A user on reddit who claims to be a former credit analyst at a major credit card company posted the following on reddit. It has a lot of very valuable information and is worth a read. 

Most of it is just copied and pasted from this reddit thread. I added some of my own comments in red. 

Reddit post

I worked as a CREDIT ANALYST for a major credit card company. I will share insights on how our underwriting works. Hope it maximizes your odds for an approval.

I won’t say which credit card company I worked for (based on my assessment, it seems to be Barclays or Chase)  — but it’s one all of you know. Although I can only speak about our underwriting process, I’m sure other banks operate similarly.

I’ll be happy to answer some questions on this thread. But I won’t be able to answer private messages.

Q: “How do you know if income I gave is accurate?”

We don’t. We know stated income is usually exaggerated. But your credit report can suggest whether your stated income is believable. Whether we believe it might influence our underwriting decision.

For example, if you claim to make $250,000 per year but just took out a tiny auto loan for $14,000 over a 7 year term, that’ll make us question your stated income. Our underwriting notes on your file might read something like: 250K YR INCOME VS 14K 7 YR AUTO LOAN — DECLINE.

Since our notes can be legally subpoenaed, we’ll never write “applicant is lying”. But anyone at the bank reading this note will know what’s being implied.

There are other negative information on your credit report that could make us question your high stated income such as lates or persistent high credit card balances.

By the way, income rarely determines whether the application will be approved. It’s more used to determine the credit limit.

Q: “What can I say to improve my odds of getting a credit limit increase?”

When we ask why you’re seeking a higher credit line, don’t say anything that suggests financial stress. For example…

– I need to pay the electricity bill

– I need to buy new tires for my car

– I need a cash advance

This means, avoid giving a sob story.

Instead, talk about life events. These are moments when even financially secured people need more spending power…

– My daughter is getting married

– We’re prepping to sell our house

– My wife is expecting

Q: “If my application gets declined, how long should I wait to reapply”.

We’re strictly forbidden to quote a timeframe as not to imply a promise. Furthermore, our lending standards can change. Our canned response is “the longer you show a good credit history, the likelier you’ll see an approval”.

But if I were to advise you off-the-record, I’d say 12 months. During this duration, make sure you’re not late on any tradelines and pay them down as much as you can. If you reapply sooner, frequent hard inquiries will hurt your chances.

Q: “What percentage of applications are decided by an algorithm and what are done manually?”

Around 80% of applications are decided by software.

Q: “For applications that are reviewed manually, how subjective is the underwriting?”

75% of the time, when we underwrite manually, the decision is clear and there’s almost no subjectivity. For the rest, there could be some subjectivity. I’d say, maybe only 5% are truly on-the-fence applications.

So if 80% of applications are decided by software and 75% of manual underwriting isn’t subjective, that leaves about 5% of all applications that involve real subjectivity.

By the way, a manual review doesn’t mean the application falls in a gray area. For example, if you have a strong credit report, you should be instantly approved. But if you’re also asking for a balance transfer at origination, we might opt for manual review to see if we can approve a credit limit that accommodates the transfer.

Another one of many reasons for a manual review is, your credit report is awesome but you stated an unusually low income which means we can only approve you for a low credit limit. We might probe you for additional income.

Q: “What FICO score are you looking for?”

We’re not a FICO lender and don’t go by their scores.

FICO factors in things we don’t care about. For example, when looking at your credit report, we’re not allowed to consider medical collections and utilities collections. We feel these types of derogatory information (which lowers your FICO) are unreliable.

All banks I know use a Fico score but some, for example Chase, have their own custom built Fico score that is specifically designed by Fico for their use. 

Q: “What debt-to-income ratio are you looking for?”

We don’t use a mathematical formula.

Like I mentioned earlier, income is rarely used in deciding whether to approve. It’s used mostly to determine the credit limit.

If we can never know the applicant’s income, it seems pointless to look at any debt-to-income ratios.

Q: “I need details. Can you give specifics on how you assess someone’s credit report in making a decision?”

There is so much, it’s impossible for me to give specifics.

After working there a few months, the credit analysts will develop a sixth sense of how the bank wants us to lend. Our decisions are randomly reviewed by managers when our job performance is evaluated. Based on those reviews, we become increasingly calibrated and develop that sixth sense.

The only thing I’ll say is, we’re trained to weigh the positives and negatives of your credit report and determine which side is more compelling.

The positives are: on-time payments, payments in full, long tradelines, high usage of the card, few hard inquiries, paid off mortgages and auto loans, no bankruptcies and no charge-offs. The negatives are the opposite. There’s really no big secrets or surprises here.

Q: “On my credit cards, do you like to see revolved balances or should I pay off the balances every month?”

It’s understandable to think credit card companies prefer you revolve your balances to collect more interest. But for underwriting, we definitely like to see payments in full.

One of the things we look for are large paydowns. For each tradeline, your credit report states what was its highest balance and the current balance is.

So if you had a credit card (with us or elsewhere) and paid off a 20k balance without transferring it to another card, we’ll view that positively.

If we ask why your balance is consistently high on another card, you can say “it’s on a 0% APR”. That might mitigate some of our concerns. We have no way of knowing what APR you’re paying elsewhere.

Q: Is there racial or gender discrimination in your underwriting?

Absolutely not. We don’t know this information nor would we ever ask.

However, there is age discrimination. When we encounter a credit report with few activity, age can be a deciding factor (it’s against the Equal Opportunity Act to decline an application based on someone’s age . But I know the banks do it. I have never seen a 90 year old get approved for a credit card…. And here you’re hearing it straight out of the mouth of a credit analyst).

For example, for a young adult, we can understand if there’s little credit history. But if you’re in your mid 50s and have little credit history, it would suggest a bankruptcy.

Even if the bankruptcy has dropped off the credit report, there’d still be a huge black hole during which no one was lending to you. That’s why someone in his mid 50s with little credit history would be concerning. This is the modern world where it’s difficult to live without a credit card for any extended duration.

Q: “If I ask for a credit limit increase, can you do a soft pull on my credit report?”

No. Our credit department doesn’t even have a way to do a soft pull.

Q: “How often do you guys give automatic credit line increases?”

There is no timetable. Using the card actively and paying in full is the likeliest way of getting one.

Credit line increases might also be given based on the company’s financial condition or on the country’s macroeconomic situation.

Q: “You lowered my credit limit (or cancelled my account) because I defaulted on another company’s credit card. Is this legal?”

Yes. This is what we call “universal default”. If you manage your credit card account poorly elsewhere, we might question if we can continue our relationship with you.

Bear in mind, when we opened your account, it’s based on your credit worthiness at the time. If that worthiness decreases significantly, that means you risk no longer qualifying for our card in the first place.

Q: “If I’m on the phone and don’t like your credit decision, would escalating to a manager make a difference?”

Probably not. Like I mentioned earlier, the amount of subjectivity in the underwriting process is low.

But it doesn’t hurt to escalate if you have time.

If you’re on the phone with us and escalate, we’ll tell you a manager is unavailable and you’ll be placed in a log for a manager call back. That’s a lie. There’s almost certainly one there and that manager can take the call immediately if he/she wanted to. But we use the call log to deter you from escalating.

Still, we will absolutely call you back.

Q: “Will putting my son as an authorized user on my card boost his chances of getting an account with you?”

No. There are lots of credit counselling advice that says listing your young son as an authorized user will help him establish credit. Since I don’t work for FICO, I don’t know if this improves his FICO score.

But like I mentioned earlier, we don’t lend based on FICO scores.

Let’s say Person A has an account and puts Person B as an authorized user. This doesn’t make it likelier for Person B to get his own account with us. Person B has no legal responsibility for paying Person A’s account and therefore, we don’t deem that information relevant.

Q: “I’ve had late payments and cannot paydown my balances. How can I game the system and still get approved?”

I don’t see a way to do it. The vast majority of the time, the credit report is the only tool used to make a decision and most of it is done by software.

I would contact your lenders to see if they can remove some of your lates. I’d also ask family members for a loan to pay down some of your balances. Lastly, check if there’s anything on your credit report that can be disputed.

Q: “You decreased my credit limit and it screwed up my FICO. Can you reverse that decision?”

Unfortunately, we cannot. Credit card accounts are an unsecured loan and the bank has full discretion on the amount to lend or whether to lend at all.

Q: “If I have a bunch of unused credit cards, do you prefer to see them closed?”

From an underwriting standpoint, there’s no reason to close unused accounts especially if you’ve had them for a long time. We like to see accounts with long tenure.

There is a risk that a bank can close an account due to non-usage. So it might be worth using an unused card from time to time.

Q: “I love to open a credit card account just for the opening benefits. Then I close them. Does this hurt the chances you’ll approve me in the future?”

We call this card churning. This isn’t a good idea because you’ll be racking up hard inquiries on your credit report. Like I mentioned earlier, we also prefer to see accounts with long tenure.

Q: “How can you see my bankruptcy since it’s been over seven years. You aren’t allowed to consider it because it should have dropped off.”

For some reason, old bankruptcies can still appear on a credit report. You’ll need to take it up with the credit bureaus. (Chapter 7 bankruptcies stay for 10 years). 

Even if a bankruptcy is over seven years ago, if we see it, it’ll be considered.

Q: “What if your analyst doesn’t like me personally and declined my application?”

As mentioned earlier, very few of our decisions contain any real subjectivity and the majority are done by software.

But in rare cases where it’s a manual process and your credit history falls in a gray zone, it’s surely possible that an analyst who got offended might decline you.

That’s why I suggest treating your call as if you’re applying for a job and be as professional as possible. Sorry, there’s just no way to remove the human element.

Our work performance is evaluated by the company based on three criteria: how fast we work an application, how politely we speak on the phone and how accurately we make underwriting decisions. Because calls are randomly pulled for evaluation, it’s unlikely the analyst will be rude just to spite you.