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 30 years ago as my wife and I were looking to buy our first house. By being a good consumer and looking for two different deals, I created an anomaly.
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. 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. 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. It seemed like a good idea (at the time).
The application seemed straight forward. Three weeks later I got a terse, but polite, letter saying that my application for the Visa Card was denied. There was no explanation but a note thanking me for applying.
I was mad. I phoned the number on the letter to get an explanation. Then I spoke to a very patient and nice lady at the Scotiabank Visa help center. She explained that my file had been flagged. Due to this flag my application was refused.
“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. This 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. I was a bad 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. I decided not to do that, and decided to go with BMO instead.
This was my first exposure to the Business of Credit, Mortgages and Banking. 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.
My credit card application was refused. Anybody heard of that these days ?