Credit rejection... identity theft?

July 6, 2009 1:37 PM

Surprise credit denial... of 4 cited reasons, two do not seem possible. Trying to rule out possibilities before I conclude there has been identity theft. So: can anything else be termed "mortgage" besides a home loan? What about "current credit card accounts?"

So my boyfriend applied for a credit card to use on our vacation abroad (wanted Capital One so there would be no foreign transaction fees). He was turned down, and the letter cited 4 reasons, two of which were understandable (relatively short length of credit history, and I forget the other one) and two not so much: it said that he had been delinquent on current credit accounts (he only has one account, and he has not been late ever), and delinquent on mortgage payments. He does not own a house. So, good people of Metafilter, what should we do?

posted by lily_bart to work & money (10 comments total)

Order a credit report (you can get one free one each year) and find out what accounts are under your name. A few years ago, on one of the three credit reporting agencies, they'd somehow merged my name and someone else's and there was a delinquent account on mine that was driving down my rating. It wasn't active identity theft; just reporting agency idiocy that was cleared up with a dispute letter. But it took more than 30 days, if I recall correctly, so you might get your report, find out what's going on, and then call Capital One directly and see if you can still get a card on short notice.
posted by olinerd at 1:39 PM on July 6

The first thing he needs to do is get his credit reports, all three of them. Go to Annual Credit Report to get them for free (legitimately, without signing up for any pay services) and see if identity theft has occurred.
posted by scarykarrey at 1:40 PM on July 6 [1 favorite]

pretty sure a mortgage is home-specific. the first step would be getting his credit reports and contesting the erroneous information.
posted by TrialByMedia at 1:41 PM on July 6

Agree with the advice to get credit reports from all 3 agecies, but wanted to add that in addition to one free report annually you are entitled to a report if you are denied credit as well.
posted by TedW at 1:45 PM on July 6

OK. I've worked as a credit card analyst. "Delinquent" can be something other than a late payment. It's pretty much any situation where something about your account is currently outside the agreed ToS - so going over your credit limit will make your account "delinquent". It's not the same as "default".

Pull his credit records and see what's on them. Check with both known credit card providers and see whether there are any delinquency issues. Surprisingly often people who swear they've never made a late payment have several recorded because they leave making the payment until the last possible day and it doesn't reach the provider before the due date.

The term "mortgage" can be used in reference to a chattel lien - ie, a lien over assets other than real estate - but that's not a common usage.

A first year credit card is always regarded as high risk. I would not have issued one of our cards to an applicant who'd had a card with another provider for less than twelve months. Some stuff is "in-house" and will only affect the way credit policies are applied internally ; whatever showed up on your boyfriend's credit check was clearly external and you need more detailed information about exactly what it is.

If something's already flagging you has "high risk", then seemingly innocuous things can affect the decision about whether or not to extend you credit. The credit analyst is looking for information about your solvency - ie, your ability to meet your financial commitments as they fall due - and you'd probably be surprised by some of the things which will raise a red flag to a credit analyst.

If you have more specific information, that would be helpful, but you really need to pull both the credit reports and the credit card provider records.
posted by Lolie at 2:07 PM on July 6

I f*!*%king hate mortgage law, but my firm practices a lot of it. "Mortgage" is not home-specific and it is in common usage in all sorts of secured transactions that are not buying a home. A Mortgage is simply a an interest in land created by a written instrument to provide security for performance of a duty or payment of a debt. You can create a mortgage without providing new funds (for instance, in exchange for extending repayment of a debt). You can create a mortgage against undeveloped land, against a single-family home, against an ice cream store.

A chattel mortgage is an interest in personal property created by a written instrument to provide security for performance of a duty or payment of a debt. Same as a mortgage, a chattel mortgage can be created without a contemporaneous loan. It can be against stock certificates, the goods in your warehouse, or a boat.

He should, however, remember signing a mortgage. That's not the sort of thing you forget. A little investigation is definitely in order.
posted by crush-onastick at 2:16 PM on July 6

Both Lolie and crush-onastick are correct about the definition of "mortgage," but to simplify a bit: about the only thing your boyfriend might have a mortgage on, without realizing it was such a thing, is a car. Or if he buys furniture, appliances, etc, on a "rent to own" basis. Yes there are other liens secured by personalty, but they are not a common middle class consumer purchasing technique outside of the examples just listed.
posted by rkent at 2:32 PM on July 6

I am a veteran of ID theft, and of accidental credit-report mergers. Do check credit reports (you can also get free ones if you are, or believe you are, a victim of fraud). If there are errors on them, start by writing to the credit agencies and telling them, "This isn't my account." Often that's all it takes to get the error corrected, and it's usually quick.
posted by not that girl at 2:34 PM on July 6

I just checked out CapitalOne's website to see if I could find out anything about their credit policies.

There's a link on this page which launches a pop-up explaining their guidelines. "Limited history" definitely takes your credit score into account and so your boyfriend really needs to fix that up ASAP. Capital regards your credit history as "limited" for the first three years of you having your own credit card - other lenders may have a similar policy.

I understand that you want to avoid foreign transaction fees, but be careful about applying for multiple cards at this stage - talk to the existing provider and see what they can offer (which may be nothing while you're still in the limited history, high risk group).

I just noticed that you said delinquent on current credit accounts - did you mean credit card accounts, or did it just say "credit accounts"? If it's the latter, it can be things like phone bills, video store late fees (here, those are the two biggest reporters of defaults, although most lenders will only take them into account if you have a limited credit history). Credit doesn't just mean money you've borrowed, it's any situation in which you're not paying for a service at the time it's provided.
posted by Lolie at 3:25 PM on July 6

If you've been denied credit, you are entitled to a free credit report (apart from the ones normally free from annual credit report).
posted by meta_eli at 3:35 PM on July 6