Are you a concerned parent having a troubled time trying to decide whether or not to give your son or daughter the access to plastic money? Do you think perhaps son or daughter may not be able to manage their finance well? Well, you fears are not completely baseless. Plastic is a very important tool that you will need to you're your kids. But your kids are vulnerable to the threats of financial crashes owing to their inexperience in managing finance. Many financial companies also hunt for such instances and operate in the logic of 'catching them young', so that it may mean some profit, getting hold of some off guard youngsters.
However, there are simple ways that will safe guard the interests of these youngsters. These are nothing but carefulness and precise decision-making, topped with a little value education being imparted on this naïve populace of youngsters. While many of the credit card companies will look for a chance to get the better from your ward, you can minimize the chances by selecting the right student credit card and helping your son or daughter manage his or her finance judiciously. After all, everything has a first time and no time can be better than college time, which is learning time.
In case you decide on giving your ward the access to plastic money, you have to make sure that you give them the best that is available. Remember, there is not a single best company for everyone. Everyone's needs are different, so will be the credit cards you choose. Remember, if you feel that your ward cannot use a credit card wisely, the best option is not getting a credit card at all for him or her. However, in case you decide on affirmation, you should follow a few essential steps for best decision-making.
First, collect several applications from credit card companies, over a minimum duration of two or three months. You can begin with short-listing some applications from credit card companies that are near to your ward's university or college. You can carry out a search online for companies issuing credit cards to get the best among deals. Get at least a set of ten options to choose from. Once you have done it, it is time to compare offers from several companies.
Comparing is the most crucial stage while opting for a credit card. Opt for the company offering minimum interest rates, low fee structure, good reward programs, low minimum balance, and so on. Also, check for reviews on the consumer websites and consider what the other consumers have to say about the company you are thinking about and about the company credentials. Try to avoid a credit card that will charge you an annual fee, because that will mean some unnecessary expense for you. Weigh your needs and only then do settle on a particular scheme or company. Avoid availing a credit card if you think you can do without it.
A student with plastic currency is comparable to a kid owning a car without license. Either he or she may end up winning a race, with proper practice, or he or she might get into a serious mess by bumping against a wall. Your role as a responsible parent starts here. The right choice of a student credit card and the proper guidance, here, is what you need. This will not only help your wards keep from wasting their resources, but also develop them into essentially responsible citizens. They will not only know where and why to spend, but also what, why and when to save.
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Does the reason for this auto loan denial by the bank make sense?
Last month my cousin applied for a used auto loan of $10800 through Wells Fargo Auto Finace and she was putting $2000 down on the car herself. She has been employed as a teacher for 3 years and has student loan debt and a department store card with no balance. She has $6600 in savings. Due to her limited credit she needed a cosigner. As I actually manage her brokerage account and prepare her taxes annually I am well aware of her ability to repay (please no lectures about co-signing). I agreed to do so as I have been a WF customer for years and have property financed by them as well as savings, IRA, etc. My credit score as a cosigner--760 with no installment payment and very little revolving debt. The WF loan officer--after reviewing my application stated it should be no problem to approve based upon the info he had and the income and assets involved by both of us. He proceeded to prep the actual loan paperwork in advance of underwriting approval.
However and much to both our surprise underwriting denied the loan and stated they would send a letter stating the reason why in 10 days--it actually was more like 30. I received the letter recently WITH MY NAME ON IT and it stated the reason for denial was due "past or delinquient payment." As I had NO late payments on ANY accounts with all three bureaus I called WF Finance for an explanation. I was transferred to a manager who told me the reason for the denial was due to my cousin having one 30 day late payment two years ago and because her score was low due to her limited credit and mine was so high "they could not approve the loan due to the amount disparity in the score range and the weight of the score falls on the primary payer" HUH?? Well what the heck is the purpose of having a co-signer if the bank won't approve a loan for $10800 with the backing of someone who has multiples of the loan amount in THEIR bank in various accounts? They denied the loan because she had a low score and I had a high one. Does this make sense to anyone??
Answer
I work in credit card underwriting. If she has a limited file with a delinquency it will weight more heavily as there are no other "good" loans to outweigh that delinquency showing that she can pay on time. The letter should have clearly stated that it was her delinquency that was preventing the loan, not yours. Even if she has the incoming cash to back up the loan her fico may have just been too low. It's called a shallow credit file (limited credit references). Over time her score will improve as long as she can acquire some credit. With that being said, lending seems to be more judgemental now that banks have experienced monumental losses over the past year and a half. Your good credit should have helped her ability to get a loan, but it will not supercede her credit file if her credit score is just too low to approve. It sounds like they were very unclear in the adverse action letter, and I am surprised a two year old delinquency would prevent her from getting a car loan. She should get a copy of her credit report (it is free anytime you are denied credit) so she knows what her score is. The difference in your credit scores should not have had anything to do with the decline reason. Hope this helps to better understand the situation.
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