Applications for new credit go through an approval process. The prospective lender has criteria that is considered when reviewing a credit application. Factors such as the items listed below may have been examined:
– Your credit and payment history
– Your income
– Your total debt to income ratio
– Multiple applications for credit within a short period
– Had you filed for bankruptcy
– Your age
– Do you need a co-signer
While specific qualification criteria may vary from one creditor to another, a determination is made whether to extend or deny the application. When a credit application is denied, the applicant will receive a letter from the creditor with an explanation of why the credit was declined. Here are some possible reasons behind your credit denial:
Errors on your Loan Application
Your application had errors. Review your loan application to see whether information was incomplete or misspelled. Check your identifying information closely for your full name, address, social security number, and birth date. Remember that multiple applications in a short amount of time could also hurt your ability to be approved.
Errors on your Credit Report
Within 60 days of a credit application denial, you may request a free credit report from each of the credit bureaus — Transunion, Experian and Equifax. Write to the bureaus for a new report. Review them for listings that may be inaccurate. If you see errors, such as duplicate negative listings, accounts that you do not recognize, or incorrect reporting, you must send written disputes to the credit bureaus. Your dispute letter should include documents that illustrate why the error should be corrected. Send your letter by Certified Mail, Return Receipt to the credit bureau. They have 30 days to respond to your dispute. If the bureaus continue to list the error, you may need to send a second dispute.
Review your employment information. Make sure the listings for your employer(s) are accurate. If there has been a lapse in employment, it could be a factor that was considered for the credit denial.
Credit Payment History
Erratic 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. Also, no credit history could be reason for denial. Creditors may be unwilling to offer credit if you don’t have a well-established credit score.
Review your report to see if there are public records listed for bankruptcy, judgments, or tax (or other) liens. If any of these items have been satisfied, you will need to dispute the listing with the credit bureau and provide documentation showing the obligation has been paid.
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.
Seek Legal Help
Flitter Milz is a nationally recognized consumer protection law firm representing victims of credit reporting privacy and accuracy issues, abusive debt collection contact and wrongful repossessions. Contact Us to discuss your consumer credit concern.