Low Interest Personal Loans - do I need manual underwriting?

[Anonymous]

So I tried LightStream and CitizensBank looking for investment capital under 7% (I make 12-15% annually on all of my investments, on average). LightStream was said to be pretty easy to get with a good score, but not so fast...

The check result tells me my FICO is about 760 but I get rejected anyway. I think it's not just about FICO score but also perhaps raw balances + number of accounts. I'm not sure if most of these online lenders (and all the lenders look about the same - even their applications and rate matrixes) are using purely automated score-based underwriting and it just spits out the largest factors affecting your score as per law, of if they are using other calculations that would fail even with an 850 FICO.

The only thing I have is federal student loans on income based repayment - about $275k with an income based repayment of $150/mo. vs. 60k of income. So, from a actual cash flow perspective I'm fine. My first action was to request consolidation to reduce all of those individual trade lines into one (about a dozen smaller loans), because all but one are under 5 years old and I think # of accounts is causing more of a problem than age of accounts. I also qualify for PSLF now so I wanted to get that started as well so I can get it all moving towards getting written off (PSLF is tax free when forgiven).

Would manual underwriting work for me? For example, with a mortgage where an automated check would take 1% of your balances as the assumed payment, if you provide proof of the actual monthly payment they use that instead and then your DTI is fine. Fannie Mae passed guidance on that in 2018, and most banks just dump their loans to the agencies anyway. I am wondering if a similar review of my actual monthly debt payments - a paltry $150/mo., would change the outcome on personal loan applications? I have no car loans, mortgage, only student loans and a $750 CC (I'm working to get a line with few grand even though I don't use CC's cause it seems to improve your score having the available credit total in the 3-5k range).

Has anyone dealt with a similar scenario, and how did you manage to get approved for at or near the lowest rates some of these are quoting (currently, 6-7% is the lowest on personal loans I found; duration and amount affecting rates on most lenders)?

[Anonymous]

There is never any guarantee for any credit based on scores alone.  You say that your score is 760 which is great.  Your file is also the difference between thick and thin.  Your file is extremely thin.  

"I have no car loans, mortgage, only student loans and a $750 CC"

If you are asking for investment capital, you have no experience with managing higher credit lines.  You can keep your DTI very low but you also owe 275k and you haven't shown the ability to pay back large loans.  How old is you credit history? 

I am curious though how much are you really asking to borrow?

[Anonymous]

Closed loans go back to 2004, for example paid off a car loan in 2013. At some point I consolidated student loans around 2010, without knowing anything about credit at the time, now I know that lowered average length of accounts. My card is about 6.5 years old; I'm getting one through my bank for 3-5k because it seems to be beneficial to have around that amount free and reporting. It won't help short term but should long term as it ages. I'm trying to get as much as I can, but 30-50k is probably the more reasonable bracket. I searched the forum for examples of approvals to get a feel for recent underwriting standards on personal loans, but there wasn't a lot of information. What I did read indicated that several of these companies confirmed base income from employment only and didn't really take effort to check other things in depth, so I'm guessing that my salary (about 60k) is the main number in the equation.

[flan]

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@Anonymous wrote:

, of if they are using other calculations that would fail even with an 850 FICO.

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All lenders lending more than a trivial sum use factors beyond FICO score.  Income, debt-to-income, time at job, time at address, rent v. own, housing payment, and liquid assets are all very common factors, but there are plenty of others.  Lenders like to think they're going to be repaid, so a history with the sort of loan they're making helps.  Or at the least, a history of making payments.

Consider someone like Lightstream, who are targeting super-prime customers. They make loans that are reasonably risky (They make unsecured car loans.  they don't even check with the borrower to see what they bought.), but mitigate that by lending to borrowers with supurb ability to repay.  It wouldn't surprise me to learn they have a blanket policy that says "You have less than X years of credit history, denied.", or other non score automatic denial rules.

[Anonymous]

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@flan wrote:

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@Anonymous wrote:

, of if they are using other calculations that would fail even with an 850 FICO.

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Consider someone like Lightstream, who are targeting super-prime customers. They make loans that are reasonably risky (They make unsecured car loans.  they don't even check with the borrower to see what they bought.), but mitigate that by lending to borrowers with supurb ability to repay.  It wouldn't surprise me to learn they have a blanket policy that says "You have less than X years of credit history, denied.", or other non score automatic denial rules.

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I'm curious if you actually read the whole post.  The first words were "So I tried LightStream and CitizensBank"...lol.

[Anonymous]

Binary,

  Typically credit unions offer the lowest rates on personal loans.  Since you only have 1 open card, it may be beneficial to you to start a relationship with one.  Since you don't have a bunch of new accounts and respectable income, you may consider starting a relationship with Penfed(you can search on the forums).  Their APRs for personal loans are as low as 6.49% and with your 760 score, I'm reasonably sure you can qualify for the lowest APR.  

Be aware though, if you decide to join they will perform a hard inquiry for membership.  You can use this same hard pull to apply for multiple products and they do have some decent cards but only offer 10k per credit card for new members.  Even if you were denied for your personal loan, you can still get a nice credit card and perhaps get your loan at a future time.  Maybe you can be approved for all but you could also be approved for none.  They do have nice car loans if you are ever in the market again.  Just a thought.  Good luck and I hope you get what you want no matter what you decide. 

[Anonymous]

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@Anonymous wrote:

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@flan wrote:

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@Anonymous wrote:

, of if they are using other calculations that would fail even with an 850 FICO.

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Consider someone like Lightstream, who are targeting super-prime customers. They make loans that are reasonably risky (They make unsecured car loans.  they don't even check with the borrower to see what they bought.), but mitigate that by lending to borrowers with supurb ability to repay.  It wouldn't surprise me to learn they have a blanket policy that says "You have less than X years of credit history, denied.", or other non score automatic denial rules.

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I'm curious if you actually read the whole post.  The first words were "So I tried LightStream and CitizensBank"...lol.

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I don’t think flan was telling the OP to “consider” as in look into  light stream, rather if i am reading it correctly, it looks like “consider”  means take into account, or regarding Lightsteam....

at any rate i would agree with both of you, score isn’t the only determining factor here.