A credit denial is stressful and frustrating, but it can also be a blessing in disguise. Most of the time, a credit card application denial is a symptom of a bigger problem, whether it’s high levels of debt, credit that has room for improvement, or other risk factors that should be managed.
If you face a denial, it’s best to see it as a warning that something you’re doing isn’t working. Read the denial letter, find out the reason for the rejection, and call the company for further details if you need.
Here are some possible reasons behind your credit denial.
Issues with Your Loan Application
Review your loan application. Check to make sure that it is complete and that your identifying information, such as social security number, birth date, and spelling, is correct. Remember that multiple applications in a short amount of time could also hurt your credit score.
Issues with Your Credit Report
Request a free credit report. Make sure that all reporting information is accurate and does not belong to someone else. If you see duplicate negative listings, take the necessary action to correct the information. Most negative information that is more than seven and a half years old should be removed from your credit report.
Unstable Employment History
Review your employment information. A lapse in employment could be the cause of the credit denial.
Credit Payment History
Your payment history can also lead to credit denial. Late or missed payments and charged off accounts reflect negatively on your payment history. High balances, collection accounts, and repossessions could also lead to denial.
You can also be denied for lack of credit history. Creditors may be unwilling to offer credit if you don’t have a well-established credit score.
Take your public records into consideration. Creditors may be looking at judgments, tax (or other) liens, or bankruptcy records.
Financial struggles can also be the root of credit denial. Collection accounts and a high debt to income ratio will reflect negatively on your credit history. A high number of credit inquiries are another negative.
Be sure to request your credit report from Transunion, Experian, and Equifax and review them for accuracy. If you see errors, dispute with the credit bureaus. Be sure to provide documents that support your dispute.
If inaccurate information isn’t corrected, contact a credit report attorney.