Five reasons you might still get denied even if you have perfect credit

Not sure if you are using your credit cards the right way? MagnifyMoney offers you some tips on how to change your credit strategy.  MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.

Just because you have an 800 credit score doesn’t mean your credit card application or loan will be approved by your bank. Your credit score is important, but it is just one indicator in a bank’s lending decision.

Here are five reasons why having the perfect credit score isn’t as important as you think. 

No. 1:  There are hundreds of generic credit scores out there.

More importantly, most banks create their own custom scoring models. While you might have an 800 VantageScore (viewed on Credit Karma), your lender might be using their own model — one that places a much bigger emphasis on different variables. Banks build their models using proprietary data, and they don’t share those models publicly.

No. 2:  Banks create rules that override credit scores.

You might have a very high credit score but a short credit history. Some banks might only want to deal with someone who has at least three years of credit history, regardless of their score.

Additionally, sometimes rules are used to block “gamers” who go from one lucrative sign-on bonus to another. Credit card companies regularly reject people who have high scores but a history of opening credit cards, getting sign-on bonuses and then moving on to the next card.

No. 3:  Credit scores don’t know if you have a job or how much money you make.

Scores like FICO use credit bureau information, which includes items like your payment and balance history. Credit bureaus do not capture your income or employment status. If you have too much debt relative to your income, you could be declined.

No. 4:  You might have other financial skeletons in the closet.

It is possible to have an excellent score even if you filed bankruptcy in the past. For example, you could have filed six years ago and have behaved perfectly ever since.

However, some lenders might still have a rule that prohibits anyone with a bankruptcy on their record from being approved, regardless of their score.

No. 5:  Your score can be different depending on which credit bureau the bank uses.

Banks calculate credit scores based on information they pull from one of the three major credit bureaus (Experian, Transunion and Equifax). Bad or incorrect information might only appear on one of those reports.

And if the bank uses that report to determine your credit history, you score could appear to be much lower than it is. As consumers, we need to be vigilant and keep an eye on all three reports.

If you spot any errors, report them immediately and ask that they are removed. You can get all three reports for free once per year at

MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.


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