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The US Sun
You can still be denied a car loan even with a great credit score – the DTI rule is crucial to know for all drivers
By Mary Connelly,
23 hours ago
A HIGH credit score doesn’t guarantee drivers a car loan.
A car salesman with nearly 80,000 TikTok followers revealed the rule that can prevent drivers from receiving a loan .
TikToker and car salesman TJ Mitchell revealed why his customer with a strong credit score was denied a car loan from the bank TikTok/tjthecarplug The bank did not approve of the customer’s debt-to-income ratio (DTI) Getty Images - Getty
TikToker TJ Mitchell — who calls himself “your favorite car salesman” — took to the social media platform to reveal why those with a great credit score can still be denied a car loan from the bank .
He shared that his customer with a score of 700 was denied by the bank in a video that has garnered over 22,000 views.
“There are instances where not only bad credit, but good credit gets denied too,” Mitchell said.
He then shared that the customer’s issue involved DTI, which stands for debt -to-income ratio.
Mitchell explained that what the customer “had coming out — his debt — was way more than the money had had coming in, which was his income.”
He continued, “Therefore, the banks did not approve him for the car he was trying to pursue at the payment he was trying to pursue.”
Mitchell “suggested” that his customer choose a cheaper vehicle “that can fall in a good debt-to-income ratio where the banks would approve him.”
The TikToker continued, “So, just because you got a good credit score, the bank doesn’t always approve you.”
He then emphasized the importance of credit history, saying this “matters tremendously” and that “debt-to-income ratio is one of them.”
In the clip’s caption, Mitchell said that DTI “is another aspect of your credit history that banks take into consideration during the approval process.”
TIKTOK THOUGHTS
Other TikTok users took to the comments section to share their thoughts on Mitchell’s video.
“Like I always say it’s a big difference between making good money and having good money,” one wrote.
“They also looked at the variety of credit you have,” another informed.
A third user said that this credit rule also applies when purchasing a home .
What's a good credit score?
FICO, the most widely known credit scoring system, and its rival VantageScore both use a range of 300-850 points.
Below we list what’s considered a good and bad credit score, according to both systems.
FICO
Poor: 300-579
Fair: 580-669
Good: 670-739
Very good: 740-799
Exceptional: 800 or above
VantageScore
Very poor: 300-499
Poor: 500-600
Fair: 601-660
Good: 661-780
Excellent: 781-850
“So true and especially when you are buying a house!” they said.
“I see it every day,” another user wrote.
A fourth said they were in the same situation when they tried to get a bank loan for a car.
“Happened to me for this exact reason,” they shared.
A fifth commented, “I’ve never gotten denied for a car loan, think my DTI was high at one point.
“However, because of all R1, never late, paid off a couple of cars, etc. never asked for income.
“Every situation [is] different.”
Mitchell responded, “True every situation is.”
Other TikTok users shared their DTI experiences in the comments section of Mitchell’s video Getty Images - Getty
Anyone who even buys new vehicle today to pay extra thousands above the MSRP is out of their minds, I will keep what I have & my daughter's & always maintaining them I won't be a fool to give in to these con dealerships who are nothing short of much greed..
Point
7h ago
only rich or ignorant people taking on new car loans in 2024. Until prices come down, I will keep the oil changed, tires rotated and balanced in the paid little old used Honda. I refuse
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