Credit Card Approval Standards On The Rise: Excellent Credit Scores Still Get Denied

Deny ButtonOne reader with a 805 credit score e-mailed me saying he recently got denied for the Barclaycard Arrival World MasterCard. As part of the FICO Open Score Access initiative, he got his credit score in the mail plus the nice rejection letter. The reason for the rejection was a high debt-to-income ratio.

The credit score is supposed to encapsulate everything from outstanding debt, number of credit lines open, and debt to income levels, yet here he is being denied a credit card with just a $3,000 monthly credit limit to start! If someone with a credit score that’s in the top 10% can’t get a credit card, what hope is there for the other 90%? Let’s find out more about his story.

The reader used to make about $200,000 a year for the past three years, but is currently unemployed and earns $40,000 a year from his various passive income streams + his $1,800 a month unemployment checks. He’s only got two other credit cards and always pays them off in full. The problem with his financial profile is that he has a $800,000 mortgage on a $40,000 income. With the industry standard of a mortgage amount no more than 5X your annual income at existing rates, it’s easy to see why a 20X ratio would cause concern.

But here’s the kicker. The reader also has $500,000 in cash, CDs, and liquid after-tax stock investments! Surely if you were the credit card company you’d be OK with approving a potential lifelong client even if he does have a high debt-to-income ratio of 20:1. What’s missing here is the calculation of debt-to-total-assets

An Easier Way To Get A Price Match Guarantee On Purchases

New 50" LED SmartTV

New 50″ LED TV with old CRT TV In Reflection

It occurred to me that getting a guaranteed price match might be easier than the five steps I outlined in my holiday shopping strategy guide post. I ended up going to Best Buy three times to deploy my savings strategy on the electronics I bought for my parents.

Trip One: Bought a 50″ LED SmartTV for $799, a soundbar for $249, and a Chromebook for $199 pre-tax on a Tuesday before Thanksgiving. Best Buy return policy is 15 days, so I was all set to try and take advantage of the price match during the Black Friday weekend sales.

Trip Two: Went back on Thanksgiving Thursday at 11:50pm after a poker game to get a 32″ LED TV and blu-ray player on sale for my mother and also see if I could get a price match for the 50″ LED SmartTV which is now on further sale for $599. They said, “no” which I had anticipated since Best Buy’s policy is to not price match on Black Friday, but unclear on the entire weekend sale. I was not deterred because they often say yes later on because I can simply return the product and argue for the cheaper price within the return policy. Besides, I had more stuff to buy this trip.

Trip Three: I was going to go back on the Monday after the Black Friday to try again on the 50″ TV and also price match anything I find on sale from Cyber Monday. But as luck would have it, I played golf on Sunday afternoon after Black Friday just a couple miles away from Best Buy so I did a drive by on the way home. Best Buy thankfully agreed to credit me $209 after tax for the 50″ LED SmartTV and I also returned the blu-ray player because it couldn’t connect to the internet. I also returned the chocolate HDMI cable for $38 and got a generic one for $9.95 because I’m connecting the blu-ray to a 32″ TV with no add-on sound system. Paying up for a fancier HDMI cable would therefore be a waste.

Despite making one extra trip than anticipated, I’m happy to have gotten the best deals possible for products I needed to buy for my parents anyway. Thankfully Best Buy was relatively quiet all three times I went. It was about time my parents upgraded their old notebook and 25+ year old CRT TVs. The biggest pain was actually trying to carrying those beasts out to the garage!


FICO Score Open Access: You Now Get A Free Credit Score When You Apply For A Credit Card

light-bulb-momentI recently had a connect the dots moment I’d like to share with you. In a program called FICO Score Open Access, FICO announced on November 4, 2013 that it plans to allow any lender who uses FICO scores to determine an applicant’s creditworthiness to allow the score to also be available to all applicants for free. So far only Barclaycard US and First Bankcard have signed up, but surely a tremendous amount more credit card companies will sign up once the word gets out to consumers.

When I applied for the Barclaycard Arrival World MasterCard to get double travel rewards points recently (see my review), I received my latest credit score in the mail of 805. At the time, I didn’t think it was strange because I always got my credit score in the mail during all my previous eight mortgage refinances. I also hadn’t applied for a new credit card in a decade so I thought receiving my score was just status quo or at least a nice gesture by Barclaycard. The reality is that most credit cards don’t send you your credit score if you apply for their card. The reason why we do get our credit scores during a mortgage refinance is because we’re paying to refinance or take out a new mortgage. Nobody pays to apply for a credit card!

As any proud personal finance blogger would do, I proceeded to write a post on how to improve your credit score to 800+ with this newfound information. We know that pulling your credit score too often may bring down your credit score. The idea is that if there’s a sudden rush of credit inquiries, it may signal the person is in a cash crunch.

Can you imagine getting your credit score pulled, getting denied by the credit card company, and being left in the dark as to why? That would be as aggravating as getting a college or work rejection letter in the mail with no reason for denial. The new FICO Score Open Access plan will supposedly allow participating banks to show applicants their credit history, any late payments, and debt levels.

You can still get your latest TransUnion credit score for free from a trusted company like if you aren’t looking for a participating rewards credit card. Just make sure you cancel the credit monitoring service before the grace period is over if you don’t want to get charged for such a service. But now if you apply for a Barclaycard US you get the side perk of a free credit score in the mail.

I’m predicting Barclaycard US and lesser known First Bankcard are going to gain outsized market share of new credit card applicants until every other credit card company participates as well. The FICO Score Open Access system is a great step for consumer rights.


Barclaycard World Master Card: If you are an avid traveler and looking for a travel rewards credit card, you can sign up for the Barclaycard Arrival World MasterCard with no annual fee with double the points on travel and dining and 20,000 signup miles ($200 value). Barclaycard offers $200,000 in automatic travel accident insurance, reimbursement for expenses if your bag is lost or delayed, trip cancellation coverage, and $0 fraud liability.

Discover Credit Card: Are you looking for the best credit card for balance transfers, flexibility, and rewards? Check out the benefits of the Discover it® credit card and maximize your purchasing power. You can earn 5% cash back rewards without any annual fees, over limit fees, or foreign transaction fees. And did you know Discover has been ranked #1 for customer loyalty for 17 years in a row? Discover it cards are accepted at over 9 million merchants nationwide and their U.S. based customer service team is available 24/7. Just remember to spend within your means!

Check Your Credit Score: Take a moment to check your free TransUnion credit score through, a company I trust. 30% of credit reports have errors, which could put a serious hamper on your refinancing or new loan borrowing abilities. I had a $8 late payment I didn’t even know I owed crush my score by 100 points come up during my last refinance. The average credit score for rejected mortgage borrowers has risen to 729 due to more stringent lending requirements. Do you know what your score is?


A Correlation Between The Number Of Credit Cards One Has And Net Worth

Average credit card interest rate chartI believe the ideal number of credit cards is three or less as stated in my  post, “How Many Credit Cards Is Too Many?” One of the main reasons for having three or less is so that you don’t spend too much time playing the churn and burn game for rewards points. Once in a while is fine, but there is a law of diminishing returns.

If you’re spending time applying for new credit cards, reading about new credit cards, keeping tracking of all your credit cards, and canceling your credit cards, then you are taking away time from making more money elsewhere. Your mind focuses on the small picture when it should instead be focused on the big picture. Furthermore, unless you are an organizational machine, you will undoubtedly miss a payment or forget to cancel your card before the introductory period is due thereby negating some of the initial sign up benefits.

Everybody should have at least one credit card for convenience sake. Many credit cards have travel insurance which comes in handy when you lose your luggage in a strange land and need a place to stay. Credit cards help build credit which is important for individuals looking to buy a home or apply for a coveted job. Buyers protection is also a great reason to have a credit card just in case you want to dispute a vendor.


How Many Credit Cards Should I Have Until It’s Too Many?

Various types of credit card logos, Visa, Mastercard, AMEX, DiscoverI was having lunch with a buddy of mine when he whipped out his foot long man wallet to pay the bill. “Whoah!” I said. “Where do you keep that thing?”

“In my man bag, of course!” he replied with pride. Todd lifted up his soft leather Bally bag that probably cost a thousand dollars. “Have a touch,” he said as he tossed it over. Todd’s bag was as supple as a baby’s bum.

The reason why Todd’s wallet is so big is because he has 10 credit cards all nicely color coordinated from top to bottom. The most prestigious cards – the black ones of course – were at the top. But as I looked closer at his collection, every credit card of his said “Preferred,” “Platinum” or “Elite.”

One could call Todd a credit card connoisseur. “I’ve got a card for every purpose,” told mentioned proudly. “Never leave home unprepared!”

Despite what is probably hundreds of thousands in credit at his disposal, Todd still rents a one bedroom apartment and has less than $80,000 his 401(k) at 35 years old because he’s spending all his money! In fact, he admitted to having around $18,000 in revolving credit card debt spread across seven cards. At least he’s got a nice BMW 650i coupe on lease for $899 a month.

So I got to thinking, maybe the reason why Todd has so little assets for a man making six figures a year is because of temptation from all his credit cards. When there are no cookies in front of me, I never eat desert. As soon as you put out a tray of gooey white chocolate chip cookies at my disposal, it’s game over!