Travel Hacking – My Mid Life Credit Crisis
Rejected? What do you mean I don’t have enough credit history? What about all those credit cards we have at Chase?
Apparently I’ve been relegated to the status of a college student – tagging on to someone else’s credit history.
My Travel Hacking – An Easy First Step covered the fun side of earning free air travel with credit card bonuses. Check that out to read how we earned a Southwest Airlines companion pass.
We pulled our credit reports before we started applying for new credit cards. Everything looked good with both of us having the same score. Makes sense – everything is in both our names.
A subtle thing happened over time though.
We’ve been married a long time – 27 years – eons in the financial world. Like many families, over the years we’ve opened and closed accounts, changed banks, and had a couple mortgages. Having seen the financial hazards of widowhood and divorce for female family members, we thought we had made the proper preparations for any sudden life changes.
Turns out financial laws have been changing and I got caught short.
In Joint Name Only
Our joint accounts aren’t really joint accounts anymore. There is a primary account holder and most of the credit history is tied to that person. For all but one credit cards I am considered an authorized user not a joint owner. And at Chase, our joint account of 15 years is treated internally with Joel as the primary.
Ten years ago, Joel worked in the financial industry and was required to consolidate all banking at that firm. Prior to that we closed the credit union account from my tech job in California and opened one tied to Joel’s employer in Texas. Making Joel the primary for our two bank accounts.
We’ve run into problems before with Joel being the primary on accounts. I’m the one who does our accounting….. So I write up a list of talking points explaining any issues and sit next to Joel while he calls customer service. Frustrating for all involved but I hadn’t realized the underlying implications.
Splitting the Points
My travel hacking plan was to first earn the Southwest Airlines companion pass under Joel’s frequent flyer account. Made perfect sense since he flies for business so I can tag along for free on some trips. Second target was the Chase Sapphire card under my name so these points are mine with the ability to transfer the points to a variety of frequent flyer programs giving us more flexibility on which airlines can be used.
Joel’s applications required some shuffling of credit limits since we would now have four accounts with Chase. Not a problem since we never came close to hitting the limits on the first two accounts. We figured that would happen again with what would be our fifth Chase account.
I submitted my application and was rejected for lack of credit history.
What the heck? Lack of credit history?
I called to be reconsidered where upon I learned that for Chase, even the joint account really was considered Joel’s account… all of a sudden I was flashing back to the ’70s.
I conveyed my disappointment explaining we had been consolidating our accounts with Chase without realizing their internal policies and based on the amounts we had charged in the last two years couldn’t believe that they wanted to lose that business. Those were the magic words – the account rep resubmitted the application and I was approved.
Apply using Household Income
Travel hacking would have to wait. I needed to do some fast work to secure my financial status.
The 2009 credit card act had to be amended due to the impact on families with disparate incomes especially stay-at-home partners. Intended to limit bank fees and restrain credit limits to what a person could reasonably afford, it required that credit limits be based on personal income. For families sharing an account, it is setup with a primary card holder and authorized users. The primary is still responsible for what the user spends on the account but certain tasks can only be done by the primary.
Oops! As written, each individual could only claim their personal earnings as income on credit applications – even if the family funds are fully merged. Last year we were on the road following Joel’s business travel. In our case, as the trailing spouse I would be out of luck based on my income alone!
Family advocates lobbied to get the laws changed. It took until 2013, but now it is legal to apply using household income without disclosing its source if it’s accessible to the person applying.
I knew to use our household income in the Sapphire application but it was the lack of primary status that got me. I no longer had a payment history that would qualify for this higher level credit card. Our consolidations over time left me as an authorized user only except for a low limit card from US Bank that we don’t use regularly.
My Rebuilding Strategy
Now that I have the Sapphire card my next step was opening a credit card account in my name only.
In my search for better mobile apps to use on the road, we opened a second credit union account before leaving Austin two years ago. At this credit union, I am primary since I was the qualifying member. (Luck vs forethought.) I applied solo for their basic card without an annual fee. I will set up a couple of automatic bill pays for this card to show consistent activity and have the credit limit bumped up over time.
Since the US Bank card shows up as joint on our credit report, I’ll be checking to see what my status is at that bank. If it truly is a joint account then it will stay open and will get some autopay activity as well. Between the three cards my credit history should be fine within a year or two.
I feel fortunate to have the time to get MY financial house in order before any real issues came up. What looked to be simplification and consolidation for the family finances could really have burned me in the future. For the time being we are pretty much charging to the cards that will build my credit history as the primary owner.
My advice is to take advantage of free credit reports and check your credit status yearly. You can rotate through the three agencies pulling a report every four months which is also a great way to check for identity theft.
Watch for an upcoming post on the other financial steps we took preparing for life on the road.