Unable to get approved for new credit cards but my credit score is above 800

[jacques]

Hi,

I've been getting denied on credit card applications recently and told I'll get sent a letter in a week explaining why. I am not sure why I am being denied, because I always make my payments on time, carry no balances, and have a credit score above 800.

I like to open new cards to use the sign up bonus to take care of large bills like auto insurance or unexpected medical bills. I never close the cards I open and always pay off the balance immediately (minus the sign up bonus). Could that somehow be the reason why I'm being denied new credit cards, even though I have 800 credit and always pay my balances in full?

[disneysteve]

A lot of factors go into your credit decisions. How old are you? How long is your credit history? Length of history is a big factor. You can have a high score but a short history and that counts against you.

Your income matters too. There is only so much credit companies will extend to you so if you already have a bunch of open accounts, even if you are not carrying any debt on those accounts, that might be a factor too.

[rennigade]

What card did you sign up for? If its with chase, they have the 5/24 rule...if you open any 5 cards within 24 months, they deny you now.

Also, credit scores are for tourists. Its basically something for people to brag over. Yes, you can get lower rates if you take out loans from what I understand. I wouldnt get too wrapped up in 800+ credit scores.

[james.hendrickson]

What card did you sign up for? If its with chase, they have the 5/24 rule...if you open any 5 cards within 24 months, they deny you now.

Also, credit scores are for tourists. Its basically something for people to brag over. Yes, you can get lower rates if you take out loans from what I understand. I wouldnt get too wrapped up in 800+ credit scores.

Rennigade..um...isn't having good credit associated with lower borrowing costs?

[kork13]

Rennigade..um...isn't having good credit associated with lower borrowing costs?

Yes, but the borrowing costs are even lower if you simply don't use credit (a.k.a. cash = zero borrowing cost). ^_^

[disneysteve]

Rennigade..um...isn't having good credit associated with lower borrowing costs?

Yes, that's exactly what rennigade said "you can get lower rates if you take out loans".

However, there are tiers of credit scores and once you are in the top tier, getting higher doesn't get you anything better. The cutoffs of the tiers vary but once you're over about 750, higher is more bragging rights than anything else. 780 will get you the same rates as 820.

[james.hendrickson]

Yes, that's exactly what rennigade said "you can get lower rates if you take out loans".

However, there are tiers of credit scores and once you are in the top tier, getting higher doesn't get you anything better. The cutoffs of the tiers vary but once you're over about 750, higher is more bragging rights than anything else. 780 will get you the same rates as 820.

I guess I respectfully disagree with the idea that credit scores are trivial or unimportant.

Having good credit matters. For example, people with bad credit have a harder time passing background checks, and in some cases bad credit impacts your relationships - your friends or family may not trust you with money. Your credit score is just a numeric measurement of your trustworthyness. Granted, if we're taking about the distinction between a score of 810 and 850, then yes, maybe it doesn't matter so much. But, if we are discussing the difference between 650 and 800, then yes there is a practical and measurable difference between these two.

Credit scores matter - they matter a lot.

[disneysteve]

Having good credit matters.

Definitely. But I also agree that, "I wouldnt get too wrapped up in 800+ credit scores."

I'm actually really curious what will happen to our scores now that our mortgage is gone and we have zero debt.

[james.hendrickson]

Definitely. But I also agree that, "I wouldnt get too wrapped up in 800+ credit scores."

I'm actually really curious what will happen to our scores now that our mortgage is gone and we have zero debt.

You probably have nearly perfect credit. Paying off your mortgage has got to be well regarded by the search algorithms.

[disneysteve]

You probably have nearly perfect credit. Paying off your mortgage has got to be well regarded by the search algorithms.

Our credit scores have hovered right around 850 for years. However, now that we have no debt, that might negatively affect our scores. Probably not a lot but we'll see.

[disneysteve]

I just checked. My FICO score dropped 24 points since August from 846 to 822. That's the lowest score I've had in years. So yeah, that's what happens when you no longer have any debt.

[bjl584]

I just checked. My FICO score dropped 24 points since August from 846 to 822. That's the lowest score I've had in years. So yeah, that's what happens when you no longer have any debt.

Yep. If you stop using your credit card and switch to all cash or debit, then you probably will have no credit score at all in a few years. It will come back as "indeterminable"

[disneysteve]

Yep. If you stop using your credit card

Well that's never going to happen. Even if they do away with rewards programs, I'd still use a credit card, not a debit card due to the higher security.

[riverwed070707]

I just checked. My FICO score dropped 24 points since August from 846 to 822. That's the lowest score I've had in years. So yeah, that's what happens when you no longer have any debt.

I'd guess the drop is more related to the negative impact of closing an account you've had open for 20+ years bringing down the average age of your accounts. I'd assume it was your single oldest account unless you'd done recent refinancing and so your average age might have dropped from 15+ to under 10 which would bring your score down a bit.

[disneysteve]

I'd guess the drop is more related to the negative impact of closing an account you've had open for 20+ years bringing down the average age of your accounts. I'd assume it was your single oldest account unless you'd done recent refinancing and so your average age might have dropped from 15+ to under 10 which would bring your score down a bit.

That particular loan was just short of 9 years old as we had refinanced a couple of times.