What To Do When You Are Denied with Credit or Insurance?
If you are denied credit, the ECOA requires that the creditor give you a notice with the specific reasons your application was rejected or the news that you have the right to learn the reasons if you ask within 60 days. Ask the creditor to be specific: Indefinite and vague reasons for denial are illegal. Acceptable reasons might be “your income was low” or “you haven’t been employed long enough.” Unacceptable reasons include “you didn’t meet our minimum standards” or “you didn’t receive enough points on our credit scoring system.”
Sometimes you can be denied credit or insurance — or offered less favorable terms — because of information in your credit report. In that case, the FCRA requires the creditor or insurance company to give you a notice that includes, among other things, the name, address, and phone number of the credit reporting company that supplied the information. If a credit score was a factor in the decision to deny you credit or to offer you terms less favorable than most other customers receive, the notice also will include that credit score.
If you receive one of these notices, you are entitled to a free copy of your credit report. Contact the company to find out what your report said. The credit reporting company can tell you what’s in your report, but only the creditor or insurance company can tell you why your application was denied.
If a creditor or insurance company says you were denied credit or insurance because you are too near your credit limits on your credit cards, you may want to reapply after paying down your balances. Because credit scores are based on credit report information, a score often changes when the information in the credit report changes.
If you’ve been denied credit or insurance or didn’t get the rate or terms you want, ask questions:
Ask the creditor or insurance company if a credit scoring system was used. If it was, ask what characteristics or factors were used in the system, and how you can improve your application.
If you receive a notice explaining that you are being offered less favorable credit terms than those offered to most other consumers, ask the creditor or insurance company why you aren’t getting its best offer.
If you are denied credit or not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information with the credit reporting company.
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