Are you applying from outside America? Playing devil’s advocate, a college friend skipped paying a bunch of loans by emigrating outside the reach of collectors. It informs why creditors are wary about lending to international clients with whom they have no prior relationship. Hence the advice to work through your bank and financial advisor; they know you, and that relationship builds trust.
My working theory is that this case exists because they have no data to calculate and classify risk on you with.
No, when your credit history is non-existent, the free credit score sites will happily tell you it’s much higher than that (mine was reported as 720-740 when I lacked history), but you’ll still get auto-rejected for everything.
Interestingly, I emailed Arnold Kling, an economist writing about the subprime market at the time (2007) and he refused to believe that was happening, and insisted I must have some horrible default on my record. (I didn’t.)
A 500 credit score from a default is much better than having no history.
(I’m not the OP but was in a similar situation.)
Edit: ah, you’re the OP. Did you have that same issue, where sites would assure you you have a good credit score even as you keep getting rejected on any credit application?
[1] If they lean further on credit reports as a job applicant filter, that could turn into an even worse catch-22!
Have you ever defaulted on a debt or something similarly bad? If you haven't, have you checked your credit reports (from all 3) to make sure there isn't false/fraudulent info on there?
I decided to check my credit report, and noticed a default from like 5 years ago that had been sent to collections -- it was a paltry sum. Some years ago, I was in the US for a couple months for work, and got a monthly phone contract with a large mobile provider and paid for my device upfront. I EXPLICITLY chose electronic billing ONLY for the service, as I was based out of a hotel during the time.
So, when it was time to return to my country of residence, I went to the shop where I got the phone and service, and closed the account. All was well.
Fast forward 5 years, and it seems that the mobile provider had actually sent (via snail mail) a final bill to my hotel address. They didn't mention this to me when I closed the account IN PERSON. I had no idea this last bill even existed till I checked my credit report. So, since I had no other credit history -- this was the single line item on my credit report from all 3 reporting agencies.
I called the provider, pulled up my old contract (good thing I never delete emails), and proved to them that I had signed up for electronic bills only, thus they were in err. I paid the last bill, and they expunged it from my credit report. This all happened over a year ago. That negative item is no longer listed with any of the big 3.
So I don't know if this line item is still there but unlisted (I've checked my reports from all 3 in detail), and was told by them as well that the record is 100% gone, yet I still can't make any headway in loans or credit cards. The _only_ thing that makes sense is that I'm being flagged due to my physical address in the US -- high-crime, low-income inner city neighborhood.
Hmm, you may want to check if there are other public records with respect to this. That seems much more likely than redlining. (Also, credit card companies have been criticised both ways on this—for denying credit to such neighbourhoods as well as for flooding them with offers.)
It’s not, a lot of us have had credit cards and “bad” zip codes / addresses. You just don’t have verifiable W-2/1099 income.
Edit: The rejection note that I normally receive is: insufficient credit history.
To me it's a catch-22 situation. It always boggles my mind when I see 20 somethings with 10s of thousands of dollars in credit card and loan debt, while I can't even get in the door. Not saying I plan on having any debt, just that I would like the opportunity to receive a loan when I want it.