I'll know that no one can come after me with a judgement since all debts were legally paid, so that's a nice feeling to put it behind me. I am just hoping and praying that goodwill letters will help to knock some baddies off my report. Thanks again! 

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Yea their pre-qualification tool is not reliable at all. It always prequalifies everyone for every card.

Yes, I understand. I feel the same way - if I ran up the debt, I'm responsible for paying it back. I'm in the process of cleaning up my credit and paying old COs/CAs myself.

But anyway, yes, stay the course, keep trying GW and keep us posted!

[Anonymous]

Thanks @OmarGB9 and everyone else @Heatt99 @designated_knitter  who responded to this post. Good luck to everyone on their credit journey; just very glad I found this site and that everyone is supportive and surprisly got answers quickly. I will definitely post any updates when the time comes to help strengthen this as a resource for others. Thanks again all, be well.