Wild Bill3
Occasional Contributor

I understand why USAA does not formally offer financial services oriented towards members trying to build or rebuild credit.  Still, there must be a substantial number of members with credit issues who need to finance an auto sale, so some program or option would be of service to the membership. Or at least offer some venue for pre-approval dialogue with a USAA loan officer who can help me configure a loan application that would be approved by USAA.  I don't want to go through a cold/generic loan application with USAA, get denied and end up with a hard credit inquiry on my credit records just because I did not apply for a loan amount or specify a down payment or loan payment schedule that would maximize my chances of being approved.


Here is my scenario: I am an established professional in my 50's.  I have marginal (low 600's) credit due to a bad divorce, but it is rapidly improving.  I have never declared bankruptcy, have a fair number of credit accounts listed as closed but not written off, no collection accounts, etc.  No history of compliant loan payments because I have not had any form of secured loan (property, auto) for over ten years.  I do have substantial child support arrears but I have been paying my CS regularly, so that account shows current in payments.


I want to finance the purchase of a moderately-priced car as much to start building credit as to obtain a vehicle.  Luckily, despite my issues, I am a high-income guy, over $150K/year, and I have been saving.  For a $25,000 auto loan, I could easily put down a third of the purchase price as a down payment.  Heck, I am close to being able to just buy a car with cash at that price, and I could certainly find a marginal lender willing to finance an auto loan despite my credit issues.  But I want to consolidate all my financial services with USAA, and it actually makes sense for me to finance an auto purchase rather than buy a car outright in order to have the loan payments reported to the credit agencies.


Basically, I am building credit late in life, not repairing credit, which I admit is odd for someone my age with my professional background.  Surely I should be able to arrange such financing through USAA just by providing proof of my income, though, if an actual human loan officer would review my records and understand my unusual situation.


Hey @Wild Bill3, I appreciate you reaching out to us today. I can definitely appreciate what you are trying to do. For new auto loan applications we ask members to visit USAA.com/autoloan. If you prefer to speak with a representative directly you can reach us at 800-531-8722, I hope this is helpful. Thank you. -Emily

Bizarrely, my conditions for getting approved for an auto loan from SOMEONE based on the original scenario have significantly improved, but I am STILL getting no love from USAA!  


--After being approved for a USAA secured credit card, my TransUnion and Equifax scores shot up to 738!  Heck, if I knew that doing so would have had such a dramatic affect, I would have secured CC account with triple the deposit.  A score of 738, given my provable income and modest amount I want to borrow, should definitely qualify me for an auto loan with most lenders.  After all, my credit issues now are basically a lack of credit history, despite being middle-aged, not bad credit history.


(Don't go for decades buying cars and housed for cash!  Now I know.)


--Experian still has me scored a 600, however, due to a county services bill for seven hundred bucks from two years ago that popped up out of the blue on my Experian report recently.  I paid it (despite probably not being responsible for it), uploaded the proof to Experian, disputed the record...and it came back as confirmed, because the county has not updated the account info with Experian.  They do that monthly, so the county's account officer explained.  Of course they do.  They're a government bureaucracy, so naturally they are glacial about everything.  I'll be retirement age before the county actually reports the not-really-a-debt as paid.


--But that should not really matter since Experian has the payment proof in hand.  Of course not, because they're Experian, they're a lawsuit-proof financial institution who does everything by automation and just doesn't have to care.  They will continue to show the collection account (which should not even be a collection account since the county never billed me!) as unpaid until their records are updated by the county, never mind what proof they have in hand from me.  I could send them a blood-witnessed affidavit from the Pope attesting that the debt was forgiven and they would still be reporting it as in collection.


--Ah, but ultimately, this whole snafu should not really matter, because I'm a long-time USAA member trying to get a modest auto loan with a financial cooperative renowned for offering personalized services.  Right?  I can just explain this all to the loan officer.  Cue my call to a USAA auto loan specialist.


[Long explanation of the situation from me redacted.]

"Yeah, you're still gonna get turned down because we use Experian."

"But Equifax and TransUnion report me as risk-worthy and, as I explained, my Experian score is only temporarily, and erroneously, listed as Poor because of one collection account.  I can send you the paperwork that explains--"

"Yeah, no, we go by the score that Experian reports.  We don't look at that other stuff.  You're gonna get turned down."


So great, despite all the hype, despite my status as a USAA member for decades, despite the fact that I don't really need to finance the car (I'm only doing so to build up my credit history), USAA will not approve my auto loan application based on one temporarily bad credit score.  From what I was told, I could have the loan amount on account with USAA as a cash balance and they STILL would not approve the loan because of my Experian score!


Because we're USAA and, despite the hype, we're just like the credit agencies: too big to challenge, impersonal and ruthless.  To quote Lily Tomlin, "We're the phone company.  We don't care.  We don't have to."

I forgot to make the most important point: essentially, USAA is forcing me to go to a lender that uses Equifax or TransUnion.  They are literally pushing my business out the door due to inflexible loan approval policies.  Plus they are going to lose my auto insurance business as well.  And I don't see the point of keeping thousands of dollars on deposit in various USAA accounts if my money is not going to be accredited towards my risk rating.  


Thousands of dollars walking out the door...you'd think someone at USAA would care about that.

Wild Bill3. I can understand your frustration with this and would hate to see you leave over this loan. Can you share with me.. did you apply for the loan? The reason I ask is that we review many factors and no one thing will stop the application from being reviewed, so a low credit score on one credit report would not stop us from providing credit.. My best recommendation would be to apply for the  loan that you are looking for and in the event of a rejection we can have underwriting look into any special circumstances you may have, such as the proof of payoff that has not been updated yet. I hope this information is helpful. The confidence you have placed in USAA is a powerful incentive to finding better ways to serve you. ~Michelle 

I did not formally apply.  That was the WHOLE POINT of discussing my loan risk profile with a USAA auto loan specialist beforehand!  I do not want to rack up a lot of hard-pull credit inquiries in order to get this loan financed, so I am shopping around (as we speak!) for a loan provider who I can be fairly certain will approve an auto loan for me.  Again, we're talking about a loan amount that amounts to less than TWO MONTHS of my after-tax income.  And, for various reasons, I have essentially negligible living expenses at the moment (no other loans or debts other than CS, no mortgage payments, trivial bills).  


The owner of the used car I want to buy knocked a couple of grand off his asking price already, and he's recommending OTHER lenders to me.  I want to buy the car this weekend, while it is still available.  I'm shopping for alternate financing RIGHT NOW.


You SAY you look at many factors, but that is exactly what I discussed with the USAA auto loan specialist yesterday!  I wanted to go through all those "many factors" with an authorized loan officer at USAA before I put in the application, because those other factors are extremely influential.  Like that I'm applying for a $20K loan against $150K annual income--I'll send you guys my salary paystubs as proof!--with virtually no other recurring draws against my income.  (For various reasons my housing costs are nil at the moment.)  As I have said multiple times, I have the asking price of the car in cash, but one of the primary reasons for me to even buy a car right now (I take public transit to work) is for the credit reporting value of having an open loan for which I would be making timely payments.


I could go out right now and buy a new BMW if I wanted to.  I'm sure the local dealership could find me financing, given my income.  But I want to buy a reasonably-priced used car, because that is the smart thing to do.  As soon as I finish this rant, I'm betting that within an hour I will have that financing lined up from another source.  You want to keep my business with USAA, Michelle?  My cell number is listed in my USAA account profile.  Forward this conversation to someone at USAA--there's still time, it's only 4PM in Texas--and have them call me to set up the loan.


My situation is odd, I will grant you.  But that is the point of working with a flexible lender, to take into account unusual circumstances that defy standard loan-risk profiles.  What risk?  I'm essentially asking to borrow against cash I have in hand, plus the collateral of the vehicle, which is worth $20K by blue-book valuation.

@Wild Bill3, Because we are not a credit reporting agency, we can not provide you an answer without a doubt if your loan application would be approved or not. As a member owned company, as well as adhering to the Fair Lending Act, an application is necessary to determine a loan request.

Since you are looking to complete a purchase this weekend, I would recommend submitting your online application to determine the outcome. However, if there is a chance certain information on your credit report will improve in a short amount of time and you're willing to wait before applying, that is also an option. 


Additionally, We do offer a FREE Credit Monitoring service to all members, you might be interested in enrolling. To do so, select Credit Monitoring from the Banking options from our Products tab. 

I will also forward your messages to the appropriate team to review your concerns and feedback. Respectfully, ~ Lori 

Well, I went ahead and applied for the loan.  It was denied.  And immediately I received an alert saying that my credit score had dropped, presumably due the Experian hard-pull credit inquiry for the loan application.  Great.  Wow.  Such awesome customer service.


Just be absolutely clear I understand why the loan application ($19.5K or 13% of my annual income) was denied, I ordered my FICO Auto score, just so I could see exactly what USAA used as reasons to deny the loan.  Score was FICO Auto 8 = 593, and FICO Auto 2 = 635.  What were the derogatory issues?


--"Serious Delinquency".  I only have the one collection account, which is for a now-paid county charge 
(presumably for an ambulance ride, which should have been covered by my insurance) for which I never received a bill.  How can you be delinquent on a debt about which you are unaware?


--"Bad Payment History".  Because I was not paying on ONE bill I did not know about.


--"Few Accounts Paid On Time".  Right, because I HAVE no accounts.


--"No Loan Activity".  Gee, how about if I take out an auto loan to build up my installment payments history?  Oh wait...


In short, just as I predicted, some dumb algorithm bilged my application because I have very little credit history (at the moment) and one erroneous collection account that has not been updated to show it has been paid and never should have been reported as delinquent.  If I were 22 years-old, earning minimum wage, I could understand being automatically denied.  But a 55 year-old guy in the 95th income percentile with decades of income history as a high-earning professional?  With essentially no debt except for some child support arrears?  Insane.


If a HUMAN BEING had reviewed the application, it probably would have been approved.


Well, back to shopping for a different auto lender and a new financial services institution at which to bank my money.  The latter will be...let's see, it's Friday, just got paid...shucky darn, yep, as of today I do have $20K in cash on account.  That's $20K of immediate deposits float USAA won't be getting from me, plus the rest of my income for the year.