Trying to Understand Banks/Credit Cards/Loans

[alexandra108]

Hi,

This is my first time needing outside funding and I would appreciate some advice so I can learn about how banks work in general:

1. Last time I asked for a $45k credit line. My bank only issued $15k and refused to tell me why they wouldn't approve $45k. So a few days and weeks later I applied for two more credit cards from the same bank for $15k credit each with the same APR and terms...both approved, and now I have what I originally wanted: $45k credit line all form one bank, except that I had to apply for 3 credit cards instead of 1 to get that amount.

Question: Why did they turn down a $45k credit line when they were willing to issue multiple cards that would end up giving me the same amount anyway (same terms, same APRs)? How does that affect my FICO to have one $45k credit card versus three $15k credit cards?

2. Which is a better idea: Get a business loan and use part of it to pay a low salary to myself because I do need to live, or don't pay myself salary, and just take out a personal loan to pay all my living expenses until the business takes off? I would assume it depends on the interest rate. I seem to be getting 9.99 APR for most of my personal credit cards/loans. What kind of APR can I expect for a business loan/business credit card for a startup business? In general is it lower than personal loans/credit cards? (I don't know because I haven't applied)

[jasaunders]

To answer your second question:
In the former, if you pay yourself from the business, you owe income tax on your salary. In the latter, if you take out a personal loan, you don't have any income.
So in most cases, the second choice would be best, but could depend on a lot of other factors.

[alexandra108]

Wow, it's you again, thanks

[sjohnson2]

Hi,

This is my first time needing outside funding and I would appreciate some advice so I can learn about how banks work in general:

1. Last time I asked for a $45k credit line. My bank only issued $15k and refused to tell me why they wouldn't approve $45k. So a few days and weeks later I applied for two more credit cards from the same bank for $15k credit each with the same APR and terms...both approved, and now I have what I originally wanted: $45k credit line all form one bank, except that I had to apply for 3 credit cards instead of 1 to get that amount.

Question: Why did they turn down a $45k credit line when they were willing to issue multiple cards that would end up giving me the same amount anyway (same terms, same APRs)? How does that affect my FICO to have one $45k credit card versus three $15k credit cards?

I'm interested in whether you found out why you didn't receive approval on the $45k original application. I have noticed this as well, in my personal life, and have also never received explanation. I have checked my credit report & realize all lenders have slightly different criteria for lending ... but I have never gotten a real concrete answer.
Thanks.
Sam

[ZingerIntl]

When you cross the $30,000 dollar loan it put you in a different bracket. Trade-lines are hard to understand, but what I do understand is it takes less approvals and less work/ risk/papers to have 3 $15,000 visas than 1 $45,000 on their books. Plus in the small print it says if you go over or miss one payment by one day you are open to rate fluctuation. Well it is a better chance you will miss a payment if there are 3 cards than one. This is where they make most of their money. So dont worry about them, get what you need move on, stay on top of it and after a couple months call in 3 separate times and ask them to lower your int. rate to like 4.9%. And ask for an increase. If you are below 25% of your limit they will give you more trying to give you enough rope to hang yourself. and keep taking it. At 19 years old I was up to 75,000 in credit. I did make descent money but thats all semantics to them.

[mthomas]

Probably what happened was, the $45,000 seemed to be too high when compared to the rest of your tradelines (listing of other credit accounts) on your credit report. Therefore, the lending analysts were more comfortable funding $15,000 applications. Bank lending is frequently very routine and technical and generally viewed on an application by application basis. Therefore, since each application were in lower increments, it was probably easier for the loan analysts to fund. Not the most convenient for you, bit at least you got your credit.

To answer your second question, I would consider using a business line of credit instead of a personal. The reason being is that businesses need more credit, so having more lines of credit open with more frequent inquiries is more tolerable for a business "credit score" Having high balances and frequent inquiries for an individual has a much more negative effect on individual credit scores.

But of course, you should also keep the interest rate in mind when making this last decision.