How can I fix my credit report if I don't know what's wrong?

October 22, 2012 1:50 PM

I was turned down for a new credit card. The issuer said I can clean up my credit report and re-apply, but I don't know exactly what the problem is.

I recently applied for a new credit card. It has better rewards than my current card.

I have an excellent credit score. I've had my current credit card for about ten years. I reviewed all three of my credit reports and found nothing out of the ordinary.

I was turned down for the new card. The reason was "delinquent or otherwise derogatory relationship" with the issuer. The rejection letter referenced Experian as the provider of the credit report that was the basis of the decision.

First, I've never had a relationship with the issuer (Chase), unless they own one of the banks I've dealt with before.

Second, I reviewed the Experian report. There is not a single delinquent payment for several years worth of records across multiple lines of credit (student loan, auto loan, credit card, a couple of store credit cards, and a mortage).

Of these credit lines, only my current credit card and mortgage are open. Everything else is noted as "closed/paid/no late payments".

I read this response about delinquency, but I don't see anything on the report that would imply I violated the terms of service on any of my accounts.

The only "derogatory" characteristic might be that my current credit card has been re-issued twice. The reported reason for both re-issues is "theft", but my card has never been stolen or lost. The first re-issue was because an online store ran my number for a purchase that wasn't mine. The second re-issue was because the card issuer's records were compromised.

The rejection letter says I have no recourse except to address the credit problem or correct the report error, then re-apply. But I don't know what to fix.

It's just a credit card. I won't be heartbroken if I can't get it, but I would save some money with the new rewards. Is it worth pursuing? Would the issuer give me specific reasons if I contacted them?

Thanks!

posted by Boxenmacher to work & money (8 answers total)

Call Chase first and see if they can shed some light on the subject.

The first person you get probably can't help you, so you'll have to push to go higher up on the food chain until you can talk to someone who can discuss your specific application.
posted by Ruthless Bunny at 1:58 PM on October 22, 2012 [2 favorites]

Agreeing with Ruthless Bunny, contacting Chase is probably the best place to start. The Experian report should have a contact telephone number at the end of the report to directly speak with the department at Chase that would deal with this. Ask them if there is a problem and from there you can ask them to contact Experian to clear it up, either by addressing whatever they are worried about or by having them note that it's an error.

The issue may not be a big deal for this credit card specifically, but could cause you problems down the road with trying to get credit in another setting.
posted by goggie at 2:18 PM on October 22, 2012 [1 favorite]

Yes call them and ask. I was denied a Chase rewards card, immediately called to ask why and the telephone rep reviewed the file while I waited and reversed the decision.
posted by greasy_skillet at 2:19 PM on October 22, 2012

I'd check the other credit bureaus too, just to be safe.

My gut reaction is that something didn't work quite right in an automated process at Chase. Calling them would be okay. If your credit reports look okay, shrugging your shoulders and moving on with life would also be okay.
posted by gimonca at 2:35 PM on October 22, 2012

Would you get specific reasons? Depends on what's meant by "specific".

They might say to someone "you have an open judgment on your report", that'd be specific and easy to talk about, but it sounds like that wouldn't apply to you.

If they made a decision based on some internal formula like debt/income ratio, they might give a general response like "insufficient income" and not share the details, but again, that's not what's in your letter.

Two ways a mistake might have happened: they might have declined you when they really didn't intend to. Or, they might have printed the wrong decline reason on the letter.
posted by gimonca at 2:42 PM on October 22, 2012

It would be possible to write a few chapters about this, but here's a brief overview.

I assume you applied online without getting an offer in the mail. That looks like credit-seeking behavior and is seen as a negative signal by banks. Replying to offers in the mail will almost always get you better offers than seeking them out. That's first.

Second, you don't say if you got an instant response, but I'm going to assume you did. That means there was an automatic underwriting process that sifted you out. It combined information you gave when you applied (including the implied information of credit-seeking behavior as above) and information on your credit report. The information you gave includes your annual income, which is required by law to be included in determining your ability to pay.

Third, applying for credit is also credit-seeking behavior and each application, successful or not, appears on your credit reports and reduces your ability to get additional cards. So the fact that you got rejected means your more likely to get rejected again, which is a bummer, but that's how it works. It'll take 24 months to get this off your credit reports.

Fourth, not all credit reports are created equal and certainly not all credit scores are. There's a difference between what Chase and other issuers see from the credit bureaus and what you can see, especially when it comes to your FICO score. What you can purchase is "for education purposes only" and that's often referred to as the FACO score, because it's fake. There's a lot of bad information about this on the web and very little good information. Another bummer, but I can sum up for you what matters:

For people with thin files and good credit, there can be a surprisingly large variance between FICO and FACO. For people with lots of information and poor credit, FICO and FACO correlate fairly well.

That's my guess as to what happens. You look at your credit reports, perhaps you bought your credit score, and you think you're creditworthy. Chase sees you otherwise, perhaps incorrectly, but calculated in part based on your credit report and in part based on your stated income. Either way, there's a formulaic cut-off and you missed. Some corner cases may get escalated to individual review, but it appears you didn't trigger that. The Equal Credit Opportunity Act requires them to send you an Adverse Action letter that details in some way what happened - and that's what you got.

If you want a card with better benefits, wait two months and collect all the offers you get in the mail. Choose exactly one and respond to it, using the directions they sent you. You can also try contacting Chase and challenging the decision, but I have not seen good data about the efficacy of that approach.
posted by allen.spaulding at 5:47 PM on October 22, 2012 [4 favorites]

I'm sorry, but when the hell will people start standing up to this sort of crap? Especially, I frankly don't doubt a word Allen.spaulding says. That is generally how it goes.
posted by Nish ton at 7:42 AM on October 23, 2012

Thanks, all. I'm trying to get away from Bank of America. They're cancelling a rewards card I had with a bank they purchased and replacing it with their own. I don't truck with that, so I'm trying to switch. The Chase Amazon Rewards card is the one I'm trying for. I'm surprised I didn't qualify.

I need to call Chase to check about the derogatory relationship thing. See if there's something I missed in my credit reports.

Yes, I applied online. I did not receive an instant response, even though Amazon says most applications get a response in 30 seconds. The letter I received was probably an automated process, though.

I don't receive credit card offers in the mail because I took measures to reduce my junk mail a few years ago.

I don't have my current FICO score. When I started a mortgage two years ago, though, the bank told me I had excellent credit. I've been prompt about it and all my other bills, so I assumed it would more or less be the same, except for whatever weight the balance of the mortgage counts for.
posted by Boxenmacher at 10:53 AM on November 13, 2012