Weird Loan approval help needed

[Austin26]

Within the last couple months I applied for an auto loan in the amount that I'll need for the Bronco with Navy Federal Credit Union. I was approved for their lowest available rate of 2.19% @ 60 months or 2.29% @ 72 for 35k finances for a new vehicle.

My wife decided we needed a new couch last month and I applied for their no interest loan just to have some open lines of credit and was denied. My wife applied and was approved.

What on Earth do you think is happening? How can I be denied on a couch loan and approved for a vehicle loan of $35,000?

My wife and I's credit is both in the 675-725 range. I know not to trust Credit Karma though so I'm underestimating. Both of our auto payment history has no missed payments or possibly one missed payment last year for me though I've applied to have the error corrected (boring story but I don't believe I'm at fault).

I currently have one open but paid off credit card. We charge something to it every once and a while and pay it off immediately. The only other debt I have is small and about to be paid off (federal student loan).

Current thought process for the Bronco is to put $10k down and finance about 32-35k at 72 months and make roughly double payments as that rate is great for 72 months. No trade.

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[Vigor]

Within the last couple months I applied for an auto loan in the amount that I'll need for the Bronco with Navy Federal Credit Union. I was approved for their lowest available rate of 2.19% @ 60 months or 2.29% @ 72 for 35k finances for a new vehicle.

My wife decided we needed a new couch last month and I applied for their no interest loan just to have some open lines of credit and was denied. My wife applied and was approved.

What on Earth do you think is happening? How can I be denied on a couch loan and approved for a vehicle loan of $35,000?

My wife and I's credit is both in the 675-725 range. I know not to trust Credit Karma though so I'm underestimating. Both of our auto payment history has no missed payments or possibly one missed payment last year for me though I've applied to have the error corrected (boring story but I don't believe I'm at fault).

Current thought process for the Bronco is to put $10k down and finance about 32-35k at 72 months and make roughly double payments as that rate is great for 72 months. No trade.

So I'm a little confused. Can you share why you're grabbing a loan this early? Earliest anyone is getting a loan is end of June. Rates could change between now and then.

Also if your wife's credit is even 1 point higher than yours.... say you have 699 and hers is 700... then that changes how the banks and lenders feel. Credit is a fickle bitch.

She also may have a longer credit history and no missed payments. Can be so many factors. Have you considered using her as a Co borrower for the Bronco?

I just signed for a new mortgage. So best believe my fiance will be my co signer so that we get the best possible rate for the bronco

 

[Austin26]

What new credit formula?

 

[Ryuk]

And remember this level of stupidity

If you have
$2000 of debt on a $5000 credit limit
That will be worse than having
$2000 of debt on a $20,000 Credit limit

They literally don't care how much debt you have, it's the difference between the debt and limit.
So you can work against yourself, by trying to be responsible and having credit cards with lower limits.

Also, the minute you open a loan, or something, your credit age drops, which then dings your credit score.

It's infuriating.

 

[Drex]

You have credit scores that are somewhere between average and low average. You just got a loan approval in your name for 35000 dollars. The assumption from the couch credit people is that you weren't applying for that loan for fun. They expect you to have a loan in that amount shortly. Depending on your income, could substantially alter the formula for extending more credit. Next time, get the couch first.

 

[Austin26]

So I'm a little confused. Can you share why you're grabbing a loan this early? Earliest anyone is getting a loan is end of June. Rates could change between now and then.

Also if your wife's credit is even 1 point higher than yours.... say you have 699 and hers is 700... then that changes how the banks and lenders feel. Credit is a fickle bitch.

She also may have a longer credit history and no missed payments. Can be so many factors. Have you considered using her as a Co borrower for the Bronco?

I just signed for a new mortgage. So best believe my fiance will be my co signer so that we get the best possible rate for the bronco

I wanted to test the waters to see how my current situation would be and if I can be approved and approved at a reasonable rate as usually my cars have cost 24k or less. I've added a supplementary income but my wage income has been cut in half since last I financed a car. Basically there's been changes.

I'd rather not even ask her to co-sign as she doesn't even really like us spending the money for a Bronco.

Congrats on the new home and thank you for the help!

At very worst I am 44% but it's more than likely 35% and should definitely be 35% or less in the next couple of months. No, I haven't changed my payment amounts, refi'd, or bought additional vehicles.

 

[timhood]

I'm not sure why you applied for a loan for the Bronco so soon/early. Or even how you got a loan. Or did you just get pre-approval? Either way, you don't want to apply for a loan before you'll actually need it, as that creates a hard pull (minor ding on your credit score). But worse, if your financial institution commits to the funding, that will show on your credit, even if they don't yet disburse the funds. Further, they will certainly do another credit pull when you actually expect to get the funds because they will want to ensure your credit situation hasn't changed.

Also, there's nothing inaccurate about your credit score from Credit Karma (or other sites) per se. You just have to keep in mind that there's no single scoring system. In the fine print, they tell you which score they are using. There are different models used by home lenders vs. auto loans, for example. Also, there are three credit bureaus and the free scores only include a score from one of them (again, the fine print says which one). It's highly likely that some of your credit history is reported to one or two but not all three bureaus. This, among other things, means there is a natural variation in your score from different sites, bureaus and dates the information was pulled. You could have a late payment or collection reported on one but not another, for example.

But the bottom line is that if you applied for the Bronco in your name, NFCU may have decided that the couch loan exceeds the debt-to-income ratio they like, whereas your wife does not have that loan counted against her.

Finally, 2.19% is pretty inexpensive financing. You mentioned paying double payments to pay it off earlier. I don't know your financial situation, but consider how that money could be otherwise used. For example, applied to your home loan, which is at a higher rate. Or a credit card or other loan at a higher rate. Or invested (after considering the risk) to get an even better rate of return. Finally, if you don't have a nice cash nest egg (at least three months), you could build that at relatively low (2.19%) cost.

 

[joeramirez]

There are so many possibilities. Could be nothing and just need to have them re-consider your application. Best thing to do is see what's on your credit for free at www.annualcreditreport.com which will not affect your score. To get your real credit score, not the free ones offered everywhere, go to Myfico or Experian but you will have to pay $4.99 or so. There are many different FICO scoring models and VantageScore's so you will get a different score depending where you check. I work in the business. Your pre-approval at Navy Federal will only be valid for a limited time.

 

[Judge Rufus]

I assume that you applied for the Navy Federal Credit Union auto loan under your name and SS#. When you apply for credit, there is a "hard" credit check run on your credit worthiness and recorded with each of the three credit bureaus. When you requested the credit for the furniture, I'm assuming from the furniture store. they also ran a "hard" credit check on you as well. Your credit score will be impacted negatively each time you have a "hard" credit check done on you. Depending upon the furniture stores credit policy, they may have rejected you simply because of the recent credit approval for $35k, or because you've had too many credit checks. Who really knows?

 

[Jr87mustang]

My wife and I's credit is both in the 675-725 range.

It seems like your credit score is really low for not having anything listed on your credit scores. I would check all three and make sure a company hasn't filed anything against you. With your description of very little debt and on time payments I would say you should be 775+ if not in the 800s.

 

[timhood]

And remember this level of stupidity

If you have
$2000 of debt on a $5000 credit limit
That will be worse than having
$2000 of debt on a $20,000 Credit limit

They literally don't care how much debt you have, it's the difference between the debt and limit.

Well, they do. There are two pieces. The percentage of credit used, which you mentioned, with under 30% being better (I try to stay below 6% while paying off monthly). The second is the debt-to-income ratio. No loan (auto, home, etc.) is extended without the lender considering this as well. At least I should say no loan from a legitimate, upstanding business. Louis and Knuckles are happy to give you what you want, although their default penalties can be pretty harsh.

 

[Nellman]

The credit score is just a general guide to give you an idea of your credit health. There are several different scores for your credit. Fico scores are number based because even the fico system changes. I know that some banks don't even use your credit score at all, they have their own scoring system. I have credit scores with Captail One, Wells Fargo, Intuit and credit karma. They all give me a different score.

Best thing to do is learn what things are looked at work to make those look best. Everyone knows about on time payments, credit inquiries and debt to income ratio but they also look at amount and type (revolving, mortgage, loans) of accounts length of open accounts, amount of credit lines. My credit score went down when I paid off my student loans, the average age of accounts dropped by 1.5 years when I paid them off. You would think this would be a good thing but not to the algorithm.

As far as vehicle loan approved but not furniture. That is a difference in the bank having collateral vs nothing. Banks will grant more loans when they have leverage to collect something if you fail to pay. Also why your car loan has a much lower interest rate then a personal loan.

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