Do prime banks look down on credit profiles with a lot of subprime credit card accounts?

[Anonymous]

Hi, gang! 

As always, I am very thankful for the wealth of knowledge on this site and look forward to becoming a "Moderator" one day. Anyway, a friend of mine is wondering whether prime lenders (e.g., Amex, Chase, FNBO) look down on credit profiles with a lot of subprime accounts. He is trying to get in with Barclays, but they keep giving him bogus reasons for denial.

Here is a breakdown of his credit profile:

TU: 700 

EX: 699

EQ: 700

AAOA: 2.1 Years

Inquiries:

TU - 2

EX - 2

EQ - 0

Utilization is <1% across the board.

Baddies: 

Paid charge-off with Radio Shack/CBNA 9 years ago

Paid charge-off with Chase Card 3 years ago

Paid charge-off with Synchrony Bank 3.5 years ago

Paid charge-off with TD Bank USA/Nordstrom 2.9 years ago

Paid charge-off with THD/CBNA 2.9 years ago

Settled with FNBO 2.5 years ago

Accounts: 

Comenity Bank/Children's Place - $3,050

Credit One Bank - $2,950

Genesis Financial Solutions (Indigo) - $300

Genesis Financial Solutions (Milestone) - $300

Capital One Bank  - $9,000

Total Visa  (Mid America Bank & Trust)  - $400

Amex - $5,100

Shell/CBNA - $150

Staples/CBNA - $205

DSNB Macys - $3,111

Syncb/Walmart (Mastercard) - $10,000

First Premier Bank - $600

First Premier Bank - $525

[K-in-Boston]

Sounds like it's more the charge-offs than anything.  I wouldn't think that the internal scoring of lenders puts much if any weight on subprime lender accounts being on a report.  They're ubiquitous for many people these days.  My question would be why the friend still has all of those subprime accounts still open with likely hefty fees and many of them with no grace period when they have the CapOne, Amex and several good and useful store cards?

[Anonymous]

Thanks so much for your reply!

He is keeping them open for age. All his subprime accounts are almost 2 years old, while his prime cards are 10 months old. He plans on keeping the junk cards until his prime cards hit the 1-year mark. This is more an age issue for him. 

To be honest, though, I still don't understand why Barclays denied him---2 of his scores just broke 700, and he either paid or settled his past credit card accounts. Citi (an ultra-conservative lender) let him back him with store their store cards, so I am not sure why Barclays is being temperamental.

I may be missing something here.  

[K-in-Boston]

The accounts will continue to count in AAoA for up to 10 years after being closed. CBNA store cards are not the same as Citi bank cards. What were the reasons Barclaycard listed for the denial and which card was it? Having 2 of 3 credit scores at 700 doesn't make one bulletproof for an application at all. I'll use my own example: decades of spotless credit history, scores in the 730s/740s, income in the 2s, and CapOne denied me for a card last February. It happens.

Edit: Also, how many of those cards were opened in the past 2 years? 1 year? Barclay doesn't like a lot of recently opened accounts, even after you've become a cardholder.

[Anonymous]

I honestly think you are right.

All my friend needs to do, based on my thoughts and what you have said, is close the junk cards, garden with his prime and store cards, and let the charge-offs age a bit more. 

Thanks for chatting with me, K-in-Boston! You are very knowledgeable when it comes to the hit-or-miss credit system.

P.S. To address your other question, Barclays denied him for having a limited credit history and history of not paying on time.

[pipeguy]

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@K-in-Boston wrote:

Sounds like it's more the charge-offs than anything.  I wouldn't think that the internal scoring of lenders puts much if any weight on subprime lender accounts being on a report.  They're ubiquitous for many people these days.  My question would be why the friend still has all of those subprime accounts still open with likely hefty fees and many of them with no grace period when they have the CapOne, Amex and several good and useful store cards?

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I agree that this is a major factor, that's a lot of charge-offs. As far as the sub-prime cards on a manual review, they are probably weighed as less worthy but considering credit cards almost always approved/declined by a computer program, I suspect the low limits are what's weighed more than the issuer. You'll find that once you start getting accounts with $5k or $10k limits that new accounts will be approved in that range. I don't think a prime lender is interested in issuing another $500 CL card to compete with 3-4-5 other $500 CL cards. Add in a bunch of charge-offs with a bunch of low limit cards and it's a weak profile irrelevant of scores. Aka if you can't handle $500 limits they are not going to give you a $5k limit. 

[pipeguy]

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@Anonymous wrote:

Hi, gang! 

As always, I am very thankful for the wealth of knowledge on this site and look forward to becoming a "Moderator" one day. Anyway, a friend of mine is wondering whether prime lenders (e.g., Amex, Chase, FNBO) look down on credit profiles with a lot of subprime accounts. He is trying to get in with Barclays, but they keep giving him bogus reasons for denial.

Here is a breakdown of his credit profile:

TU: 700 

EX: 699

EQ: 700

AAOA: 2.1 Years

Inquiries:

TU - 2

EX - 2

EQ - 0

Utilization is <1% across the board.

Baddies: 

Paid charge-off with Radio Shack/CBNA 9 years ago  (store card)

Paid charge-off with Chase Card 3 years ago

Paid charge-off with Synchrony Bank 3.5 years ago

Paid charge-off with TD Bank USA/Nordstrom 2.9 years ago (store card)

Paid charge-off with THD/CBNA 2.9 years ago (store card)

Settled with FNBO 2.5 years ago

Store cards don't carry the same weight or value as national bank cards such as MC/V/Dis/AE

 Accounts: 

Comenity Bank/Children's Place - $3,050 (store card)

Credit One Bank - $2,950 (sub-prime)

Genesis Financial Solutions (Indigo) - $300 (sub-prime)

Genesis Financial Solutions (Milestone) - $300 (sub-prime)

Capital One Bank  - $9,000

Total Visa  (Mid America Bank & Trust)  - $400 (low limit)

Amex - $5,100

Shell/CBNA - $150 (Store Card)

Staples/CBNA - $205 (Store Card)

DSNB Macys - $3,111(Store Card)

Syncb/Walmart (Mastercard) - $10,000

First Premier Bank - $600 (sub-prime)

First Premier Bank - $525 (sub-prime)

 To follow up on my other post the green highlights are the only good prime accounts and the Walmart MC is iffy because its Sync and high APR.  With the Cap-1, AmEx and Walmart cards you have no need to pay high APR's and AF for sub-prime cards and IMO you should close those ASAP - as far as store cards if you use them and they have value AND you PIF every month, keep those you use but close those you keep just to pad your utility. 

I have 28 open accounts, all are bank cards with the exception of (store) Amazon $10k, Lowes $35k and Home Depot $25k which I use a bunch but always pay in full or use 6/12 month 0% financing.

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