Proportion Of Loan Balances To Loan Amounts Is Too High

[masscredit]

I applied for a CLI for one of my TD Bank cards. That was denied. The reason given is - Proportion Of Loan Balances To Loan Amounts Is Too High. B/L is currently at 77%. At what point does this no longer apply? 

[Vinjints]

I'd imagine that depends on the FI. But I am curious on the answers since I'm showing about the same B/L on my daughter's car from April. I understand the reasoning, but would assume time since taking the loan out would be more significant, if it's less than 6 months, than the actual ratio. When was your loan opened?

[BrutalBodyShots]

@masscredit there's no real answer to this, as it would vary by lender. There are some (most, probably) that wouldn't even site that denial reason at all. Even if you were to ask around for just TD data points, you're unlikely to find someone with the same profile as you where the expectation would be the same. Remember that you are approved or denied credit (or additional credit) because of your overall credit profile, even though an issuer only needs to provide you with a single denial reason.

[AndySoCal]

@masscredit @Vinjints @BrutalBodyShots  Here is a good answer to your question.

https://www.cfajournal.org/credit-report/ 

[masscredit]

@Vinjints The loan was opened October '24

@BrutalBodyShots Funny thing is, this card is 9 months old. I was approved for it 6 months after I got the auto loan so the B/L was higher then. My credit card UTI was also higher. Currently that is rounded up to 1%.

@AndySoCal Good info there but it doesn't say what B/L ratio is no longer considered high. I think I read something before that said under 50%. Without knowing or there being an actual solid answer, I'm guessing in the 30-50% range. 

[BrutalBodyShots]

@masscredit, just a FYI, the FICO negative reason code related to installment loan utilization being less than ideal exists at 9.5%+ for all non-mortgage loans as far as we're aware. Now whether the lender in question uses the same threshold point is anyone's guess, but mine would be that it doesn't align with the FICO algorithm.

[Thomas_Thumb]

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@masscredit wrote:

I applied for a CLI for one of my TD Bank cards. That was denied. The reason given is - Proportion Of Loan Balances To Loan Amounts Is Too High. B/L is currently at 77%. At what point does this no longer apply? 

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The reason for a denial often has nothing to do with a Fico reason code listed on a denial letter. The "system" is provided with reason codes when a score is pulled. It then grabs one or two reasons and spews them out in a letter regardless of relevence.

A new or newish account adds a degree of risk that may contribute to no CLI. Generally, B/L ratio is not a true cause. I would not dwell on B/L ratio as the primary reason almost certainly lies elsewhere.

[BrutalBodyShots]

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@Thomas_Thumb wrote:

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The reason for a denial often has nothing to do with a Fico reason code listed on a denial letter.

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That's exactly right @Thomas_Thumb, and what makes it more confusing to most people is that a denial letter often contains both (denial reasons and FICO negative reason codes) and frequently in close proximity of one another. Heck, Amex denial letters do this and put "Your FICO score" between both of them and many people mistakenly believe they were denied because of their FICO score when all the letter was stating is what their FICO score was. I think people confuse FICO negative reason statements and lender denial reasons all the time.

[AndySoCal]

@masscredit @Have you done any balance transfers  to any of your credit cards?  What is your overall credit utilization?

[masscredit]

Thanks for the info guys! 

@AndySoCal I did a couple BTs last year. They were just for a month.No fee onto one of my Cap1 cards. Currently have one card reporting $166/$6500. Overall utilization is rounded to 1%.