A Few Questions from an Unexpected Conundrum

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the_one092001
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A Few Questions from an Unexpected Conundrum

Postby the_one092001 » Sat Sep 28, 2013 8:58 pm

Looking for some advice on how to proceed, since the problem I have is one I haven't seen mentioned all that often.

I'm a student graduating in the coming summer, currently 23 and I've had a BoA student Visa since November 2009 with a $1,000 limit, cosigned. I basically never use it though, since the one time I did shortly after getting it, I got a notice the day later informing me that someone tried to charge phone cards to it. It's the only card I have to my name, but I'm also an authorized user on a Chase United Club card with a $30k limit. I rarely use it myself but it's paid in full every month by the other users (my parents).

I applied a little over a week ago for a Chase Sapphire Preferred (yes, quite a jump) and got a denial letter (unsurprisingly). The stated reason was 'Not enough accounts open long enough to establish a credit history.' After looking for reconsideration advice online, I called them up. The CSR was nice and after confirming my information, reopened the application and put me on hold. I had already checked my credit score with EX and it's currently 750.

When he came back, he informed me I could not be approved due instead to the cost of my rent relative to my income, which was too high. Nothing to do with credit history, score, or even total income, but instead allegedly my income-to-debt obligation was too high under federal law. Because of this, I couldn't get any of the lower-level cards either, like the Freedom.

This is problematic since in the short term, there's very little I can do. My rent is hardly going to decrease, and at the same time the likelihood of being able to get a job paying well enough to boost my income significantly without having graduated is also not particularly high. Chase doesn't accept cosigners and no longer allows joint accounts. It's not as much a matter of building a credit history as it is raising income (or lowering rent).

Which means that there are a few options for consideration that I would like to ask for advice on:

1. Apply using household income. I am still claimed as a dependent on my family's taxes as I am a full-time student with limited personal income. Obviously, my parents' income to debt obligations ratio is much better than mine, and under Regulation Z, they still transfer portions of their salary to my account (to pay for rent, mainly), which would make it acceptable as an account I have 'reasonable expectation of access' to.

2. Try the reconsideration line again. This doesn't seem particularly likely to work given that it seems to be Chase's internal policy in response to the government's lending criteria. According to the CSR, it applies even to low-limit cards like Freedom.

3. Apply to other banks for other cards, which may not have the same requirements. Chase though has the cards that would most fit my intended use, which is why they were my first choice. Possibly look at cosigned cards, although these are usually lower-end. If this is an option though, are there any suggestions?

4. Do nothing, and wait until post-graduation to move to a lower-rent area and get a better-paying job (relative to my current listed income).

Asking to see if anyone has any feedback or advice on the matter. I'm mostly in it to start building points, especially for travel (hence the decision to apply for CSP) since I travel relatively often. I have no history with most of the major American banks (nor does my family) simply because they basically don't operate in my home state.

Thoughts?


mdl28
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Postby mdl28 » Mon Sep 30, 2013 12:12 am

Seems to me you have already given yourself many answers to your own question. It's up to you to choose which fits you best. Goodluck
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Ikarus
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Postby Ikarus » Mon Sep 30, 2013 12:33 am

If the Chase Sapphire is out of your league, why not apply for the Freedom?

Or, better yet, take advantage of your student status and get student cards.

Discover it and Citi Forward have student cards that offer high credit lines, rewards, and no annual fee.

You should be a shoo-in for those.
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the_one092001
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Postby the_one092001 » Mon Sep 30, 2013 1:15 am

Ikarus wrote:If the Chase Sapphire is out of your league, why not apply for the Freedom?

Or, better yet, take advantage of your student status and get student cards.

Discover it and Citi Forward have student cards that offer high credit lines, rewards, and no annual fee.

You should be a shoo-in for those.


I asked the CSR when I was on the line whether I could apply for a lower-level card, but he said I'd get the same response from all of Chase's offerings for the same reason, so Freedom's also out. Assuming he's right (might not be since he cited it as law, while the law doesn't actually specify an actual debt-to-income ratio and leaves that up to the banks).

I was going for the CSP because it fit my use: no foreign transaction fee, and accrual of miles at a favorable rate on the airline I use far more than any other, United. While I know other cards have options for travel redemption, the 1:1 transfer for UR points to United and Hyatt were the most useful features in light of upcoming travel plans and in the long run given my travel patterns. Another hard pull will negatively affect my score since Comcast inexplicably decided to pull twice in three days on a single cable/internet application. I'll be calling tomorrow for a last shot and if that doesn't work, I'll consider the alternatives mentioned here.

ivotedale
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Postby ivotedale » Mon Sep 30, 2013 1:38 am

+1 on the student cards.

For what it's worth, I don't know what your income is, but the Chase Sapphire (preferred or standard) requires a higher level of income. I currently make less than $40k and was denied the standard Sapphire for one reason- was because I didn't make enough. I think folks on the forum mentioned the Preferred version anyway is targeted at folks who spend $120,000 or more a year, although results may vary.

On the other side of the coin, I was approved for the Freedom w/ a small $1k at the time, but I was working part time in retail going to school. I don't think I've heard anything about rent vs. income in my experience ever. I was making $9+ an hour +$350/ mo. in rent for a room, less than 25 hours a week.

I'd suggest obtaining another card to build some more credit history, and perhaps re-apply in another year or so. My first cards were Capital 1, then eventually got an Amex charge and have since moved on.

Doesn't make sense to move to a lower-rent are if you enjoy where you are in my opinion.

The CSP + Chase's Ultimate Rewards mall is a pretty sweet combo I hear, but there are still other options out there in the meantime. I'd suggest maybe Amex's charge cards (1:1 Membership Rewards pts) or the Starwood Preferred card if you're into the whole travel/hotel/points thing.
Currently: American Express Blue Sky, American Express Zync, Chase Freedom Visa, Capital One Newcomers--->converted to Capital One Quicksilver Mastercard NO AF

flan
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Postby flan » Mon Sep 30, 2013 8:12 am

ivotedale wrote:. I don't think I've heard anything about rent vs. income in my experience ever. I


Income minus housing expense is a standard metric that lenders use to determine your available income. That gets used to determine limits, and might be used as an approval factor, too. My banker at Chase has told me that their cards all have the same underwriting criteria, modulo any required credit limit minimums and signature status requirements. So to get a CSP, you need to be able to get a card from chase, get a $5K limit, and get signature status. (Chase issues all sorts of cards with >$5K limits that aren't signature.) You can do all that with an income well less than 100k.

Chase are firmly in the prime lending business, so it's not surprising that they have disposable income requirements for everything. A customer who can only spend $100 a month isn't going to make you money.

Midori
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Postby Midori » Mon Sep 30, 2013 8:44 am

I would probably avoid #1. If I've got my parents paying my rent and giving me an allowance, I wouldn't pick up a card with a $95 annual fee. It would be horribly embarrassing for me to make a sincere argument to CSR that I deserve this prime card because "my parents are paying my rent!"

Rewards points or no rewards points, I'd be working on becoming independent. Putting off the credit card I really want for a year or two doesn't seem too onerous as your current stage in life. It's sort of like driving a ten-year-old Volvo when you really want the latest BMW.

Did they actually say, "You were denied only for one reason; let us know when you move somewhere cheaper, because then you'll have no problems with this fabulous file you've got going?"

When I have people applying to rent a house, I might come up with three or four points against them on their application. There might be some minor criminal stuff in their background; we screen for income; they might have misrepresented their previous addresses; and they might have a bad reference from their previous landlord. But of course, I don't tell the prospect the entire laundry list. I might pick one of those things and tell the prospect that I'll put his file on the shelf while he gets it taken care of, so get back to me, okay?

If it was me, I'd anticipate a few of the reasons why Chase wouldn't be interested in me at this point, and spend the next year or two working on it. I only have one credit card... how about if I apply for another card or two that's at a level somewhere between the BoA Student Visa and the CSP? Students are probably not the main demographic for the CSP, trips to South Padre or no trips to South Padre, Study in Italy or no Study in Italy. I'd work on my savings and my income, graduating well, securing a solid job, seeing how I liked my field in reality vs in theory. Get a little bit further along on your path, and you shouldn't have any problems getting what you want if you use your time in between to lay good groundwork for yourself.

cashback
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Postby cashback » Mon Sep 30, 2013 9:11 am

If you are not paying the rent then dont claim it on the credit card app. If you lived with your parents for free, you wouldn't claim their mortgage payment on an app.
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takeshi
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Postby takeshi » Mon Sep 30, 2013 10:33 am

the_one092001 wrote:1. Apply using household income.

Unless the app states household income you can't use household income. In any case, your parents don't live with you, do they?

the_one092001 wrote:I was going for the CSP because it fit my use: no foreign transaction fee, and accrual of miles at a favorable rate on the airline I use far more than any other, United. While I know other cards have options for travel redemption, the 1:1 transfer for UR points to United and Hyatt were the most useful features in light of upcoming travel plans and in the long run given my travel patterns.

It looks to me like you'll have to compromise on this matter.

the_one092001
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Postby the_one092001 » Mon Sep 30, 2013 1:27 pm

Just applied for a Chase Freedom online and it insta-approved me. I'll start with that for now and see about applying for another card later. Ironically, now that the semester's already started, I don't expect to be buying all that much from Amazon for a while.



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