Completing and submitting your credit application can help you get the financing you need to purchase a car, furniture, even a home. But after careful review, a creditor or lender may decide to reject your credit application. As a consumer, you can take steps to address the problems that led to a rejection and improve your chances of getting an approval in the future.
Get Details on the Rejection
Being calm and asking for details regarding the rejection can provide clues as to why a lender or creditor rejected your credit application. Lenders are cautious with loans; and before taking a risk and approving an application for credit, they check your income and credit to ensure that you meet the criteria for a loan. Problems with your credit report, such as collection accounts and liens, are justifiable reasons for a credit denial. Additionally, a creditor may reject your application due to inadequate income or high debts. Ask for specifics so that you can take steps to correct the issue.
Credit Report
You're entitled to a free credit report after receiving a credit denial. Checking your report shortly after receiving a denial letter in the mail is key to figuring out the reason for a rejection. Lenders use your credit report to determine a loan approval. If problems related to credit reporting errors contributed to a loan denial, identifying mistakes and getting your credit report updated can help you qualify for a credit card, loan or other type of financing in the future. AnnualCreditReport.com provides consumers with reports from all three bureaus free of charge annually.
Identifying Your Role in a Rejection
You may feel angry and bitter after having your credit application rejected. But instead of making excuses or blaming the lender or creditor, take responsibility for your actions and recognize bad habits that could have led to a lower credit score and a rejection. These include habitual late payments, high credit card balances or excessive credit inquiries. Learn how to manage credit wisely first and then apply for credit.
Shop Around
Because creditors and lenders have minimum credit score requirements for financing, getting approved for credit can be as simple as selecting a different lender. One creditor may require a credit score of 700 or higher, whereas another may approve your application with a score of 680. If you already practice good credit habits, shop around and look for another bank.
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