Need help understanding a reason of denial

[MikeyMagic]

So I am still learning as much as I can about credit and reporting so please have patience with my various questions. I love the info I gain on this forum.

So my question is this, it is known that you want your credit utilization to be ideally less than 10% each month. I am new to this and I am trying AZEO.

I was watching a youtuber apply for a credit card from Citi and he was denied. 1 of the reasons he was denied was CREDIT REPORT SHOWS YOUR BALANCES ON 1 OR MORE OF YOUR ACCOUNTS ARE TOO LOW IN RELATION TO CREDIT LIMITS.

I am so confused here. I don't know what this man spends a month but let's say his total credit limits on all his cards is $80,000. And he spends $70,000 during the billing cycle and makes a payment or 2 throughout the cycle and then a few days before the statement date he pays everything off in full except for leaving a small balance to keep his utilization low and keep his credit scores up.

Isn't that what he is supposed to do? I don't understand, if he is using his cards a lot but just is paying off most of the balance before the statement date, isn't that supposed to be good? According to the denial he seems like he was penalized for doing that. So what is he supposed to do, leave a $30,000 balance on 1 card and a $20,000 on another card so the credit report will show a high balance? That would seriously drop his credit score right? But according to this denial from Citi it seems that's what this credit card company wants!!

I am so confused. I spend a decent amount on all my cards but pay them all off in full before the statement date except for 1 card which I leave a small amount. I thought that was good but according to Citi it obviously isn't.

The only thing maybe is he isn't spending during the cycle much on any of his cards and Citi can tell that by the application from its algorithms? So the 1 or more LOW balances are because of that? 

I'm so confused can someone please decipher this for me and help me understand this Denial reason? It just goes in the face of everything I have learned so far. 

Thanks so much.

[FireMedic1]

Ignore you tube.

[MikeyMagic]

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@FireMedic1 wrote:

Ignore you tube.

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The guy applied live and then showed the letter of denial with the reasons why from Citi added to the video once he received it. So this wasn't some guy just ranting about things, he had the letter that was mailed by Citi. So obviously it was legit.

[JoeRockhead]

You should take nonsensical reasons given (like this one) for denials and group them in with other such phrases like when your parents said "because I said so".

You said it was one of the reasons.... Citi is really new account and inquiry sensitive so who knows what this person did in the 6 months prior to the application.

[pizzadude]

All good points above.  Also I'll mention that creditors are required to provide you "A Reason" when you are declined.  This does not have to be the only reason, the most impactful reason or the main reason why they declined you -- it's just one of the factors that was taken into account.

[SouthJamaica]

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@MikeyMagic wrote:

So I am still learning as much as I can about credit and reporting so please have patience with my various questions. I love the info I gain on this forum.

So my question is this, it is known that you want your credit utilization to be ideally less than 10% each month. I am new to this and I am trying AZEO.

I was watching a youtuber apply for a credit card from Citi and he was denied. 1 of the reasons he was denied was CREDIT REPORT SHOWS YOUR BALANCES ON 1 OR MORE OF YOUR ACCOUNTS ARE TOO LOW IN RELATION TO CREDIT LIMITS.

I am so confused here. I don't know what this man spends a month but let's say his total credit limits on all his cards is $80,000. And he spends $70,000 during the billing cycle and makes a payment or 2 throughout the cycle and then a few days before the statement date he pays everything off in full except for leaving a small balance to keep his utilization low and keep his credit scores up.

Isn't that what he is supposed to do? I don't understand, if he is using his cards a lot but just is paying off most of the balance before the statement date, isn't that supposed to be good? According to the denial he seems like he was penalized for doing that. So what is he supposed to do, leave a $30,000 balance on 1 card and a $20,000 on another card so the credit report will show a high balance? That would seriously drop his credit score right? But according to this denial from Citi it seems that's what this credit card company wants!!

I am so confused. I spend a decent amount on all my cards but pay them all off in full before the statement date except for 1 card which I leave a small amount. I thought that was good but according to Citi it obviously isn't.

The only thing maybe is he isn't spending during the cycle much on any of his cards and Citi can tell that by the application from its algorithms? So the 1 or more LOW balances are because of that? 

I'm so confused can someone please decipher this for me and help me understand this Denial reason? It just goes in the face of everything I have learned so far. 

Thanks so much.

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It's just "nonsensical", as @JoeRockhead suggested. Don't get confused by some algorithm spitting out something meaningless.

[MikeyMagic]

Thanks everybody, what I think I've learned from you all in this thread is that the reason stated on the letter made no sense and not to believe it lol.

And Citi seems pretty weird in its denials haha.

I'm gonna keep sticking to what I've learned in this forum.

[BuckyB]

That's correct. Ignore the "reasons" on the denial letter. They're irrelevant at best and misleading at worst. Sometimes they're completely contradictory like the guy who received a denial that said, "Too many revolving accounts" that was followed with "Too few revolving accounts."  Another guy got a denial that mentioned "Number of tradelines reported in bankruptcy".... but he had never declared bankruptcy.

[GZG]

literally, CREDIT REPORT SHOWS YOUR BALANCES ON 1 OR MORE OF YOUR ACCOUNTS ARE TOO LOW IN RELATION TO CREDIT LIMITS.

means

"you don't spend enough on the credit you already have, so why should we give you more"

as above said, it's a proxy reason, Citi just needed to give a reason, so they got one.

Would Citi actually be concerned about that? Maybe. Particularly for their Citi Custom Cash card, where the 5% category is limited to $500 in spend, and if they feel they are handing out the card to somebody who will never be profitable, that might be a concern, but it's doubtful.