Everything you know about fighting a credit denial

By: on 2014-08-20
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Everything you know about fighting a credit denial
Everything you know about fighting a credit denial

It is extremely important to maintain a good credit report as it will help to generate a good credit score. Your credit score is the reflection of your financial responsibility. A low credit score reflects that you have been unable to pay back your bills on time. It also signifies that you've less knowledge on money management.

Your credit score paints such a picture of you that other creditors will hesitate to lend you money. Until and unless you do credit repair and improve your credit score, you will be unable to obtain a loan (whether secured or unsecured) at suitable rates and terms. Credit card company may deny to give you credit because of the following reasons.

  1. Low credit score.
  2. Insufficient income.
  3. Negative information in your credit report.
  4. Loan balances.
  5. High credit card balances.
  6. Excessive inquiries in your credit report.
  7. Having multiple credit cards.
  8. Recent delinquency.
  9. Charged off accounts.
  10. Under age to get a credit card.
  11. Incomplete application form
  12. Frequent job change.

Find out the exact reason why your application was rejected

According to the law, the lender must mention the reasons why you're not eligible to get credit in the credit denial letter. Go through the letter carefully to know the reason for rejection. You can find two or three reasons in the letter for the loan disapproval. Try to resolve the issues to repair your credit fast.

Self audit your credit score

As you know there are several credit scoring models and the report differ from each other. Your lender may not use all of them. So, try to review your credit following other credit scoring models that isn't used by your lender. Thus, you can compare your credit report and score from the one you get from the lender. Also you can find out what factor affected your score the most.

Grab your free credit reports

Ask the credit agencies for free credit reports. You must ask for free annual credit report within 60 days of receiving rejection notice by the lender.

Steps to resolve error issues in your credit report

1. Dispute negative items and errors

– Your credit report may have negative items that you feel can be deleted. Many a times, it so happens that your creditors miss out on informing the credit bureaus about a loan you have already paid. The credit bureaus write only those items on your credit report which your creditors inform them, they don't cross check the information. As a result, a lot of wrong information may get updated on your credit report because of the mistake of creditors. There might also be printing mistakes in your credit report. You can dispute all these negative items and get them removed to increase your credit scores.

2. Add positive remark to your credit report

– It is very much important that you have enough positive information on your credit report. If you have too little credit history, then also your credit score will be low. Credit history is one of the most important factors in calculating your FICO score. This is the reason why you should not close down your old accounts. If you have to, then close down your new ones. Thus you can add positive information in your report.

3. Request for a corrected copy

Ask the credit reporting agencies for a corrected copy of your credit report that needs to be sent to the lender. You lender may reconsider your application after getting the corrected version of your credit report.

4. Get assured

Don't loose hope after getting reports from any credit report agency. The three credit report agencies maintain privacy of their report. So, if you find any suspicious point or mistake in your report, then check the other two to be 100% sure.

Getting rejection letter is unfortunate. But with little effort, time and positive thinking you can improve the areas and prevent future denial.

Last Updated on: Wed, 20 Aug 2014

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