How can a non-borrower open a high interest savings account? | Motive Financial | Discussion forum

Michael Allan said
Recently I applied for a Savvy Savings Account at Motive Financial. After hearing no word for two weeks, I called and spoke to an agent. He put me on hold, then came back and said, "Your application does not meet our profile."

They had rejected me - for a savings account! -. When I pressed him for a reason, he finally said, "I suggest you speak to Equifax."

Equifax has a consumer relations office here in Toronto. I went there and got a copy of my credit report. The only entry it records is a hard credit check by "Canadian Western Bk", which is Motive's parent. I'm not a borrower, so the rest of the report is blank.

My best guess is that Motive is vetting the applications based on credit score. Having no credit history on record, I probably haven't much of a score, either. Now I worry that applying to another bank will lower my score even further. After a string of rejections, I'll be left with no savings account and no more banks to apply to.

So I ask for advice, please. How can a non-borrower open a high interest savings account?  

Unfortunately, Michael, it's because you've got no credit history, which means a 600 credit score (600 = no credit history in Equifax's modelling). 620-680 are slightly above average to decent credit worthiness and anything over 720 is generally considered excellent.

I would recommend either:
- establishing a joint unsecured line of credit (at least $5,000 limit), possibly with a parent or a spouse who has a good credit history, and then re-applying in six (6) months;
- apply for a GIC secured line of credit (at least $5,000 limit) with your existing bank or credit union (usually one-to-one security; that is, $5,000 GIC gets you $5,000 limit);
- apply for a cash or GIC secured credit card, from either of Home Trust or Capital One. Both have $59-60 annual fees, but Home Trust would be my pick as they have one that has no annual fee and a higher interest rate (which won't matter as you'll be paying it off in full on or before the statement due date); or,
- apply for National Bank's mycredit MasterCard, with no annual fee and no cash security required. They'll likely approve you for a low limit of $500 as I applied for one while a student.

However, in the latter two cases, they may require you to visit a Canada Post retail postal outlet to present two pieces of government-issued photo ID to verify your ID, since you have no credit history and they can't verify you through that method.

Another think you could try is reach out to Motive Financial's Division Manager, Adam Skoreyko, at adam.skoreyko [at] cwbank [dot] com, and let him you'd like to become a Motive Financial customer but you've never had a credit history. Ask him if he'd consider having you present your two pieces of non-expired, government-issued photo ID at a Canadian Western Bank branch and a CWB staff member can certify them as true copies and interoffice the photocopies to Motive Financial in Edmonton. They, officially, like to stay separate, but often times, on a case-by-case basis, branch staff members can be engaged by their virtual banking branch counterparts to assist in an account opening. It's worth a shot! 🙂

Cheers,
Doug

This is indeed a problem.

I'm sure Norman's advice is sound, but OP says he lives in Toronto, which would make it difficult for him to appear at a CWB branch.

Here's an offbeat and ironic suggestion: Get yourself into medical school! The banks fall all over themselves extending credit to med students.
The point is really that banks can do whatever they really want to do.; they'll find a way. Ask them to tell you what you should do in order to qualify. You might hint that eventually you will be wanting a car loan or a mortgage, even if it's not true, just to get them thinking that you might be worth their while in future. This will not work, however, if you are eari=ning minimum wage with no better prospects.

I notice that banks often advertise that they have banking services that are directed to new immigrants who don't have a credit history here. It doesn't sound like you are a new immigrant but you might find it useful to check out that route and see what is available to them and how they access it.

Do you have a bank account somewhere? Perhaps you can take out a small line of credit there to get started.

You might find that a credit union is more amenable. Although they have lost a lot of their original purpose, most were originally set up to serve people whom the banks wouldn't serve for one snobbish reason or another. That said, don't bother with Meridian or DUCA, both of whom do hard credit checks. Tell them your problem before you apply so as to avoid unnecessary credit checks. I can't say if any of them will help you.

Doug posted something a while ago about banks being required to give a reason why they won't serve you, and that it must be one of a list of specified reasons. Perhaps he can comment on this situation as I don't remember the details.

Yes, there may indeed be a double standard. They may be able to justify or get away with it but it might not be enough to satisfy me. However, I don't know all the details. It's something to look into for reference anyway. It might provide some inspiration for a different strategy.

Can you or someone provide Michael with the link to your previous comments about the Access to Basic Banking Regulations? As I recall, they could only refuse for specified acceptable reasons. It might be useful for Michael to know those and perhaps to ask for a written reason. I recall you said that But banks would sometimes change their minds if pressed to give a reason in writing, but maybe this credit rating business qualifies?
It really annoys when people like this who have presumably been paying their way get penalized simply because they don't want to borrow money - particularly at a time when there are endless complaints about people carrying too much debt. Those credit agencies have too much power, and are not accountable and are not even responsible for the accuracy of their information. When I looked at my report a few years ago (first time ever), I was really surprised at how little it contained. I actually wanted it to include more information about credit cards because I haven't had a loan since the mortgage a long time ago. i wa actually worried that there might not be enough info for me to get another CC!

It says under his username, above, that he is in Toronto.

Michael, your story is incomplete.

These are requirements to open a HISA account with Motive:

Fill out the online application form. Be sure to include your Social Insurance Number (SIN), address and occupation so we can confirm your identity.
Send us a personalized cheque from your account at another Canadian bank for any amount ($1.00 or more) made out to yourself.

Do you have an account with another Canadian bank? If you do, you shouldn't be worrying about lowering your credit score to the point you can't open account at any bank, you already have an account with at least one Canadian bank.
If Motive is your first Canadian bank you wanted to open account with, that obviously won't work.

Also, as you could see from bank's account opening requirements, they may use provided information to check your legal status in Canada, your sources of income and your residence.
Obviously, a bank, especially the one which could never see you face to face, would be extra diligent.

If you still want to open savings account in Canadian bank, start with those having branches and make in person appointment to visit branch to open an account. Shouldn't be a problem to find bank branch if you live in Toronto.
They may be interested to get you as a new client, but if not - you could use few minutes of their time to find why, and make your own conclusions on why is that and what to do next.

Not prying into your financial situation, but lack of credit score would also be a sign that you are not filthy rich. If you only have modest amounts of funds, there is almost no difference in how much interest you could make off Motive savings account vs. brick-and-mortar bank savings account. Consider difference in few dollars monthly a convenience fee for having bank account from the bank that took you as a customer.

Loonie said
Yes, there may indeed be a double standard. They may be able to justify or get away with it but it might not be enough to satisfy me. However, I don't know all the details. It's something to look into for reference anyway. It might provide some inspiration for a different strategy.

Can you or someone provide Michael with the link to your previous comments about the Access to Basic Banking Regulations? As I recall, they could only refuse for specified acceptable reasons. It might be useful for Michael to know those and perhaps to ask for a written reason. I recall you said that But banks would sometimes change their minds if pressed to give a reason in writing, but maybe this credit rating business qualifies?

I can't remember if I started a new thread or replied to an existing thread with those comments, but I could try doing a forum search. Nevertheless, what I can say is that in non-face-to-face account opening situations, their reason would likely not being able to pass credit bureau verification. If Michael has no active credit accounts and/or has not had any in the last three years, their identity matching algorithms may not be able to match the information he's entered on his application form with his credit bureau. As well, if he has no credit history at all (i.e., never had or it's been more than 6 years since he had an active credit account), his credit report would be either non-existent or everything would've sort of "aged off". This is happening with my paternal grandmother's credit report due to the fact that my dad and my aunt, who have a Power of Attorney for her, had previously closed all of her borrowing accounts. I fully expect that within a few more years, she'll be back to "square zero" being a 600 credit score, which is equivalent to no credit history.

It really annoys when people like this who have presumably been paying their way get penalized simply because they don't want to borrow money - particularly at a time when there are endless complaints about people carrying too much debt. Those credit agencies have too much power, and are not accountable and are not even responsible for the accuracy of their information. When I looked at my report a few years ago (first time ever), I was really surprised at how little it contained. I actually wanted it to include more information about credit cards because I haven't had a loan since the mortgage a long time ago. i wa actually worried that there might not be enough info for me to get another CC!

It says under his username, above, that he is in Toronto.  

Thanks, Loonie. I rarely look at where people are from on here, so didn't know he was from Toronto initially.

The point you raise is a good one, but this isn't really a problem with Motive Financial, per se. It would be nice if they offered other methods to verify one's identity. Unfortunately, CWB doesn't have bank branches in Ontario so it's unlikely he'd be able to verify himself through that method even if Motive's Division Manager were to grant an exception. To be fair, Motive is a small virtual banking branch operation of CWB relative to Tangerine, Simplii, and EQ which have national contact centres of hundreds of employees. I estimate they have only between one and two dozen staff total, all based in Edmonton and many working in non-client facing roles. Also, Michael's issue is not unique to Motive Financial either - he would experience the same problem with any of the Manitoba credit unions, who would have to verify his credit bureau too. Even Motus needs to verify his credit bureau as part of identity validation, but at least they do have Meridian branches if they were so inclined as to engage a Meridian employee to help verify their customer (I believe they should).

The House of Commons and Senate are currently studying proposed legislation on open banking, which would allow Canadians to share their banking credentials with other financial institutions and fintechs in order to easy identity verification, but that's still likely a few years out because financial institutions would need to have that technology implemented into their systems.

It's annoying you have to borrow, yes, but I'd encourage Michael to wait 6 months after opening a cash secured or starter unsecured credit card with one of the providers above and re-establish a credit profile.

Cheers,
Doug

Doug said

Thanks for your assistance, Alexandre, but creditworthiness does not necessarily mean lack of net worth. There can be a correlation, but it's not consistent. 

As I said, Michael gave us an incomplete story.

Who known, perhaps Michael is one of those lucky people who has substantial net worth but no credit history.
If I force myself, I might, with quite inconvenience to me, switch to cash only lifestyle and in few years perhaps my credit history will vanish.

For case like that my suggestion would be to visit in person Toronto branch of Oaken Financial, open account with them and deposit funds to their 1 year GIC, which coincidentally offers same interest as Motive Financial Savvy Savings account.

It is only the negative information on a credit record that is required to be aged off. Positive information doesn't have to be removed.

According to LegalLine.ca, Equifax Canada keeps positive information on a record up to 10 years. TransUnion Canada keeps the positive stuff on a record up to 20 years.

As well, FINTRAC guidelines don't require recent credit activity on the credit record. The guidelines require that the record be at least 3 years old for it to be the sole source of identity verification and at least 6 months old to be used as one of the two sources for a "dual process" verification.

Loonie said
…
Doug posted something a while ago about banks being required to give a reason why they won't serve you, and that it must be one of a list of specified reasons. Perhaps he can comment on this situation as I don't remember the details.

Bank Act section 448.1 compelling opening of retail bank accounts has exemptions as well as requirements to be met.

In the current Access to Basic Banking Services Regulations for section 448.1, there is this significant exemption in 3(1) for accounts that link to an existing account:

Refusal to open account

3 (1) Subject to subsection (2), subsection 448.1(1) of the [Bank] Act does not apply in the following circumstances:

(a) if the member bank has reasonable grounds to believe that the retail deposit account will be used for illegal or fraudulent purposes;
…
(e) if the request is made at a branch or point of service of a member bank at which the only retail deposit accounts offered are those that are linked to an account at another financial institution.

As well, applicant needs to present ID as required by 4(1)(a). That's not an easy requirement to meet for an online-only signup:

Conditions to be met

4 (1) Subject to subsection (2) and for the purpose of subsection 448.1(1) of the Act, the conditions to be met by an individual who is requesting that a member bank open a retail deposit account for the individual are as follows:

(a) the individual shall present to the member bank

(i) two pieces of identification from among those set out in Part A or B of the schedule at least one of which is from among those set out in Part A of the schedule, or

(ii) one piece of identification from among those set out in Part A of the schedule, if the identity of the individual is also confirmed by a client in good standing with the member bank or by an individual of good standing in the community where the member bank is situated;

(b) the individual shall disclose, orally or in writing, the information listed in Part C of the schedule if the information is not available on the pieces of identification presented by the individual;

(c) if the member bank requests, the individual shall consent to the member bank’s verifying whether any of the circumstances set out in paragraphs 3(1)(a) to (d) apply to the individual, and to the member bank’s verifying the pieces of identification presented by the individual; and

(d) if the member bank is a federal credit union and if it so requests, the individual shall become a member of the bank.

Michael Allan said
[snip]

Doug and Loonie - I think I found that legal requirement in the Bank Act (and now I see Norman's looking there, too). The Act does refer to the Access to Basic Banking Services Regulations in the same context, but the basic requirement is written into the Act itself; subsection 448.1 says that "a member bank shall, at any prescribed point of service in Canada or any branch in Canada at which it opens retail deposit accounts through a natural person, open a retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person."

Normally I would be *entitled* to open an account. A bank could not simply say, as Motive said to me, "Your application does not meet our profile." But it seems this entitlement only applies if I present myself "in person". Online only banks may be exempt.

Still, I'd like to hear back from Motive. Earlier I sent them an email, "Hopefully this is all a mistake and can be sorted out. But if not - if I must apply elsewhere - then it would help to understand why my application to Motive got rejected. Could someone please explain?"

I'll give them time to reply, then post an update here.

Thanks all for your kind and thoughtful advice,
Mike  

Thanks, Mike, for the reply. Glad to hear you've been able to peruse our replies. I agree that Motive Financial's initial reply to you that you do not fit their current profile was rather curt, too generic, and not all that helpful. I was going to suggest following up with them to clarify as to a specific reason, but sounds like you've already done that. Keep on it and get a more specific reason. If it's because you don't have recent credit history information in the past three years or because you have no accounts on your credit profile, then that makes sense. However, they should at least clarify that it's not due to poor credit history but rather due to your inability to pass their identity verification.

It's true that you could use face-to-face methods for verifying your identity, but, unfortunately, CWB does not have to offer that as they have no branches in Ontario. As well, Motive Financial is a virtual banking operation without branches so you're limited to whatever methods they choose to use.

Have you thought of either Alexandre's suggestion of an Oaken 1-year GIC at 2.85%, possibly paired with an Oaken Savings account at 2.30%?

Alternatively, it sounds like you have sufficient capital to do a secured credit card or line of credit. Do you have a bricks and mortar financial institution where you could ensure about setting up, say, a $5,000 cash secured line of credit with $5,000 held in a locked-in GIC? Alternatively, if Home Trust, Capital One, or National Bank will use Canada Post for identity verification, you could set up a secured credit card. This would provide you with the method of re-establishing credit history.

As well, I've often found the easiest way to get your personal information on your credit profile updated is simply to apply for a new credit product. Since a hard enquiry has to be done and the financial institution has to report your address information, you can be assured that an update to your address will be done. Note that when you subsequently apply for a bank account, you'll have to enter your previous address if your new address, on your credit report, was only updated less than 2 years ago. The credit bureaus can be difficult to deal with, as it's all via mail and they want copies of your government-issued photo ID and all your supporting documentation. So, if you can, that's a further incentive to setting up - and using - a secured borrowing account.

Hope this helps,
Doug

slightly off topic but are we saying for an 18 years old (which I believe is the min age requirement for someone to open online account), its not possible to open an account due to 99% chance a 18-years-old wont have a credit history either ?
Talking in general not just Motive (since I think all banks have credit check when opening online accounts).