Four Things to Do If Your Application Is Denied

Applying for a credit card or loan is somewhat of a gamble. Even if you’re sure you meet all the qualifications, your application can still be denied. While it’s disappointing, it’s not the proverbial end of the world. It’s an opportunity improve your credit and your finances so you can be in a better position the next time you apply.

Understand why your application was turned down. After you have an application denied, the bank will send a letter letting you know the reason or reasons your application was turned down. The information in this letter will let you know what you need to do differently the next time you apply. For example, if your application was turned down because you had too many recent applications, then hold off on making any additional applications until you’re approved for the loan.

Get a copy of your credit report. If you’re turned down because of information in your credit report, you’re entitled to a free copy of the credit report that was used in the decision. The bank will send a letter letting you know how to get your copy of this credit report. Review your credit report to make sure the information is reported accurately.

You’ll have 60 days to order this free credit report and you’ll only get one report from the specific credit bureau the bank used to bank its decision. You can order your credit reports from the other major credit bureaus for free through AnnualCreditReport.com or purchase them directly from the bureaus.

Fix what’s wrong. There could be a number of things in your credit report that keep you from getting approved for a credit card or loan. For example, high balances, recently opened accounts, and open collections are all negative items that could lead to a denied application. Use the information in the letter from the bank to figure out what you need to fix with your credit.

If you found errors on your credit report, dispute them with the credit bureau to have them removed. You can make a dispute online or write a letter explaining your dispute. Providing proof of your dispute can help you get your errors cleared up quicker.

Work with a different lender. All banks have different approval criteria. Just because one denied your application doesn’t mean another will also deny it. Smaller community banks and credit unions may be more willing to work with you, particularly if you have a unique financial situation. Self-employed workers, for example, may have a harder time getting approved for a loan from a big bank.

Understanding the reasons you were denied is one of the best things to do after you have an application turned down. If you have the chance, ask your loan officer as many questions about the decision so you can better understand what you should do to improve your chances of getting approved next time.