Personal Finance

Applying for a line of credit

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  • Jul 18th, 2009 2:39 pm
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Deal Expert
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Mar 18, 2005
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Niagara Falls

Applying for a line of credit

So my fiancee just applied for a loc online via PCF and was denied. No reason given but I thnk they have to mail you the reason right?

Anways, she makes $26 000 a year, has $6000 in the bank and is on the mortgage with me.

Our mortgage is at 121 000.

She doesn't pay the mortgage, her only bill is giving me $300 a pay cheque and I take care of all the expenses.

She applied for a $15 000 LOC, we are getting married and that is what we were setting our budget at.

Was that too much of a LOC to try and get with her yearly salary?
Does the online PCF LOC application do a hard hit against her credit?
15 replies
Deal Addict
Jun 12, 2008
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Ripley
Yikes - would you like me to spare you the lecture on going into debt just to have a fancy wedding? With a little imagination you can do it for under $5000 and just use her savings. Make it about the union and not the party. Save the LOC to pay for your marriage counselling.

I think she tried for too much. Her total debt load would have to be below 40% of her income. I don't know if that is a hard hit. If she has great credit it shouldn't matter. PCF is very hard to get money from.
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Mar 18, 2005
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zeddy wrote: Yikes - would you like me to spare you the lecture on going into debt just to have a fancy wedding? With a little imagination you can do it for under $5000 and just use her savings. Make it about the union and not the party. Save the LOC to pay for your marriage counselling.

I think she tried for too much. Her total debt load would have to be below 40% of her income. I don't know if that is a hard hit. If she has great credit it shouldn't matter. PCF is very hard to get money from.
I was well aware that I was going to get a lecture talking about LOC on this thread. Such is life.

I would love to spend less than 5K but that just isn't going to happen. The reception alone will be a little over that mark.

Her debt load is far below 40%. Like I said her only monthly payment is the $300 per paycheque that she gives me. The rest she saves up. She has no student loan, no car payments, no insurance payments nothing. I guess we'll have to go down to a real bank, I just thought it would be easier to do it through PCF since that is who we bank with. Hopefully it wasn't a hard hit against her credit.

I really don't remember reading anything about it indicated a hard hit but I wasn't the one filling out the form either.

These appear to be the terms
what to expect:
the application will only take a few minutes to complete
your account will take at least 5 business days to process, providing that all required documentation is submitted immediately
you will be required to provide your consent to let us obtain your credit report information so that your application can be assessed. If you do not want to provide your consent, we cannot proceed with an online application for this product, but you can apply for a savings account or apply for a GIC account instead
at the end of this application you will be asked to accept the terms of service.
at the end of this application you will be presented with:
so it does look like a hard hit is initatied, but it also says at least 5 business days and she was denyed on the spot within seconds....
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Mar 18, 2005
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As far as debt load goes, are you saying that her total debt can be 10400?

26000*.40, or is it the sum of what her payments would be for the year?
Deal Fanatic
Aug 27, 2004
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FYI, PCF is known to be very stingy when it comes to LOCs...
Sr. Member
Apr 11, 2003
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Edmonton
Evil Baby wrote: Anways, she makes $26 000 a year, has $6000 in the bank and is on the mortgage with me.

Our mortgage is at 121 000.

She doesn't pay the mortgage, her only bill is giving me $300 a pay cheque and I take care of all the expenses.
If she's "on the mortgage with you", then regardless of how you folks take care of that bill in house, the bank counts it against her TDSR. If you were to get hit by a bus, they want to know she could still make that payment, right?

Also, if she has no other bills - I'd wager she doesn't have much in the way of credit. It's certainly possible that's not true, but if it is, then that will affect her credit score.

Assuming that 121,000 mortgage is 25 years and 5%, that's about $700/month. I'm guessing they'd factor in heat/taxes/etc into that, so let's say it's $850/month.

40% of $26,000 / 12 (2166) is about $866/month. That means if they are using the mortgage and expenses against her TDSR, she's maxxed out pretty much.
Member
Jul 3, 2008
265 posts
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Calgary, AB
Do you have any equity in your home? Is she applying for an unsecured LOC?

Why not try doing it jointly? Do you work?


Even the big banks are stingy with giving out unsecured loans/loc's right now.


My bank, that I've been with for over 20 years turned me down for a $10,000 LOC, then tried for a $10,000 loan and got rejected for that as well (both unsecured). My fiancee and I were both on the application, and have a combined gross income of $98,000. We each have credit scores over 750. She has little to no expenses (lives at home with her parents, and I live with them, rent free with only my car payment and a small personal loan to worry about).

But they did approve us for a $300K mortgage.
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Mar 18, 2005
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netwise wrote: If she's "on the mortgage with you", then regardless of how you folks take care of that bill in house, the bank counts it against her TDSR. If you were to get hit by a bus, they want to know she could still make that payment, right?

Also, if she has no other bills - I'd wager she doesn't have much in the way of credit. It's certainly possible that's not true, but if it is, then that will affect her credit score.

Assuming that 121,000 mortgage is 25 years and 5%, that's about $700/month. I'm guessing they'd factor in heat/taxes/etc into that, so let's say it's $850/month.

40% of $26,000 / 12 (2166) is about $866/month. That means if they are using the mortgage and expenses against her TDSR, she's maxxed out pretty much.
Yeah that's what I sort of thought. If we are both on the mortgage would they not take those payments and devided it by 2? I assume no to that as well. We are covered by insurance incase I get hit by a bus, and I was recently laid off for 6 months and we were able to keep up with our bills. They only thing she'd have on her credit score is 1 cc that gets paid off monthly but is not used very often and the house, unless OSAP also counts towards the credit score.
VivienM wrote: FYI, PCF is known to be very stingy when it comes to LOCs...
Sadly I was not aware of that before I attempted this. I will give them a call tomorrow and try to figure out if a hard credit hit was done on this application. If not we'll go talk to a real bank and see what options we realistically have.
Scotian Lotion wrote: Do you have any equity in your home? Is she applying for an unsecured LOC?

Why not try doing it jointly? Do you work?


Even the big banks are stingy with giving out unsecured loans/loc's right now.


My bank, that I've been with for over 20 years turned me down for a $10,000 LOC, then tried for a $10,000 loan and got rejected for that as well (both unsecured). My fiancee and I were both on the application, and have a combined gross income of $98,000. We each have credit scores over 750. She has little to no expenses (lives at home with her parents, and I live with them, rent free with only my car payment and a small personal loan to worry about).

But they did approve us for a $300K mortgage.
I do work but I've only been at my job for a little over a month so we were trying to avoid the hassle of that situation. I talked with one bank before we tried this last night and they told me I'd have to make it through probation first(makes sense) then get a letter stating it was a permament full time position(also makes sense).

Also we've only had our hous for just under 2 years so I doubt we've built up enough equity in it, especially since we live in the Niagara Region which is one the hardest hit areas for realistate in Canada.


As a side question, if a hard hit was done, how long should we wait before being concerned with it affecting her credit negatively?
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Sep 9, 2005
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Scotian Lotion wrote: Even the big banks are stingy with giving out unsecured loans/loc's right now.


My bank, that I've been with for over 20 years turned me down for a $10,000 LOC, then tried for a $10,000 loan and got rejected for that as well (both unsecured). My fiancee and I were both on the application, and have a combined gross income of $98,000. We each have credit scores over 750. She has little to no expenses (lives at home with her parents, and I live with them, rent free with only my car payment and a small personal loan to worry about).

But they did approve us for a $300K mortgage.
That is absolutely insane... and a little scary.

I'm in the process of looking for an unsecured LOC myself, and thought my only concern would be who would offer me the best rate, not that I'd actually get declined outright.

What did they give as the reason for declining you? I would assume it was due to the $300k mortgage you got approved for, else it is totally incomprehensible that they would turn down an application with the stats you listed.
Member
Jul 3, 2008
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Calgary, AB
Salinger wrote: That is absolutely insane... and a little scary.

I'm in the process of looking for an unsecured LOC myself, and thought my only concern would be who would offer me the best rate, not that I'd actually get declined outright.

What did they give as the reason for declining you? I would assume it was due to the $300k mortgage you got approved for, else it is totally incomprehensible that they would turn down an application with the stats you listed.
The notes returned with the rejection stated a negative net worth, no sizable assets and no long history of savings, other than RRSP's.

Since I wasn't consolidating any debt or securing it against an asset, they wouldn't budge. It had nothing to do with the mortgage approval, if anything, that should have helped us.

I think it's just the times. Even the personal banking specialists I was dealing with were 99% sure it would be a joke to get approved and were surprised we were rejected on both products.
Sr. Member
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Sep 9, 2005
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Wow, thanks for sharing that. Perhaps it's not the best time for me to be shopping for a LOC. :) I don't really need it, just thought it would be convenient to have "just in case". Perhaps better to wait 'till things improve.
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Nov 15, 2005
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So now is not the best time to get a LOC?

I'm also looking for a unsecured LOC. While shopping around, all the banks I spoke to (except RBC) said that getting a LOC is no problem and to just bring all the required info to go ahead with it. I hope they don't decline me afterwards.
Deal Addict
Nov 18, 2008
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wolverineTO wrote: So now is not the best time to get a LOC?

I'm also looking for a unsecured LOC. While shopping around, all the banks I spoke to (except RBC) said that getting a LOC is no problem and to just bring all the required info to go ahead with it. I hope they don't decline me afterwards.
YMMV.

I had zero trouble getting a LOC recently from PCF, but the interest rate was high and the limit was low. My parents were also able to get a high 5 digit LOC from a big bank quite recently. The banks are looking for stable income and possibly profession.

OP:

It was definitely a hard hit on her file. If the bank declined her, it means a credit check was done. If she doesn't have too many inquiries, it won't hurt too much (knocks a few points off). It is only when there is a massive amount of inquiries does it drag your score down temporarily, speaking from experience.
Newbie
Jul 29, 2008
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tng11 wrote: YMMV.

I had zero trouble getting a LOC recently from PCF, but the interest rate was high and the limit was low. My parents were also able to get a high 5 digit LOC from a big bank quite recently. The banks are looking for stable income and possibly profession.

OP:

It was definitely a hard hit on her file. If the bank declined her, it means a credit check was done. If she doesn't have too many inquiries, it won't hurt too much (knocks a few points off). It is only when there is a massive amount of inquiries does it drag your score down temporarily, speaking from experience.

The point made about ONE inquiry knocking off a few points is incorrect. If she has had no inquries in the last 12 months, other than the PCF inquiry, her score before the inquiry and after will remain the same.

That said, the bank you approach next, may want confirmation from PCF that you did not obtain any new products as a result of the inquiry.
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Sep 9, 2005
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wolverineTO wrote: So now is not the best time to get a LOC?

I'm also looking for a unsecured LOC. While shopping around, all the banks I spoke to (except RBC) said that getting a LOC is no problem and to just bring all the required info to go ahead with it. I hope they don't decline me afterwards.
Wolverine, I'd say go for it.

As I mentioned earlier in this thread, I was hesitant because I didn't want to get a hard credit hit only to be turned down. Since I just opened a chequing and savings with Citizens Bank (which incurred a hard hit anyway) I figured, I had nothing to lose since they use the credit bureau report they already have done.

I went to the Toronto boutique to speak with the rep who opened my accounts for me. She said it shouldn't be a problem. I filled out the form, but she said not to worry about the net worth section as they're mainly only concerned with that for large loans, like mortgages. She said she was certain there would be no problems and she'd let me know in a day or two.

By the time I got home barely 15 minutes later, she'd already sent me an email saying I was approved. I'd only applied for $5k, but she gave me $10. She said I could increase that limit if I wanted. The going rate is P + 5% but she is willing to offer me a better rate since I'm having my payroll direct deposited with Citizens. I'm going to call her next week to negotiate it. Also, she said once I have more history with them (I only joined 2 weeks ago) that they would reduce my rate further.

I just wanted to pass along this info, because like me, I've noticed a lot of people asking for info about LOC's lately. As well, there was a lot of discussion about how difficult applying for credit with Citizens was, and my experience was anything but. We spent more time chatting than actually going over the app. It was a wonderful experience and I have to say, the more I deal with Citizens, the more I love them as a FI.
Member
Apr 29, 2006
429 posts
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Toronto
PCF minimum income required for LOC is only $20K from one source. You're better off going into a pavilion to apply for it.

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