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What to Do If You Are Rejected for Credit

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What To Do If You're Rejected For Credit

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:

Find Out Why You Were 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?

Review Your Credit Score

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 When you do, pay particular attention to how your score compares to others, and what factors influence it the most.

Get Your Free Credit Reports

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.

If you Find a Mistake on Your Report, Make Sure You do Three More Things:

1. Dispute the mistake.

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.

2. Request that a corrected copy be sent to the lender.

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.

3. Get your other free credit reports.

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?

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  • Nicole

    What do you do when you paid a collection agency but the original creditor is still on your credit how can you get that removed

    • Gerri Detweiler

      Paying a collection account doesn’t remove the original debt from your credit reports. But the balance should probably be listed as zero. If it’s not you can dispute it. Please read: A Step-By-Step Guide to Disputing Credit Report Mistakes

      • Nicole

        What should I do

        • Gerri Detweiler

          I’m sorry Nicole — I am not sure what you are asking. Do you mean what should you do about the original account? If it’s accurate then there may not be a lot you can do except focus on building positive credit references going forward. As negative information becomes older it typically carries less weight. We wrote about that here:
          How Long Does It Really Take to Improve Your Credit?

          • Nicole

            How can I get back on track with a good credit history my score is 520 very poor

          • Gerri Detweiler

            Do you have your free credit report card from It gives you an action plan for your credit. Have you taken a look at it? Does it make sense?

          • Nicole

            Yes I have my credit report looked over my report have some charge off bill collectors that have bought some accounts now I’m trying to fix my credit report

          • Gerri Detweiler

            Nicole – It sounds like it would be beneficial for you to have someone sit down with you and go over your credit reports with you. Some credit counseling agencies offer this at a low cost. More info here: 6 Places to Get Free Help With Your Credit Problem

          • Nicole

            I have looked over my credit report what’s the next step

          • Gerri Detweiler

            What are the main reasons listed for your score? What steps are suggested in the action plan? Do they make sense?

          • Nicole

            How can I get a better credit scores now what’s the steps I need to take to get my score over 520.

          • Gerri Detweiler

            It’s impossible to say without knowing the details of what’s bringing down your scores. What were the top reasons listed for your current score?

          • Nicole

            credit collector reporting late payment every 30 days and charge offs reporting every 30 days

          • Gerri Detweiler

            They are generally allowed to do that for as long as that item is on your reports (7.5 years from original date of delinquency).

          • Nicole

            the same account it reporting two different company’s I disputed all 3 credit agency but know luck…

          • Gerri Detweiler

            The try filing a complaint with the Consumer Financial Protection Bureau. Be very specific in your complaint.

          • Nicole


      • Nicole

        How to write a dispute letter?

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