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 being and has student loan debt and a department store card with no balance. She has $6600 in savings. Due to her limited credit she looked-for a cosigner. As I really 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 being 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 small revolving debt. The WF loan officer–after reviewing my application confirmed it should be no conundrum 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.
But and much to both our surprise underwriting denied the loan and confirmed they would send a letter stating the reason why in 10 days–it really was more like 30. I expected the letter recently WITH MY NAME ON IT and it confirmed 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 being 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 significance to anyone??
I work in credit card underwriting. If she has a limited file with a delinquency it will weight more heavily as there are no additional "excellent" loans to outweigh that delinquency showing that she can pay on time. The letter should have clearly confirmed 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 increase as long as she can get your hands on 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 excellent 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 ancient 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 know the situation.
In simple English her credit score just wasn’t high enough, even with the co-signer. The amount of cash you have in their bank is beside the point…nor do they even have that info.
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It does make significance. The loan, although you cosigned, was going to be mainly her loan because she was considered the primary payer. Therefore, her score weighed more heavily compared to your score. Since her score is so low, WF denied the loan.
Sure, credit scores don’t always provide the complete picture of someone able to pay a bill, but this is how it is. Your cousin may be a excellent financial state right now, but according to her scores, she isn’t capable.
I’m guessing it’s because of student loans. But it could have been a upset she has not told with you.
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Have you been watching the news about banking and TARP? All the banks have tightened their credit standards due to massive losses. Wells Fargo has always been a tougher place to borrow than additional banks.
Check around and see if you can find another willing lender. Your cousin may need to dip into her savings for a greater down payment.
You could try to bargain with Wells to see if they will grant a loan using a higher down. But doubtless better to go to a different bank.
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I work in credit card underwriting. If she has a limited file with a delinquency it will weight more heavily as there are no additional "excellent" loans to outweigh that delinquency showing that she can pay on time. The letter should have clearly confirmed 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 increase as long as she can get your hands on 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 excellent 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 ancient 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 know the situation.
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Doesn’t have to, does it?
WF is not required to lend money. If they don’t want to lend to her (even with your brilliant score as a co-signer) then that is the final choice.
What their statistics show is that you are an brilliant customer whom they like to do business with. What they don’t want to see is this link turning sour when your cousin defaults and WF has to come after you for the payments.
They may have upset you now… but saved you from real financial distress in the future.
Wouldn’t you look out for your customers too?
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Wells Fargo is a real pain when it comes to consumer lending. I was a retail credit manager from 1967 to 1977 and would never deny a charge if they were late one time but if I wanted to deny it, the 30 day late payment can be used against her. Perhaps she can go to the bank where she has her checking account for the loan.
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Retired bill collector 35 being
From the perspective of the bank, yes; it’s for the very same reason you built-in the statement that you didn’t want any lectures about cosigning. Having worked on the servicing side in the loan industry, I have talked to more cosigners who regret having cosigned than I have those who don’t, and most either cannot or will not assume the remaining financial responsibility. Credit requirements have become more stringent, as you are certainly well aware; based on your first paragraph, your cousin doubtless has a solid score, but the bank is worried to take even a moderate risk. You, on the additional hand, are viewed as very stringent, organized, and calculating which is reflected in your near perfect score. They know they can only ding your score so much; they also know you know it. Should the borrower not be able to make her payments, they would pursue you. Experience has taught the banking industry that cosigners are often reluctant to pay. If they feel it may be worth it to you to sacrifice a small dip in your credit score to avoid having to pay the remaining balance of the loan, they would not approve you as a cosigner. With a long, blemish free history, even a complete default on a loan (or in this case a repossession) would leave you with an enviable score compared to the vast majority of people – which ends up really making you more of a risk in their eyes than someone with a score in the high 600’s or low 700’s who would be more motivated by the threat of dropping into a lower credit tier by a comperable hit.
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5 being in the loan industry