r/CRedit • u/BrutalBodyShots • Aug 27 '24
General Credit Myth #29 - Approval odds for credit cards online are accurate.
I see people all the time that are mislead by "approval odds" for credit cards from marketing sites. Credit Karma is no doubt the ringleader, but there are plenty of others as well. Sometimes actual "approval odds" are provided, where other times cards are touted as "recommended just for you" or "our top pick for you" which is suggestive that it aligns well with your profile. After all, most of these sites like Credit Karma, WalletHub, Experian, Credit Sesame, Credit.com etc. have your report data, so certainly they must be pointing you in the right direction, no? They must have your best interest in mind, right? Wrong - they are simply out for financial gain.
Remember that it's all marketing. They want you to click on the links and apply so that they get a financial kick back. Please ignore these approval odds and suggestions; resist the manipulation! Look no further than Credit Karma's reviews where there are literally thousands of people (for all credit cards) that say things like "Thanks a lot for the wasted hard inquiry" or "I had excellent approval odds and was denied" and so on. Most people do eventually see through the BS, but I'm afraid that many, especially those new to credit don't understand that CC approval odds don't have to be accurate.
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u/nixsurfingtangerine Aug 27 '24
Experian is better than the Credit Karma site.
CK tells me good approval odds for banks I'm on the burn list for and low odds for cards I already have.
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u/BrutalBodyShots Aug 27 '24
Experian is better than the Credit Karma site.
Perhaps "better" but it still doesn't mean that they should be taken as gospel, regardless of the source. Heck, even a pre approval straight from a CCC can't be 100% accurate, although that's about the best one can do and put the most trust in.
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u/nixsurfingtangerine Aug 27 '24 edited Aug 27 '24
I would not apply for something on Experian unless it says "Matched for you" or "pre-approved", or "apply with no hit to your credit score".
Generally speaking, matched for you and pre-approved means you'll get the card.
Credit Karma is awful because it lies when their lips are moving, because they want to throw you all off the cliff like lemmings. If half of you get the card and half just get a hard pull and a decline, CK makes more money because it lied. Say 20% of those people wouldn't have applied if CK didn't inflate their chances of approval. That means that there are a bunch more who got the card and CK got their commission.
Use the bank's pre-approval. Not CK.
I think CK even settled a lawsuit about this, but from what I hear nothing much has changed. It's just too profitable. Even if they got sued again, they'd probably just settle it again. There's a lot of money being a credit card influencer, which is why there's so many on YouTube, backed by the card companies, giving you wink wink hint hint advice about how to fudge your application. (Which you shouldn't do.)
The banks usually don't care about people inflating their income and stuff. They'll issue a card, and then if it ever goes into arrears they have something they can object with at the bankruptcy. Thank God I never lied to a bank.
People who follow these YouTube people shouldn't be surprised if their debt survives a bankruptcy and they get turned over to a prosecutor.
That application you handed the bank, the contract for your card. They never get rid of that. It's on file in case they ever sell the debt or end up on the opposite side of a courtroom or want to object to a discharge.
Don't listen to Influencers. It's dumb.
Same advice when you ask for a credit increase. About the only place you may get away with it is if the bank asks something like "How much do you plan to spend if we give it to you?" Well, maybe you planned to spend that much and it just never happened. Pay attention to what the question was.
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u/Basic_Ad_769 Aug 27 '24
So here's one for you (esp any of you from MA. Do you see this?). On CK, I see 100 offers. On Exp, I see: "Your state does not allow us to show CC reccs.". Obv someone needs a lawyer. I haven't looked up credit laws in the commonwealth yet, but since I realized the discrepancy, it's been in the back of my mind to do so.....
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u/nixsurfingtangerine Aug 27 '24
Report CK to your State AG's office and see if they open an investigation.
That would be hilarious if they go f*** with Intuit.
Evil Corp. Lots of layoffs, "AI" nonsense", charges more for TurboTax every flipping year it seems, lots of people complain that CK inflates credit card odds to get more commission.
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u/Molanghrian Aug 27 '24
Credit Karma is probably the most obviously guilty of this. Language like "from our partners" etc. should be alarm bells if you see these. Look for the fine print or small cover-their-ass advertising disclosure.
CK got into legal trouble about exactly this and settled a lawsuit for $3M with the FTC. https://www.ftc.gov/enforcement/refunds/credit-karma-settlement Their disclosure is more prominent now, on the page, but most people glaze over clicking on it or legal language anyway.
It's not that there can't be decent card suggestions on there. It's that it gives a wildly false sense of approval odds, and it's dependent on who is paying them to advertise their cards - eg Amex Gold's for everyone and Credit One preying on people that assume it's Cap One.
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u/BrutalBodyShots Aug 27 '24
Yup, good post. Credit Karma being the most guilty of it only magnifies the problem since the majority of people seem to use CK, so their manipulation is wide spread.
Their exact quote is "Personalized offers shown from paid partners are based on your credit profile and Approval Odds." Approval Odds capitalized - sounds official! Certainly misleading.
Good call on the Amex Gold. That one has been the first pop up for me ("excellent" Approval Odds) for a long time now so clearly they are taking care of CK for pushing it so hard.
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u/Molanghrian Aug 27 '24
CK and the Vantage score stuff would be funnier to me, if it didn't plainly rely on people being misinformed in order to hock financial ads at them
I'm a fairly unique case I think, but currently my VS3 TU is 627... but my FICO TU is 736
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u/BrutalBodyShots Aug 27 '24
That's definitely less common, but not unheard of. That TU Fico score, is it 8 like you'd get from a Discover or BoA account?
Credit Karma definitely preys on ignorance, which is unfortunate. I'm not sure if you ever read this thread, but I went through a breakdown of much of CK's manipulation here:
https://old.reddit.com/r/CRedit/comments/1d98t6i/credit_karma_101_the_good_and_the_bad/
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u/Molanghrian Aug 27 '24
Yep, Discover but also confirmed from a recent free trial from Experian (since cancelled of course)
I've read most of your myth & 101 posts when I was getting into understanding all this better, including the CK one for sure. It's amazing how much of an uphill battle it is with misinfo even in the credit subs.
Tangentially related, and something I can't find much if any info about though - why have the bureaus helped make the Vantage model anyway? To complete with Fair Isaac Corp I guess? And if so, seems like they've been not very successful overall at adoption, and/or it's slow going.
Trying to google any real info about this so far has been useless, it's full of 'articles' explaining the difference between the models (mostly poorly).
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u/BrutalBodyShots Aug 27 '24
Good question. Competition sounds right, and even at a lesser cost like you said it still hasn't gained much adoption. I don't really know much more about the details here, where perhaps u/og-aliensfan may be able to contribute more.
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u/og-aliensfan Aug 27 '24
Definitely about the competition...and money.
"In 2006, the 3 major credit bureaus – Experian, TransUnion, and Equifax – joined forces to create a VantageScores® credit scoring model to compete with FICO Score."
"VantageScore was created to introduce much-needed competition into the credit scoring market, according to Jeff Richardson, senior vice president of marketing and communications at VantageScore Solutions and host of podcast The Score. “Founded by Experian, Equifax, and TransUnion in 2006, our mission is to use data analytics to drive innovation and inclusion—giving consumers more credit access, and helping lenders make better lending decisions,” he says"
https://fortune.com/recommends/credit-cards/fico-vs-vantagescore/
Edited to tag u/Molanghrian
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u/Gamer30168 Aug 27 '24 edited Aug 27 '24
Speaking of "approval odds" I got a couple of pre approval mailers last year from Discover and Wells Fargo. Both turned me down and cited something like insufficient credit history.
One year later I now have ~ 20 months of positive credit history spread out over 3 revolvers and 1 installment loan (paid off). Both Discover and Capitol One's pre approval tools on their respective websites are telling me I qualify for decent cards with rewards. I've been afraid to pull the trigger due to last year's incidents. I don't want to eat hard inquiries for nothing.
What are your feelings about the accuracy of online approval tools OP?
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u/BrutalBodyShots Aug 27 '24
I think they're pretty reliable overall. The best way to know though is to compare your profile to the profile of others (ideally similar) and see their results. Are you sure the mailers you got were pre approvals? Often mailers are just "invited to apply" or "pre selected" and not actual pre approvals.
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u/Gamer30168 Aug 27 '24
You're probably right and I might be conflating "pre approval" with mere invitations.
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u/BrutalBodyShots Aug 27 '24
That could definitely be the case. Marketing can definitely trick you at some times. I get far more pre selected to apply offers in the mail than actual pre approvals. It varies from person to person though.
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u/PisceanEnigma Aug 27 '24
Follow the money. It's all paid advertising.
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u/BrutalBodyShots Aug 27 '24
Right on. Unfortunately most people looking at approval odds do not understand that, so it's important to get the word out.
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u/nathanielx9 Aug 27 '24
I got approved for a loan on CK. If it says or you get 50 bucks, i think its newly instant approval. Now i dont have a high CC, so I cant say for those higher tier cards or with others income to debt ratio
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u/nixsurfingtangerine Aug 27 '24
I've heard people that got denied and had a hard time getting the $50.
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u/Substantial-Agent611 Aug 27 '24
I'm a little off in the head but 30% interest rates?? I'm not that off.
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u/Clockwatchthrowaway Aug 29 '24
This is absolutely true. My credit score is solid, but CK said I could get all kinds of fancy cards I am not qualified for. I got tempted and immediately denied, so now I have to wait a while before I can apply for a card I’m actually qualified for due to the extra hard inquiry.
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u/DoctorOctoroc Aug 27 '24
I've always suspected that their recommendations (CK in particular) are based on solely your score and if you have any existing cards a 'tier under' those that they push, specifically. Thinking like a marketing person (and I did do PPC, SEO and SMO professionally for a number of years), whatever determination leads to the highest click-through rate and/or conversion would be most profitable for them, therefore if they see someone with a Chase Freedom Rise card, for example, they'll be more likely to recommend the Chase Freedom Unlimited and a year after that, that same user will see the Sapphire Preferred showing up at the top of that list.
In other words, they literally just show you the 'next best thing' when possible, or otherwise show you everything that your score can loosely 'qualify' you for without any consideration for the content of your profile beyond that.