My little beater 4X4 went completely to hell unfixable. Decided to bite the bullet and buy a new truck. Here are my stats:
Age 57. Married.
Debt: None. Mortgages paid. No credit card balances. No car payments.
Credit rating: 822 (per Credit Karma).
Income: $64,000 annual pension, $66,000 annual salary $50K+ from private business.
Spouse: 59, no debt, combined income of $110K from 2 business interests.
I got a pre-approved loan from my bank. Found a truck and after negotiation got my price. Put $10,000 cash down and planned to finance $35,000.
Dealer entices me with an offer of an additional $1500 savings if I finance with them. Higher interest. I did, but then I used my pre-approved loan to refinance it at the lower rate and kept the additional $1500 savings. Smart. I’ve done this many, many times before.
That was 3 months ago and everything was fine. Until today. I got a letter in the mail from PNC Bank. This was not a bank I nor the dealer (that I know of) had any business with. The letter said they were rejecting my loan application due to my poor credit score of 838 (per the letter) and too low of income. The letter mentioned the dealer by name.
I already have a loan, in fact had 2 of them before refinancing the first.
So what the hell is this all about? Even if this was one of the banks the dealer does business with why on Earth would they reject my application. And why would it take 3 months for this letter to arrive? Never had anything like this happen before.
oh this ones simple … the car dealer ran you through more than one place and took the first one that said yes … and you’ll be getting letters from all the places that said no
I doubt they’d beat the rate I have and I plan on paying off the 3 year loan in 18 months anyway. But I find it strange that I’d get rejected in the first place and then not told about it for 3 months.
It’s possible they rejected you because they noticed you had just taken out 2 car loans.
Say they were slower than the others, by the time they checked you, you had just taken out 2 car loans and the first wasn’t showing as paid off. WAG.
The rejection notice should have told you which credit reporting bureau they used. Since you got rejected, you are entitled to a free credit report from that bureau. (And everyone is entitled to one free annual report and all the major credit card issuers are giving their customers free credit reports, although perhaps not from the bureau that PNC used.)
Get the report and see when PNC made the inquiry. Most likely the 3-month delay is just some bureaucratic snafu. But if there has been a more recent inquiry from PNC, maybe somebody at the car dealer resubmitted your credit application by mistake or maybe there is something sinister going on.
Hard inquiries can make your score drop, although it rises back up fairly quickly if there is not a history of repeated inquiries, and the inquiries stop. It might have happened that when PNC checked your score, the other inquiries had caused it to drop. If you check it now, it may be back up, but you can see the history, and see if it dropped at some point.
Also, did you pay off another loan when you bought this car?
When I paid off my mortgage, my 15 year credit history vanished, and suddenly is was only as old as my oldest credit card, and my score dropped.
Nowadays, the underwriting models are basically a black box that weighs several factors including credit score, income, and all the other things that the lender thinks are important. I can’t inspect PNC’s credit model but my hunch is that by the time they made a decision on your credit score, the two car loans you had taken out were on your credit report. Their credit model was leery of a person with two brand new car loans and they declined to give you a third. I recognize that’s not what actually happened but it’s likely what your credit report reflected at the time they reviewed it.
In theory, PNC should not claim they were denying you on the basis of your credit score if your credit score was not a factor in their decision. However, because the credit model weighs all the factors including credit score simultaneously, it’s arguably not possible to extract the impact of your credit score from the credit decision. So, PNC adds the language about credit score to their form letter and everyone gets that part of their adverse action notice.
It’s also possible that they use multiple credit scores and one of those credit scores was too low for them (although given the strength of your credit, I tend to doubt this). Ironically, if a lender denies credit to you on the basis of multiple credit scores, they only have to disclose a credit score to you. They don’t necessarily have to disclose the particular particular credit score that may have had the greatest impact on your denial (i.e., they don’t have to tell you your lowest credit score). In my opinion, this is a case of a rule not quite working as intended.
I don’t know why it took so long for PNC to send you the letter. They are supposed to respond to you within 30 days of receiving your credit application.
They have to, by law, give you THREE reasons you might have been rejected or suffered adverse action.
They might not have two!
Adverse action could be that you didn’t qualify for the best offer they have. For example, the very best finance terms from PNC might be for repeat customers who are borrowing less than 25k and make over 150,000 per year and are putting 50% down and have FICO over 840.
It has nothing to do with auto loan inquiries, because redundant inquiries are ignored. If you have 20 auto loan inquiries in a week, this does not repeatedly beat down your score.
An inquiry could mean you borrowed a lot of money, and the tradeline has not been listed on your credit report yet, so it temporarily hedges down the score.
I worked with scoring models/reports for 20 years at TransUnion. My girlfriend literally had the highest score I have seen in 20 years, and she received a similar letter when she bought a new car. They fire off dozens of loan requests, shopping for the best deal for you… and some lender has some weird and very specific program you don’t qualify for… and this is ‘adverse action’… which by law triggers adverse action letters that must have three reasons…
… and the short story is: Move on. Don’t bother for another minute.
