Understand Why You Were Denied
Youll get a letter stating the reason why your credit card application was denied. This could be related to your credit report or credit score. If youve missed payments, have debt or tend to carry a high credit card balance, you may have a tough time getting approved for a credit card. You could also be denied for forgetting to fill out important information in your application or if you dont meet all the eligibility requirements.
Moody’s Downgrades Lodha Developers’ Outlook To ‘stable’ Owing To Weak Sales
Moody’s has downgraded Lodha Developers outlook from positive to stable as a result of weak operating sales during the first half of this financial year. The credit rating agency has affirmed the ratings of corporate family and bonds issued by realty major. Saranga Ranasinghe, assistant vice-president and analyst, Moody’s revealed that the companys outlook has been changed owing to its weaker operating sales during the six months to September 2018. In addition, the companys had high debt maturities in fiscal years ending March 2020 and March 2021. Lodha said the company would achieve Rs.9,500 crore of collections and it is also on track for net sales of about Rs.8,000 crore. The credit rating agency stated that Moody’s total operating sales in the financial year ending March 2019 may be around 25% lower than in previous fiscal and around 38% lower than its previous expectations for 2018-19. Moreover, Moody’s expects Lodha Developers leverage to remain weaker than required for a higher rating. In spite of the lower operating sales of the company, Moody’s expects cash collections to be in line with expectations and around 20% per higher than in fiscal 2018. Lodha also has ready-to-move-in units, which are typically preferred by customers and also guaranteed. The realty firm has debt maturities of around Rs 1,300 crore in India over the next 12 months.
28 January 2019
Why Do Credit Card Issuers Want To Know Your Income In The First Place
Credit card issuers typically consider their approval requirements to be proprietary information, yet its well known that card issuers consider a variety of factors before approving applicants. Information considered can include your credit score, employment situation, income and any debts you have.
The main purpose of knowing your income is to gauge your ability to repay any amounts you borrowor at the very least your ability to keep up with minimum payments. With that in mind, its easy to see why couples managing joint finances would want the ability to list household income without both going in on a joint credit card.
Recommended Reading: Www.macy’s.com/mymacyscard
How Does Your Credit Limit Impact Credit Score
Your credit utilization is an important factor in your scores, and how big or small your credit limits are can greatly affect it. Even if you’re a high earner with a great job, your credit score will suffer if you’ve maxed out all your open accounts. In some instances, it could prevent you from getting approved for a new account altogether.
Increasing your credit limit can bring down your credit utilization ratio and help lift your credit score. The opposite is also true. If your available credit goes down while your spending habits stay the same, it can drag down your score. Closing out old credit cards, missing payments or reporting a reduction in your income all could result in lower credit limits.
Conditions That Might Cause Your Application To Be Declined
When assessing your ability to pay back debt, Goldman Sachs1 looks at multiple conditions before making a decision on your Apple Card application.
If any of the following conditions apply, Goldman Sachs might not be able to approve your Apple Card application.
If you’re behind on debt obligations4 or have previously been behind
- You are currently past due or have recently been past due on a debt obligation.
- Your checking account was closed by a bank .
- You have two or more non-medical debt obligations that are recently past due.
If you have negative public records
- A tax lien was placed on your assets .
- A judgement was passed against you .
- You have had a recent bankruptcy.
- Your property has been recently repossessed.
If you’re heavily in debt or your income is insufficient to make debt payments
- You don’t have sufficient disposable income after you pay existing debt obligations.
- Your debt obligations represent a high percentage of your monthly income .
- You have fully utilized all of your credit card lines in the last three months and have recently opened a significant amount of new credit accounts.
If you frequently apply for credit cards or loans
- You have a high number of recent applications for credit.
If your credit score is low
Goldman Sachs uses TransUnion and other credit bureaus to evaluate your Apple Card application. If your credit score is low ,4 Goldman Sachs might not be able to approve your Apple Card application.
Don’t Miss: Td Bank Echeck
What Is A Good Dti Ratio
After you calculate your debt-to-income ratio, you will arrive at a figure. But what does this number mean? From a creditors perspective, the higher your DTI percentage, the greater the risk.
Each lender will determine its criteria for DTI ratios. Theres no universal cutoff point between a good DTI ratio and a bad one. However, here are some general guidelines courtesy of the CFPB:
- 43%: In general, this is the highest ratio you can have and still be eligible for a qualified mortgage.
- 36%: The CFPB recommends homeowners maintain a DTI ratio of 36% or less.
- 28%: Mortgage debt should ideally be 28% or less.
- 15%20%: Renters should aim for a DTI ratio between 15%20% for their debts. Your monthly rent payment does not figure into this calculation.
What Happens If My Debt
If your debt-to-income ratio is higher than the widely accepted standard of 43%, your financial life can be affected in multiple waysnone of them positive:
- Less flexibility in your budget. If a significant portion of your income is going towards paying off debt, you have less left over to save, invest or spend.
- Limited eligibility for home loans. A debt-to-income ratio over 43% may prevent you from getting a Qualified Mortgage possibly limiting you to approval for home loans that are more restrictive or expensive.
- Less favorable terms when you borrow or seek credit. If you have a high debt-to-income ratio, you will be seen as a more risky borrowing prospect. When lenders approve loans or credit for risky borrowers, they may assign higher interest rates, steeper penalties for missed or late payments, and stricter terms.
Recommended Reading: Refer A Friend Southwest Rapid Rewards
What Makes A Good Credit Score
A good credit score has balance. Its a common misconception to think that having a decent amount of money and no loans equals a high credit score. To have a good score, you need to take out loans and build credit.
You also need to keep the balance on those loans as low as possible and make your payments on time. Its very important to not take out more loans than you can handle. When using a , for instance, the best way to optimize your credit score would be to only spend a small amount and pay it off rather quickly. Having a maxed out credit card, on the other hand, will not help your credit score.
Banks and credit bureaus want to see that you know how to spend responsibly. They need to know that you can handle the credit limit youre given without overdoing it. Maxing out your credit card racks up fees and interest that make it even harder to pay off your debt. If youre trying to get approved for a new line of credit, but have maxed out your credit card, your bank is going to be very hesitant to give you more debt.
In the end, a good credit score motto to live by is work on what youve got. Before you try and open any new loans, work on lowering the ones that you have. Not only will that improve your credit, but it will also open up some room in your finances to be able to comfortably handle a new loan, should you decide that its time.
Paying Off Debts Will Erase The Transaction From Credit Report
Do not be under the illusion that paying off a debt will erase that entry from your credit history. The evidence of the debt will stay put with your credit history for years and impact your credit score and credit availability.
Such entries in your credit history will show that you have handled your debts responsibly and have been successful in paying it off. It will reassure any prospective lenders and put in a good word about you. On the other hand, any missed payments and defaulting registered can tell the lenders about your finance handling capabilities and stop them from approving your credit application.
Negative information can stay on your report for up to seven years bankruptcy information can stay for as long as 10 years.
Also Check: Cabela’s Credit Card Application Status
Improve Your Credit Score
If youre unlikely to qualify based on your score, you will need to add positive information to your credit report by catching up on any past-due bills and maintaining a steady history of on-time payments, among other things. Once youve established a strong credit profile, you can then target credit cards known for their high initial credit limits.
More Credit Than You Can Handle
Here’s the deal:
Lenders have incredibly well-tuned application review systems.
They can estimate exactly how large a credit limit you can manage, and the odds that youll pay back your debts.
Given the lenders experience with lending, they probably have a better idea of how large a loan you can handle than you do.
If you lie on an application and wind up with a credit line that is larger than you can manage on your true income, youre far more likely to fall into debt.
You might be entirely unable to pay your way out of that debt.
The credit limit that the lender gives you limits your risk in the same way it limits the lenders risk.
Getting a higher credit limit simply increases the amount of debt you can get into.
Don’t Miss: Can You Pay Car Insurance With Credit Card
Does Your Lender Really Verify Income And Debt Information
Lenders typically only notice large discrepancies in reported information. For example, if you claim $10,000 of income on your tax return and $90,000 of income on your credit application, you have a better chance of getting caught than if you claim $10,000 and $12,000, respectively.
Sound far-fetched? It isnt. In 2006, David Gaylord reported $12,488 of income to the IRS and $90,000-$122,000 of income on multiple credit applications. Not surprisingly, he was convicted of bank loan application fraud. While he wasnt fined $1 million or sentenced to 30 years in prison, he did have to pay a fine of almost $50,000 and was sentenced to time served and supervision upon release.
The Future Of Credit Application Verification
In response to credit fraud, Mimi Chong a Ph.D. student at Western University in London has set out to catch liars on credit applications. Her paper titled Catching Liars: Big Data and Credit Card Fraud proposes a method to keep little white lies from costing banks big money.
Chong believes banks need to update their current systems, which only detect big lies and not small but still potentially harmful fibs. Banks can do this by hiring outside auditors and also training their employees to investigate the different application variables.
Lying on a credit application can be a costly mistake. Report your income, debt, employment status and housing costs correctly. Chances are, your lender wont verify these items. But it has every right to, and, if it does, you could end up paying beaucoup bucks and/or spending time in a concrete cell.
Don’t Miss: Chase Credit Card Cancelling
A Credit Report Agency Can Fix Your Score
You may come across credit repair agencies when you are looking for measures to fix your low credit score. Based on the name, some people may mistake such agencies for firms that can repair a low score and build it up to a good score overnight by spending some money. However, it does not work that way.
A credit repair agency helps you file disputes with a credit rating agency if you can find errors on your credit report. The error can range from a mistake in your name to a mistake in a transaction registered under your name in the report. If you do not have the time or knowledge as to how you can dispute the errors, a credit repair agency can help you by doing the needful on your behalf.
Is It Better To Ask For A Credit Limit Increase Or Open A New Account
Opening a new account can come with negative impacts on your credit score, such as reducing the average age of your credit and creating a hard credit inquiry. A credit limit increase doesn’t have a downside in terms of your credit score, so it may be the better option. However, if you only have one credit card, then you may want to open up a new account to increase your number of credit accounts.
Don’t Miss: Cancel My Jcpenney Credit Card
Does Income Affect Credit Score
Does Income Affect Credit Score? : While your income doesnt have direct effect on your credit score, a sudden reduction or loss of earning can have an indirect impact on your score if it prevents you from paying your bills.
Your credit score is based on the information gathered in your credit reports at the three national credit bureaus. Credit report information includes history of borrowing money that can be in the form of credit card accounts and loans as well as your history of repaying these debts.
Your credit report records are detailed and extensive yet there are lots of personal data that are not included in your credit reports that cannot be taken into consideration during calculation of your credit score. Some of the things that are not included in your credit report are the following:
- Religious affiliation
- Ethnicity or race
Non-inclusion of these personal data from scoring systems and credit reports helps eliminate any possible bias among the lenders or other people who may check your credit reports.
What To Look For In A Student Credit Card
Student credit cards like the Discover it Student cards allow you to build your credit history while youre still in school. Student credit cards may have a lower credit limit, so students can get started, practice responsible use and build their credit history.
As the name suggests, most student credit card issuers require you to be enrolled in a college or university to be eligible for a student card. Generally, you can be either a full- or part-time student, and enrolled in a two- or four-year school.
Credit card issuers target college students hoping that they remain customers once they graduate and start earning more income. Since so many credit card companies want these new customers, undergrads are flush with student card options. But which ones are best? In many cases, you should look for offers with 0% introductory rates, low annual fees, and generous rewards packages in the form of cash back or points. It should also be easy to get approved, even if you have no or limited credit history. You should also make sure youre earning an income to make the monthly payments on time.
Recommended Reading: Best Buy Credit Card Payment Address Citibank
How To Calculate Your Debt
Here’s an example:
You pay $1,900 a month for your rent or mortgage, $400 for your car loan, $100 in student loans and $200 in credit card paymentsbringing your total monthly debt to $2600.
Your gross monthly income is $5,500.
Your debt-to-income ratio is 2,600/5,500, or 47%.
Do Credit Cards Require Proof Of Income
While you need to submit pay stubs and income tax returns when you apply for other financial products like personal loans or a home mortgage, credit card issuers dont typically require proof of income. Without this step, many issuers have the ability to approve your application online within a matter of minutes. Some instant approval credit cards even give you the option to access a digital card number you can use right away.
With this being said, you should never lie on a credit card application. Your card issuer probably wont investigate your income or other details you share on your application if youre a responsible cardholder, but misleading banks when applying for credit may still be considered bank fraud.
Consequences of bank fraud could include exorbitant fines or even jail time. Overall, the risk of lying on a credit card or loan application just isnt worth it.
Don’t Miss: What Credit Cards Pull Transunion Only
How Fraud Can Affect Your Credit Rating
When lenders search your credit reference file, they may find a warning against your name if someone has used your financial or personal details in a fraudulent way. For example, there may be a warning if someone has used your name to apply for credit or forged your signature.
There might also be a warning against your name if you have done something fraudulent.
To be able to see this warning, the lender must be a member of CIFAS. This is a fraud prevention service used by financial companies and public authorities to share information about fraudulent activity. CIFAS is not a credit reference agency. The information it provides is only used to prevent fraud and not to make lending decisions.
If there is a warning against your name, it means that the lender needs to carry out further checks before agreeing your application. This may include asking you to provide extra evidence of your identity to confirm who you are. Although this may delay your application and cause you inconvenience, it is done to ensure that you don’t end up being chased for money you don’t owe.