Denied But With An Explanation (Forbes)   Leave a comment


This past Thursday, a new law went into effect which requires lending institutions supply consumers with their credit scores, for free, should they decide to deny them credit. Part of the sweeping Dodd-Frank Wall Street Reform and Consumer Protection Act, consumers who are rejected for credit card applications, student loans, or car loans are now entitled to receive a free copy of their credit score along with an explanation of why they were turned down. This new regulation will also apply to those who are “adversely approved” that is, approved but not at the best rates.

The law does not apply to all credit situations. Utility, telephone, and insurance companies, who often use their own in-house scoring systems, are exempt. However, if you were denied credit due to a low FICO or VantageScore (score created by the three major credit bureaus), the lender must supply you with your score along with general information for the denial. They must also inform you of how to obtain your credit report.

Everyone should know the content of their credit report, as the effects of this report are far reaching and beyond that of simply being invoked when applying for a loan or credit card. Banks are not the only ones interested in your score. People can be denied jobs or access to housing based on these numbers. Even if you’ve always been a good credit risk, a simple clerical error can lead to inaccurate information on your report. If this is the case, you can submit a report dispute and clean your report. The largest impact on your credit report is your payment history, if you have accounts in arrears for 30-60 days; bring them up to date before they take a toll on your score. And while creditors are not required to remove collection accounts from your credit report, some are open to negotiation.

Try to pay down your credit card balances, but if this is impossible at this time, do make sure to make at least the minimum payment. Transferring your credit card balance to one with a 0% APR can save a lot of money, but do keep in mind the 0% APR is typically just an introductory rate and will expire. When considering switching credit cards, take into consideration their rewards programs; this is another moneysaving device. Cash back programs can literally put money in your pocket when you shop or – like the Shell credit card – when you drive.

While no one enjoys being denied credit, at least now the denial will come with an explanation. Something good can come from something bad if you let this be a starting point for you to repair whatever damage your credit may have incurred.

Posted July 31, 2011 by ilanamelissagreene in Uncategorized

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