Deciphering reasons why a credit card application is denied

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nine7one
 
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Deciphering reasons why a credit card application is denied

Postby nine7one » Fri Feb 17, 2012 5:00 am

I got a Walmart credit card a few years ago - issued by GE Money Bank - during a "no interest for a year" promotion. I used it to purchase a TV and paid the balance within a year, interest free.

I recently applied to have the credit limit of the card raised. My request was denied, which didn't surprise me because I went through a divorce recently and my credit rating dropped a bit during the process.

My issue is with the reason my request was denied. I'm a pretty bright guy and I have no problem comprehending things I read, but I have no clue what the explanation for the denial means. If someone can help me out with this one I would greatly appreciate it.

The reason listed was: "Percentage of times payment greater than amount due over the last 12 months on this account."


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PlatinumAMEX94
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Postby PlatinumAMEX94 » Fri Feb 24, 2012 1:46 am

It means that you only pay the minimum payments, most or all of the time. You have to pay MORE than the minimum payments consistently if you want a credit line increase (CLI). I'm not sure what their ratio is, but generally you have to have 50% or more of the time paying more than the minimum payments. By only paying the minimum you become a greater risk of not paying it back in a timely fashion.
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Postby randeman » Mon Feb 27, 2012 6:59 pm

That's a new reason for me, never heard of such a thing. But PlatinumAMEX94 is right that you should always pay more than the minimum. Not just to increase your chances of a limit increase, but to save yourself interest charges.
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Pete838
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Postby Pete838 » Mon Feb 27, 2012 7:27 pm

randeman wrote:That's a new reason for me, never heard of such a thing. But PlatinumAMEX94 is right that you should always pay more than the minimum. Not just to increase your chances of a limit increase, but to save yourself interest charges.

It makes perfect sense. If you review your credit report you can see that the banks report whether you pay the minimum or more than the minimum. It seems like a great bellwether of if a person is experiencing financial difficulties. If you pay the minimum and your card is over-utilized (close to your limit or consistently over 75%), then it appears that you are or may be surviving on credit and may default.
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nine7one
 
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Postby nine7one » Mon Mar 05, 2012 11:32 pm

Thanks for your help. And it is correct as well. After I paid the TV off I have actually been paying the minimum on purpose thinking it would help my credit rating if I maintained a low balance.

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Postby musicisstopping » Fri Mar 09, 2012 3:52 am

What I found that works is, just pay a buck or two over the minimum; it'll be listed as "pays more than the minimum" on your report. Never, ever pay "just the minimum--at least a dollar!



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