This is why you might not get approved for a new credit card right now. (via CNBCMakeIt)
that with the onset of the last financial recession, consumers had less access to credit of all kinds, including loans and credit cards. Americans will see this play out in several ways. Those applying for a new credit card right now may get rejected more often.
For existing cardholders, card companies mayfor risky customers to limit likelihood of unpaid balances that issuers may have to eventually write off. Yet existing customers in good standing may see their credit limits stay the same or even increase, Bharadhwaj says, so card companies can offset customers who have become delinquent or have ballooning balances.Americans may also encounter more hurdles when they apply. A 26-year-old Minnesota man, who asked to be anonymousin mid-April, but wasn't approved on the spot, despite having a 755 FICO score through Experian. When he called about it, he was asked to supply a copy of his Social Security card and a copy of a bill for proof of physical address. "I'm not a credit analyst, so I don't know what's normal procedure and whatnot," he tells CNBC Make It. He submitted the requested documents and was told he'd hear back in seven to 10 days. In the interim, he's crossing his fingers. Chase did not immediately respond for comment. "It's more than likely I'll be denied, but that won't be a surprise due to the current state of the economy. Now looking back, it was probably a mistake applying for a credit card right now," he says. He applied for a card because he wanted to purchase a new computer to allow him to create video content on YouTube or Twitch as a side gig. He was looking to buy one priced between $2,500 and $3,000. "I thought if I got a decent credit card, I could afford a PC in that price range and then pay the balance off within the next few months," he says. Requests for more documentation are not uncommon, even before the pandemic, Bharadhwaj says. "Documentation requirements have always varied by credit card issuer," he says. But they could become more common as a way for credit card companies to seek out more information on a consumer's situation before issuing a card. "Because credit bureaus do not score on income, not knowing whether a consumer has cash flow is a blind spot for issuers," Bharadhwaj says. For that reason, some customers may see some credit card companies requesting additional documentation to help validate an applicant's identity or to qualify them for a certain credit limit or product offering. and near-prime borrowers will take the biggest hits. And yet these are arguably the people who need help — and access to cash — the most. "We have seen some banks being more selective in which products to offer or approve, based on risk profiles of consumers and also product constructs," Bharadhwaj says. Those with good credit scores will have less trouble getting approved, but they may still be impacted to some degree because of the lack of visibility into unemployment and the impact the pandemic is having on the economy, he adds. And this restricted access to credit may linger. "It's tough to say [when these restrictions will ease] given we don't know exactly when shelter in place will end," Bharadhwaj says. But when the U.S. does eventually come out of this current economic downturn, Bharadhwaj believes we'll see a reemergence of people starting to rebuild their finances and increased approval rates. In fact, both men are both already planning to re-apply when the upheaval from the pandemic calms down. "I'm still gonna go for the Cash+, but I'll wait until things settle and get more back to normal," says the software developer. "The banks are jittery right now so I'll probably try again in 6 months when things are better."Check out:
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