Been Denied Credit? Here’s What You Can Do

If you apply for and are denied credit, it can leave a real sinking feeling in the pit of your stomach. Let’s suppose that you applied for a new credit card and were turned down. Ouch! What does it mean and what can you do about it? Does this mean you won’t be able to get any more credit anytime in the future?

Find out why

If you’re denied credit, the lender is supposed to give you notice as to the specific reason or reasons why your application was denied. If it doesn’t, federal law gives you the right to learn why if you request the information in the first 60 days after you were turned down. It’s illegal for a creditor to give vague and indefinite reasons for why it denied you so the reason has to be precise. There are reasons that are acceptable such as “you haven’t been in your job long enough or “your income was low”. Reasons that would be considered unacceptable are “you failed to meet our minimum standards” or “you didn’t have a sufficient number of points on our credit scoring system.”

What to do

If you are denied credit and given no reason for it, the first thing you should do is contact that creditor and ask why you are denied. If the creditor says that it was because you were too close to your credit card limits or have an unacceptable number of charge cards, there is something you can do. You can either reapply after you pay down some of all of your balances or you could close some of your revolving credit accounts.

If your credit report was the culprit

There are instances where you might have been denied credit because of what’s in one of your credit reports (you actually have three). If this is the reason, the lender is obligated by the FCRA (Fair Credit Reporting Act) to provide you with the name, address and phone number of the credit-reporting bureau that provided the information. You should get in touch with that bureau to learn what your report said. You can get the information free if you ask for it within 60 days of being denied credit. The credit bureau is required by law to tell you what’s in your report. However, only the creditor can tell you why you were denied.

Which credit scoring system was used?

If you’ve been denied credit or didn’t get the interest rate or terms you thought you deserved, ask your lender if it used a credit scoring system. In the event that it did, be sure to ask which factors or characteristics were applied in the system and how you could develop a better application. In the event the lender approves you, you could ask the company if you’re getting the best terms and interest rate available. If you are not, ask why. If you learn that you were not offered the lowest interest rate because of problems in your credit report, you should contact the relevant credit bureau and contest the inaccurate information.

What to do if you have really bad credit

If you’re turned down for credit because you have a really bad credit history, a good option is for you to let us settle your debts. Our debt counselors have successfully settled the debts of thousands of U.S. families and helped them become debt free in 24 to 48 months – with a payment plan they could afford. Contact us for more information about debt settlement, what it costs and how we could use it to help you.