Bank of America & Barclays Tighten Up On Business Credit Card Applications
Recent data is building a bigger picture that banks are tightening up on business credit card applications. Approvals are much less automatic these days. Given the economic downturn many are facing and uncertainty banks are facing, they’re not so willing to give out credit. Here are 2 experiences my wife had this past week that help build the picture of what’s happening with banks regarding business credit card applications.
Quick Summary of Where We Stand
In April, we reported that Chase tightened up on business credit card applications. Most of this is related to sole proprietor businesses, however. Additionally, many of those who were rejected also had no deposit accounts with Chase (savings, checking, CDs, etc.), so Chase seemed wary of extending credit to people with nothing the bank could grab onto for repayment.
We assumed that, given uncertain economic situations, other banks would extend less credit going forward. Shawn even had his credit limits cut by Chase last week. Banks also close unused cards to avoid risks, and right now is a prime time for this to happen. All of this points to a picture of banks taking less risks right now.
My Wife’s Business Credit Card Applications
Last month, my wife applied for 2 business credit cards:
- Barclays Hawaiian Airlines Business Mastercard
- Bank of America Alaska Airlines Business Credit Card
My wife is no stranger to either of these banks. We thought she was a shoe-in for both cards.
Preparing For the Applications
Given that we knew Barclays and Bank of America have specific guidelines, we made sure my wife was within their application rules. We worked to avoid new inquiries and new personal accounts on her credit report for several months. Here is my wife’s credit picture before the applications:
- 4 new credit cards in the last 12 months
- 4 credit inquiries in the last 12 months
- 780 credit score
- Applied using the information from our reselling business, which has all necessary tax documents to prove it exists
My wife was within the Barclays and Bank of America application rules. She also had the Barclays AAdvantage Aviator Red Mastercard in the past. She currently has a Bank of America checking account with several hundred dollars in it.
Rejected For Both Cards
My wife was rejected for both cards. That in itself was a bit surprising, but the reasons in the rejection letters we received in the mail are the real surprise. Both of them contained 1 simple line as the rejection reason.
- Barclays rejection reason: too many recent applications
- Bank of America rejection reason: “current economic risk related to your industry”
The Barclays rejection surprised us given the fact they normally accept 5 inquiries or will re-evaluate during a reconsideration call. They gave us a hard ‘no’ during that phone call and had no interest in discussion.
Bank of America’s reason is honestly something I’ve never seen before. The economic uncertainty at this time makes them wary of a reselling business. We are gathering documents to show that we are making a profit right now and putting more money in her BofA checking account before calling in. I’m 50/50 on my optimism here.
As more data rolls in, the picture is getting bigger and clearer. Banks are wary about who will be able to repay right now. They’re less willing to extend credit, both on personal cards and on business credit card applications. Barclays is tolerating fewer inquiries on credit reports. Bank of America appears suspicious of retail-based industries with no physical presence to use as collateral.
If you’ve been denied on a business credit card application recently, let us know if the rejection points to anything new. New reasons? Lower tolerance than previous rules showed us? Any data that helps build a bigger picture can help.