Credit Checks Can Cause Issues

It is interesting to see how the dominoes fall  in the financial world, and one of the most entertaining stories I have is from about 25 years ago as my wife and I were looking to buy our first house.

As we shopped for the first Big Cajun Hacienda,  Mrs. C8j and I decided we needed to shop around to get the best mortgage deal, that was possible at the time. At the time interest rates were very high and we were hoping to find as low a locked in rate as we could (it ended up being 12.5% for a five-year term). We spoke to our bank (at the time) Scotiabank but my brother had (at the time) a good deal (in his opinion) with BMO, so I went and spoke to them as well.

Both banks wanted to “pre-approve” me for a mortgage on the basis of my income and such, so they both came back with about the same deal for me, so we were leaning towards Scotiabank (as they were our current bank). Scotiabank also suggested I apply for their Visa card to help with moving expenses and such, and it seemed like a good idea (at the time).

Gift Cards, Cash

So Many Cards so easy to get these days.

The application seemed straight forward, but about 3 weeks later I got a terse, but polite, letter saying that my application for the Visa Card was denied, with no explanation (but thanking me for applying).

I was flaberghasted, insulted and very mad (in my younger days, I was even a bigger hot head than I am now), so I phoned the number on the letter to get an explanation for this serious insult that had been inflicted on my Financial Ego! I spoke to a very patient and nice lady at the Scotiabank Visa help center (I would say she earned her pay that day), and she calmly explained that my “file had been flagged” and that was why I was refused the Visa Card.

“Why was the my file flagged?”, I asked.

The answer was simple, my “credit file” had been accessed twice in the week before my application, which caused the system to kick out my application as high risk. Why did my “credit  file” get accessed? Remember those two pre-approvals? Those two procedures cause the whole system to suddenly view me as a bad credit risk, because people were looking up information on my credit, as simple as that.

Once the patient young lady on the phone and I figured this out, she said she could put through my application, and get me the card in a few days, but I decided not to do that, and decided to go with BMO instead.

This was the first time I had been exposed to the Business of Credit, Mortgages and Banking and it was an eye-opening experience, and from that I have learned to be wary of banks, and to always ask questions about all processes no matter what transpires.

Oh, and isn’t it interesting that I was actually turned down for a credit card? Anybody heard of that these days ?


When did You Get Your First Credit Card ?

I got my first credit card ( a CIBC Visa with a $500 credit limit) at the CIBC in the basement of the University of Waterloo’s Federation of Students building. What was ironic was that I had applied my first year and was turned down, but as soon as I could prove I was in the CO-OP program, suddenly I was a good enough risk to get the card. At the time I really only used the card to buy books, and rarely even carried it with me.

These days all three of my daughters have had offers to give them Credit Cards, and my assumption is that it is mostly on the back of my income (i.e. if she gets a card, Daddy will pay it off for her), which infuriates me (I believe I swear loudly and tear up the “complimentary credit card offer” letter shows up, every time (at least that is what my wife tells me)).SmallCardSecurity

Now you can even buy “pre-loaded” Credit Cards for kids to use, that sound interesting, but I haven’t used one, so I can neither confirm nor deny that it is a good idea.

This whole topic started with a discussion I was having with my Mother and she voiced to me how concerned she was back in 1982 when I got a Credit Card, which really does show the difference in the generations. My Mother’s generation has always viewed a Credit Card as a dangerous liability that must be closely managed and carefully used (I am paraphrasing, and generalizing), because my generation seems to have a more “Magic Money” attitude towards instant Credit that the Credit Card gives you.

OK readers, when did you get your first Credit Card? How old were you, and why did you get it?




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