What happens if you are denied credit or don't get the terms you want?

Denied Credit

If you have ever been denied credit, you may feel confused, upset, or just annoyed. Sometimes, being denied credit (especially on a frivolous account or purchase) can be a blessing in disguise. There are however, rules and regulations set in place so that you can determine why you were denied credit.

Often times, if you are denied credit you will receive a letter notification. This letter should have the reason you were denied credit and an address or phone number you can call for more information. Acceptable reasons for credit denial include: your income was too low, or you have not been employed long enough. Or, if there is something on your credit report that makes you a high credit risk, it is reasonable to understand why the creditor may choose to deny your credit application. Invalid or unacceptable reasons for being denied credit include: anything regarding your race, gender, or marital status, or vague, ambiguous statements such as 'you did not meet our minimum standards' or, 'you didn't have enough points on our credit scoring system. If the creditor denies you for an invalid or unacceptable reason, you have the right to find out more information.

You should contact the creditor within 60 days in order to receive an explanation for why your application was denied. Find out if they used a credit scoring system and which factors were involved in their system. If you were denied due to an item on your credit report, ask them to be specific. You should also obtain a copy of your credit report so that you can verify the information that they give you.

The other thing to keep in mind is that if your credit report is in need of repair, that you can accomplish credit repair and reapply for the credit. Chances are, the credit scoring system used by the creditor will account for updates to your report, and you may be approved the second time you apply with a repaired credit report.

You may also want to shop around for creditors who offer similar loans or credit items as the one which denied credit to you. Just because one creditor denied your credit application does not mean their competitors will. They may in fact, have different criteria on which to base their decision about extending credit to you. By shopping around, you may find that you are able to obtain a better line of credit, or better rates than before.

The best thing to do about a credit denial is to not take it personally, but to pursue the credit you wish to obtain by other means. Credit report review and repair are very important steps, and shopping around or re-applying may be the answer. If you have been denied credit, be patient and look for alternative means to obtain the credit that you are seeking.