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).
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 ?
I can understand banks doing this. They don’t want a person to apply for 3 credit cards, a line of credit, a home equity loan, pull out cash advances on all of them, and then run away (for good) to Aruba. I bet this scenario is attempted by someone out there almost daily.
Funny, I called one company to have my credit limit *decreased*. (What in the holy hell do I need $20,000 on a credit card for?) When told doing that could (somehow) “negatively effect my credit score,” I replied, “Go ahead, negatively effect away! “