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Who Uses Your Credit Report

Been Denied Credit? Here’s What To Do

If you are denied credit, the Equal Credit Opportunity Act requires that the lender give you notice that tells you the precise reasons your credit application was rejected or the fact that you have the right to learn the reasons if you ask within 60 days. Unclear and vague reasons for denial are illegal, so ask the lender to be specific.

Sometimes you may be denied credit because of information on a credit report. If so, the Fair Credit Reporting Act requires the lender to give you the name, address, and phone number of the credit reporting agency that supplied the information. You should contact that agency and ask for a free copy of the credit report (you must request it within 60 days of being denied credit). The credit bureau can tell you what is on your report, but only the lender can tell you why your credit application was turned down.

If your lender says you were denied credit because you are too close to your credit limit on your credit cards or you have too many accounts, you may want to reapply after paying down your balances or closing some accounts (always be careful when closing accounts, these accounts affect your credit in different ways and you do not want to lower your credit score). Credit scoring systems update information and change over time.

If you’ve been denied credit, or didn’t get the rate or credit terms you want, ask the lender if a credit scoring system was used. If so, ask what characteristics were used in that system, and the best way to improve your application (or score). If you are approved for credit, ask the lender whether you are getting the best rate and terms available and, if not, why. If you are not offered the best rate available because of inaccuracies or errors on your credit report, be sure to dispute the inaccurate information with the credit bureaus involved.