# Self employed, declined for CC due to low NOA numbers



## YYC (Nov 12, 2012)

Hi guys, I had recently paid off my two existing credit cards. My wife and I decided we'd like to cancel them and go with a no fee card, and we settled on the Scotia Scene Visa. So I did an application. When I told them I was self employed, they asked for my last two NOAs and a copy of my corporate registration. I sent it in, and I was declined due to poor income/expense ratio. My NOA only shows about $40k in salary & dividends due to being self employed, but I grossed well over $150k last year. Anyone have any suggestions? Should I go back and fight with them? Or maybe try to get them to include my wife's NOA as well? She shows roughly the same amount of income too. I really want this credit card for regular use, but I'm also pissed at Scotia for being such idiots.


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## YYC (Nov 12, 2012)

I think you missed the point. I already have a credit card, but I want to cancel it and get this other card. My question was around suggestions on how to achieve that. Thanks.


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## marina628 (Dec 14, 2010)

standard practice for self employed people is to provide two years noa and the banks average out the two .Gross has nothing to do with it ,you can only use the income you declare on your personal income tax. So you now know you need to apply as joint with your wife so maybe they can modify the application at the branch for you. Closing the credit cards will drop your fico ,the proper thing to do is pay them off and ask the bank to drop the limits down to $1000 then forget about them.


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## james4beach (Nov 15, 2012)

I'm surprised they actually told you why they declined the application.

Do you absolutely just want this particular CC or could you do with another? Different companies have different acceptance policies, so maybe just apply elsewhere. Also I have seen strange things happen with CC applications. For instance, PC Mastercard (which I've had for many years in good standing with zero missed payments) refuses to increase my credit limit. Whereas my friend who applied with them, herself unemployed and far more debt than I have, was approved and given a much higher credit limit than me.


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## marina628 (Dec 14, 2010)

not sure if this is true but a friend of mine told me the easiest way to get a credit limit is to pay the card off in full and stop using it for 6 months then call them up and pretend you want to make a big purchase and ask them for an increase. Since they are not making any money from you anyway they usually will do it.


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## MoreMiles (Apr 20, 2011)

Technically, a corporation asset is not your money. You may have other shareholders and business loans. Maybe a reference letter from your corporation business account bank manager may help?


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## HaroldCrump (Jun 10, 2009)

james4beach said:


> For instance, PC Mastercard (which I've had for many years in good standing with zero missed payments) refuses to increase my credit limit. Whereas my friend who applied with them, herself unemployed and far more debt than I have, was approved and given a much higher credit limit than me.


That seems logical, from the credit card company's perspective.
They are not making any money off you.
They have no incentive to give you more credit (other than the merchant fees they collect from retailers)
On the other hand, they must be making lots of money off your friend.

They don't want to give more credit to people that manage credit well - they want to give more credit to those that are perpetually in debt.


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## marina628 (Dec 14, 2010)

High usage also makes the card money from merchant fees ,I use to have a smaller limit on my cibc visa and I would have to pay it off every week to use it the following week, sometimes even having a credit on it (to get my aeroplan points lol) Finally after 3 years of this they tripled my limit for me.


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## YYC (Nov 12, 2012)

I called and spoke to them again yesterday, they said even with my wife's income of ~$40k (so, $80k between the two of us) we still wouldn't qualify. Not sure what their standards are, but it seems pretty rigorous for a free card. To answer another question, we had wanted this card specifically, just because we wanted a free card, but with some points or something. Scene points for free movies would work well for us, rather than say airmiles or something where it takes years to accumulate enough points to do anything. We could probably get a free night out at the movies every month or two just from regular usage. We'll have to decide if we want to go through the process with another company or if we just want to stick with what we have. Thanks for the responses.


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## w0nger (Mar 15, 2010)

if your corporation makes good money, get a corporate card.


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## MoreMiles (Apr 20, 2011)

w0nger said:


> if your corporation makes good money, get a corporate card.


It won't help. You are supposed to only charge business-related expenses on a corporate card. So you cannot use it for personal groceries or movies.... it's hard to argue that those things are needed to operate your business, unless you are in a movie or restaurant business.


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## w0nger (Mar 15, 2010)

you could write it off as miscellaneous expenses on your accounting and then "loan" the money from the corporation to the individual. Seems like more hassle than it's worth tho...


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## YYC (Nov 12, 2012)

w0nger said:


> if your corporation makes good money, get a corporate card.


I have one. Prefer to keep the expenses separate as much as possible.


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## MRT (Apr 8, 2013)

If the issuer is only asking for NOAs, they are failing to adequately adjudicate your application, perhaps due to inflexible/tight guidelines...or perhaps because they don't really care.

For self-employed clients who setup as a corporation, they could also be looking at your most recent 2 or 3 years of corporate financial statements to determine the health of the company and establish positive trends, instead of only considering NOA net income. Every case is unique, but it isn't rocket science to delve a little deeper and gain a clearer idea of your overall financial position. This is commonly done in the mortgage industry, but credit card issuers may not care to do so, I suppose.


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## YYC (Nov 12, 2012)

MRT said:


> ...or perhaps because they don't really care.



Yep, I certainly got this impression from the reps on the phone. In fact one them actually told me "as a self employed person, you have lots of benefits such as writeoffs and other things, so it wouldn't be right for you to benefit on both sides of the equation" (I just about went through the phone when she said that. Credit card companies are the arbiters of what is right & wrong now? Riiiight.....). Anyway not the end of the world to be declined, but I will vote with my wallet and Scotiabank will never see a nickle from me again given the snarky attitude I received from everyone I talked to during the process.


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## MRT (Apr 8, 2013)

*sigh*

the rep's is an all-too-common snide opinion, that because you are self-employed, you ought not to 'benefit on both sides'. It is ridiculous, of course, as it is not you who writes the tax code, but it is still disheartening to hear employees of lenders/issuers making such ignorant, ill-informed remarks. misplaced jealousy, perhaps? 

sure, there are a lot of self-employed persons who game the system (I've seen plenty) to varying degrees, just as there are plenty of traditionally-employed persons who work cash jobs or receive tips and don't declare them, who participate in shady charity schemes (donate $100, get a $500 receipt), or even outright lie on their tax returns and just hope they don't get caught. The faulty logic is to paint everyone as doing something 'wrong' when the real issue is lenders/issuers CHOOSING not to deal with outside-the-box situations. 

In any case, voting with your wallet is indeed about the best thing you can do. I would take the time to write to someone who isn't a monkey on the other end of the phone, to briefly describe your situation and how your business is going elsewhere. Believe it or not, eventually someone up the chain will care (but I wouldn't fault you for not bothering lol)


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## marina628 (Dec 14, 2010)

About 6-7 years ago when I got my TD Business Visa Card ,I asked for a $15,000 credit limit and at that time my business had $90,000+ in cash with average deposits $60,000 a month.I still had to do the personal guarantee for my business , I found CIBC to be easier as I applied online but even though it is CIBC Business visa in my Business name this card shows on my personal credit bureau.


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## YYC (Nov 12, 2012)

I'm thinking about dealing with CIBC for a new card, since that's where we have our business account and business visa. I can go into the branch where I actually have a relationship with them and I assume they'll be more flexible. We had decided on a no-fee card, but our business card is aeroplan, so I'm thinking now about just going big instead and going for this one, as we might as well focus on one type of points for best return:

https://www.cibc.com/ca/credit-card...t_id=IntCC-Travel-AventuraWorld-E#aventuraWMC

The Aventura points can be converted 1:1 to Aeroplan, and it has better travel coverage along with trip cancellation insurance than the CIBC Aeroplan card


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## OhGreatGuru (May 24, 2009)

YYC said:


> Hi guys, I had recently paid off my two existing credit cards. ....


I looked on Scotia Bank's site and there is nothing to suggest this particular card is aimed at high net worth people - quite the opposite. Frankly, I suspect it's not your NOA that's the problem, but your credit rating, only they don't want to tell you that for some peculiar reason. Had you been in the habit of carrying balances on your cards?


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## MRT (Apr 8, 2013)

Credit rating is not negatively impacted by either paying off all cards or by carrying balances, unless those balances are very close to, or exceeding, the credit limit (in which case it is only a temporary hit). 

OP can easily verify their credit rating by pulling a copy of their report though.


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## OptsyEagle (Nov 29, 2009)

Have you suggested that you will be cancelling the other cards, once approved for the new one. Perhaps they take your income and review it against the payments required if all your available credit was utilized (actually I am sure they do this) and that is where you encounter a problem.


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## YYC (Nov 12, 2012)

I pulled my credit the other day, because I was curious if that was the issue. My 'score' is over 700. However, I did discover that the corporate card, which has a much higher limit, along with a balance, is showing up on my personal credit report. So, I suspect it's likely to do with their calculations around minimum payments combined with their assumption that I only make $40k a year. Anyway, I cancelled one of my personal cards the other day, and we'll just stand pat with the other one, which we've had the longest. Focus now will be on paying off the corporate card and continuing to reduce overall debt load, as described in my money diary.  Thanks all for the input.


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