Miss0033

So my last 2 card applications I have gotten denied. Both have cited current debt to income ratio as the reason. All my accounts have declined and income has risen. The only thing that has changed is I added a mortgage. Now my wife and I spent considerably less than we were approved for (around 50-60% of what we were approved for actually) and can comfortable afford all of our debt and still put a good amount into savings and investments.

So I called Chase today about my recent denial, and the woman candidly explained that it was most likly the mortgage payment that was causing the problems.

In the application the only ask for my annual income, the can see only my debt, and I listed the total mortgage payment that my wife and I both contribute to. Yes, without her income I would struggle to afford everything. How can I get approved for cards now? The entire mortgage is listen on my credit report, as I imagine it is on hers as well. We both signed on the house and are joint owners... Are my credit card mile days coming to an end? What gives? I know others on here own homes and churn cards like crazy...

MDtR-Chicago

Personally, I would have listed half the mortgage. If that throws a red flag, that's fine, because that can be discussed in the reconsideration conversation. But if you're sharing the mortgage, why not reflect that?

worldiswide

There are a number of factors at play here. First of all, the mortgage even though it is joint really means that each of you are responsible for the whole amount. So your credit report is a mix of individual tradelines and joint tradelines. They are identified as such, but a joint is the same financial responsibility for debt to income calculations. Secondly, some of the recent regulations under the CARD act requires card issuers to confirm ability to pay at the time of underwriting. The ability to pay is required to be individual level not a household level. This was designed from the governments perspective to protect consumers from overextension of credit, and then being taken advantage of with high interest rates or additional fees. Of course this can affect households in two ways; one that a non working spouse is unable to obtain credit in their own name, and secondly, that individuals will not be able to take on as much new individual credit when they have tradelines that were underwriting with household income (a mortgage). If this sounds confusing, it is, and certainly falls into writing regulations that really have unintended consequences when put into practice. Each issuer can determine their own credit policy, but must be able to ensure government regulators that they have taken ability to pay into consideration.

Issuers can not ask for household income but they do try to find ways around that like asking for 'other income' to which you can answer what you feel comfortable is other income(household) and that should be used in the underwriting decision. Half the mortgage amout is not correct.

A long answer to your original question, but yes the new mortgage does have an effect on your ability to obtain additional credit. Plus if it is new, you have not built a payment history on this new and substantial debt. In the past, mortgage delinquencies were very rare, but not so now.

RetiredRoadWarrior

A very informative post, worldiswide, but I admit to being puzzled by 'issuers can't ask for household income'. Seems like they should. And seems like all cc apps ask that question.

BCF

+1
Two years ago I was shopping for an auto loan. The finance manager of the dealer suggest me to right half the rent we pay in the application, because me and my wife pay that amount together.

Happy

The recent laws require the banks to ask for Individual income. But as we all know that it often is not practical therefore the banks find ways to work around this while not violating the requirements of the laws.

worldiswide

Very well put Happy. There are always differences between the spirit and the letter of the law.

Miss0033

I appreciate the thorough information. Unfortunately as of this post (last July) I have only been approved for 1 out of the 6 cards I have attempted.

The one approval was a single application to the US Bank Olympic Bonus. I already have an extensive relationship with US Bank (Mortgage, joint checking, savings, business checking, etc.) so I had assumed approval and got it.

Since then I have attempted:
Chase Southwest
Chase Sapphire Preferred
Hawaiian Airlines card
AmEx Hilton
Citi Hilton Visa
Priority Club Select Visa

All rejections, and no luck with reconsideration line.

There were mutiple applications on same day spread of 2 days (1 group in september 1 in December), I cannot remember how I grouped them.

Anyway I pretty much get the same response of "Denial of application due to Potential debt compared to existing obligations" which is strange.

CreditKarma says 758. I have never ever missed a payment and only carried a balance once. I treat my credit cards like a check card and only buy things if I can afford to pay them with cash. I have no negative remarks on my credit report.

How can I get back into the game? Before the 2nd group of applications (in December) I closed 2 cards I wasnt using that often in October with credit limits of $7,500 and $5,000 to try and free up some availabel credit and it appears to have made no difference.

My wife and I spent less than half of the amount we were pre-approved for on the house (so we arent stretched super thin is what I am saying).

How can I get back in the game? What am I doing wrong? I have a majority of my accumulated points spent or pending use on upcoming trips. I would like to have the ability to continue accumulation and not be done.

Please help! Any advice would be appreciated.

knopfler

Do you currently have any Chase credit cards? If so, when you get declined for a Chase card, simply call the reconsideration line and if they won't approve you, ask them to take some of the credit limit from your existing Chase card and transfer it to the new card.

MDtR-Chicago

There's something strange going on here...

If I were you, I'd use my free yearly pull on all three credit reports right now and thoroughly check every detail. I'd also invest in the free 10-day trial at myfico.com to get a real FICO score and use their simulation tools to figure out what's hurting you.

If nothing turns up that way, I'd look at these numbers to make sure they match "good" parameters:

Average Age of Accounts > 5 years
Utilization, which is balance reported compared to credit limit (on each card and overall) < 10%
# inquiries in past year < 6 (on each report)

If you're still stumped, feel free to post that info here and maybe we can troubleshoot. Otherwise, the best advice is probably to have no inquiries for a year and start fresh.

SCEflyer

A mortgage can not be parceled out in shares or interests like a partnership. It is a joint and several liability.

MDtR-Chicago

*shrug* If the application only allows one person's income, it seems reasonable to me to only list one person's half of the ongoing obligation.

I'm personally not concerned that this would violate any terms with the CC issuers but if you are, by all means, don't do it.

Miss0033

Thanks for the advice, here is what I found:

So got my credit reports and found no discrepanices, no negative marks.

Average age on accounts is of concern --> 3 yrs 6 months. So If I close a couple relatively new accounts will that up the average age, or will those accounts hold down the average by remaining counting at 1 year old. Basically is this an average age of all OPEN accounts? Or all accounts overall?

Credit utilization is at 9% as is fairly steady unless trying to hit a high minimum spend.

Hard inquiries in last 12 months is now 5 with most recent applications.

Also I do have a chase card, with very little spending on it. Most of my spending is on my SPG AmEx right now, with a little bit being spread around.

So what would you suggest? Close a couple newer accounts? Would raise utilization rate, but lower "risk", and hopefully raise average age of accounts by keeping older ones open...

MDtR-Chicago

ALL accounts; closing won't help.

Is there any single card that is high? (Say, above 50%?)

If you're paying off in full every month - as you should be - maybe try paying right before the statement cuts rather than the due date. Then when the balance reports it'll report $0 or close to it. But 9% is a fine number anyway.

It's really hard to tell... would that make you look less risky, or look like someone who churns cards quickly and thus more risky?

If you could manage to get Amex to approve you for something, that would probably be best, since a new Amex inherits the age of your oldest Amex.

Hopefully someone will post who has experienced something similar to your situation.

dssxxxx

Having a few drinks.............

If you can't afford it, don't do it or don't apply for it....