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I am currently looking for a loan to purchase a new vehicle. I just called my bank, and after briefly discussing with them, they said that I can apply to a 2.74% loan. This is the best I have found so far. I applied through the phone, and received an e-mail a little bit later stating that it was denied.

The reason I was given was the following: "Insufficient recent satisfactory credit history or no credit file."

They were able to pull my credit score, which is good (even though its slightly lower than my FICO score that is reported to me every month by my bank).

I don't understand. I have had a credit card with my bank for at least 5 or 6 years. I started with a limit of $200, which they raised to something like $700, then $1200, then $2500. My limit is now $5700.

I moved to the US 8 years ago, and have been paying my bills since then (phone, car insurance, power, internet, etc...). I have been employed in the same company for that time as well. I never borrowed money (other than using my credit card every month and paying it off on time, to raise my credit score).

What do I do from here? Do I contact Experian to figure out why they don't seem to know me or have any information about me? Do I call my bank back and negociate?

Thanks for any pointer you may provide.

Edit: I just pulled my 3 reports from annualcreditreports.com. Everything is fine, except the Equifax one that I cannot see online and that I need to request by e-mail. All my payments are shown to be made on time. I did not find anything bad on the reports.

Edit2: I have called the bank back. They are stating that they have no more information than the one I know, which is "Insufficient recent satisfactory credit history or no credit file". They advised me to call Experian as they will probably be able to give me more information.

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    Why not buy a car for cash, and stay off the never ending car payment cycle that robs the typical American of wealth building? – Pete B. Dec 6 '19 at 11:40
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    Perhaps the 2.74% loan rate is just a typical bait and switch marketing. – mootmoot Dec 6 '19 at 12:32
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The reason I was given was the following: "Insufficient recent satisfactory credit history or no credit file."

You're focusing on "no credit file" but ignoring the just-as-important "Insufficient recent satisfactory credit history".

Now, you might think that your your credit history is satisfactory enough to get a (quite low) 2.74% auto loan, but obviously the bank doesn't.

It's very possible that you'll have to pay a higher rate.

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  • Hi @RonJohn - Thanks for the answer. I have pulled my credit reports and have double checked the Experian one (which they are referring to). I did not find any inaccuracy or late payment. All payments on my credit card have been made on time since I have opened the account more than 4 years ago. – user92136 Dec 6 '19 at 2:57
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    @user92136 you're banging your head against an uncaring wall. – RonJohn Dec 6 '19 at 2:59
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    What are you saying? – user92136 Dec 6 '19 at 3:03
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    @user92136 It may not be enough to have recent positive credit history, you may need to have an exceptionally good satisfactory credit history. Meaning, you might need to be in the top percentile to qualify for these kind of interests. The bank said you could apply, anyone can apply, but that's it in this case. (Edit, I realize this is probably more suitable as an answer but its an answer to what Ron is implying I think) – Jonast92 Dec 6 '19 at 16:16
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    @user92136 - Since you don't have anything negative on your credit report, maybe the key word in "Insufficient recent satisfactory credit history or no credit file." is not satisfactory but rather Insufficient. It may be that they want to see something besides your revolving credit on your report to get this really good rate. So look elsewhere, or better yet save up your money so you aren't dependent on a loan. – Glen Yates Dec 6 '19 at 23:42
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I would start with a look at your actual credit report. Normally, you can get this for free at annualcreditreport.com, which is the official site for this. However, you're an immigrant, and this site definitely needs a SSN. Experian's site also has a free credit report lookup, which might work better.

What's most likely is that your credit card hasn't been reported correctly. If that's the case, you will need to contact your bank to tell them to fix the issue.

EDIT: For completeness: you are allowed one free credit report per year from each of the major credit reporting agencies. In addition, you are allowed a free credit report if you are denied credit because of your report. (Which is the case here.) You should have an adverse action letter, which will specify the procedure to take to view your credit report. However, there's no particular need to make this procedure simple, and just using your annual credit report might be easier.

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  • Hello - Thanks for the answer. I have a SSN, and I just pulled my 3 reports from annualcreditreports.com. Everything is fine, except the Equifax one that I cannot see online and that I need to request by e-mail. All my payments are shown to be made on time. I did not find anything bad on the reports. – user92136 Dec 6 '19 at 2:28
  • OK, that's on the bank then. A 2.74% loan is a very low rate, and they might have very high standards. I'd suggest either talking to the bank, or just moving on; a credit card being paid on time for multiple years and no problems reported should be good enough for a car loan. – user3757614 Dec 6 '19 at 2:36
  • OK. Thank you. I will call them and ask for details. I will follow up here for public knowledge. – user92136 Dec 6 '19 at 2:39
  • Follow up: I have called the bank and what they are basically telling me is that they have not been provided a reason by the credit agency other than "Insufficient recent satisfactory credit history or no credit file.". They advised me to call the agency and that they will probably be able to provide me with a little bit more details as to why they came to that conclusion. – user92136 Dec 6 '19 at 3:05
  • @user92136 Is it the same bank where you have the credit card? Then they shouldn't even need to pull your credit records to see that you are making your payments on time. – glglgl Dec 6 '19 at 8:39
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By the sounds of it your credit history is mainly revolving credit ( credit cards or credit with no set paid installments ). What this potentially means is that the bank you are trying to get a loan from may not think your credit history is diversified enough, as in you don't have any installment loans or any other long term loans to "prove your credit worthiness" for something like a car loan. I know this sounds backwards but it is something banks will deny a loan for, They will even look at if previous loans had a cosigner. For instance say you get someone to co-sign this car loan with you, when you pay it off and say you go to trade in this car for another car and take out another loan. They will see that your last car loan had a cosigner and may not give you a good interest rate based on that you had a co-signer on the previous loan.

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Banks use a number of factors to determine creditworthiness. Although underwriting decisions are lender-specific, there are some general guidelines they all typically use.

Specifically, for larger loans (i.e. a car loan or mortgage), banks like to see a "trade line" history in addition to a generally good credit report. That is, they like to see that you've had other similar loans. This plays into a scoring factor called credit mix (basically, a measure of how diverse your credit history is).

It's important to note that for larger loans, lenders do not simply look at your credit score. They also look at the contents of your credit report. They look to see what kinds of loans you've had, and how well you did on them. Having an acceptable score may not be enough in some cases, they lender may also want to see that you've had at least some sort of loan that's similar to what they're about to give you. So, if you are taking out an auto loan, they may look to see if you have a history of installment loans. If you have only ever had one credit card, they may consider you a risk because your history is not diverse or substantial enough.

This presents a chicken-and-egg scenario. How do you get your first loan if having had a loan in the past is a requirement for getting a loan? Unfortunately, there isn't a direct or satisfying answer to this question. The good news is, there is enough variation in lending policies that you may have some luck by shopping around. If that bank won't give you the loan you want, perhaps another lender will.

At this point in time, if you've determined that you want a certain loan (which you know you can afford) to buy a car, your best bet is probably to shop around. Looking for smaller community banks or credit unions may be advantageous, they are typically more likely to actually sit down and have a conversation with you about how they make decisions, and they may be able to offer advice to help you meet your goals. Of course, you want to weigh any advice you get against the fact that they're essentially trying to gain your business, but some banks and credit unions will have certified professionals on staff to give legitimate financial counseling in order to help you along - or, at least, they'll have a lending officer who cares enough to have a conversation with you instead of just reading a message off a screen.

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they said that I can apply to a 2.74% loan

The thing is, anyone can apply for a loan, no matter how good or bad your credit score is.

Some loan agents (or your contact at the bank) may get a % bonus for all applications so the agent is inclined to encourage you to apply. However, that doesn't mean that you're one of those who will qualify for it. The agent/contact is usually not the one to approve or deny your loan request anyway.

The reason I was given was the following: "Insufficient recent satisfactory credit history or no credit file." They were able to pull my credit score, which is good (even though its slightly lower than my FICO score that is reported to me every month by my bank).

It sounds like they're saying that it's not enough to have a good credit score to qualify for these rates, there's nothing wrong with it but in order to qualify for these interests you might need an exceptionally satisfactory credit score & history.

You should be able to apply for a different loan on different terms and you'll probably have more luck there but consider this road blocked for now.

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Your definition of "satisfactory credit history" and your bank's definition are not the same.

You think that not owing people money, and paying money back promptly if you do owe money, would be satisfactory. I fully agree with you. But your bank doesn't.

What your bank cares for is interest payment. They don't care that you are a responsible citizen keeping his money affairs in perfect order. They want irresponsible citizens who waste money, take loans, and pay interest. Do you think that's unreasonable, even perverted? You are right. And I agree. But it's not the way the bank sees it. Because they only care for their pockets, and you didn't put money into their pockets.

You could walk to a different bank, and ask whether you would get a loan if you move your business completely over to them. Because it's not about your credit history, it's about what is in it for the bank.

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