I don't know about you, but whenever I've been rejected for something -- a job, a credit card, even being left out of an event I had hoped to be invited to -- my first reaction has been to fume or pout (or maybe both).
But I know I can do better.
"Rejection offers us an opportunity to evolve through and learn from our experiences," says clinical psychologist and author Carmen Harra. "It allows us to look within and say, 'OK, maybe I can change this'." While she was referring to relationships in her article, her advice is relevant for many different types of situations - including, yes, being rejected for credit.
In fact, getting turned down for credit can give you an opportunity to improve your credit. Here's what to do if your credit application is rejected:
By law, the lender must provide you with a notice with the specific reasons why you were turned down (or charged more) for credit. Look for it, and read it -- even if you'd rather tear it into shreds.
The rejection letter will list three or four reasons why you didn't get approved. Those "reason codes" are often generated from the credit score used in the transaction, and they can offer valuable insight into your credit.
More important, think about whether you can do anything about them. Does it say the balances on your credit cards are too high? Maybe it's time to tackle your debt. Does it point to a negative credit history?
You'll also get your credit score, based on the score used by the lender. But keep in mind that there are dozens of different credit scoring models out there and lenders may customize the scoring models they use. For that reason, it's also helpful to get a credit score that isn't customized for that particular lender, so you can see where your credit stands overall.
You can get free credit scores at Credit.com. When you do, pay particular attention to how your score compares to others, and what factors influence it the most.
The letter you get will list the credit reporting agency that supplied your credit report for this particular application, and explain how to request a free copy. Take advantage of it, as this is an extra free copy that doesn't count against the free annual credit reports you are entitled to from each of the major credit reporting agencies.
You don't want it hurting your chances of getting approved for other loans or credit cards, do you? Learn how to dispute an error on your credit report.
You can ask the credit reporting agency to send a corrected copy to any lender who recently received a report with the erroneous information. Who knows? Maybe they will reconsider your application.
The three major credit reporting agencies don't share information with each other. So if you find a mistake on one of your reports, it's a good idea to check the other two to make sure they aren't also reporting wrong information.
Being rejected for credit isn't fun, but you may be able to make the most of it, and turn it into a positive experience for your credit in the long run.
How's that for making lemons into lemonade?