If you have ever been denied for credit, you probably were wondering why. Your personal credit score is a reflection of your credit risk in the eyes of potential lenders. So, understanding how to determine why you were denied for credit will enable you to work on improving your credit score.
There are a variety of reasons that could cause you to be denied for credit, including:
1. Credit Obligations that are Delinquent- Late payments, charge offs or judgements, tax liens, foreclosures and slow to pay credit history can cause not only your credit score to decline, but can cause you to be denied for credit.
2. Incomplete or Inaccurate Credit Application Information- Potential lenders rely on the information you provide to them on the credit application to make their credit decisions. If information on the application does not match the information that they find on your credit report, it may cause your application to be denied. Be sure to check your credit application for accuracy before you submit it for consideration; it may save you from an un-necessary denial.
3. A High Volume of Credit Inquiries- This is probably one of the most commonly overlooked areas of a person’s credit report. When a potential lender requests information about your credit history, it shows up as an inquiry on your credit report. There are two kinds of credit inquires, hard and soft inquiries. A hard inquiry is when a lender requests an actual copy of your credit report for review why a soft inquiry is a look into your personal information for pre-approval or for a promotional offer. Soft inquires do not impact your credit score while hard inquires if they occur too often can cause your credit score to decline.
4. Credit Report Errors- While they do not occur commonly, errors can be present on your report, negatively impacting your score. The most common error is a name misspelling, so it is important to review your credit report regularly to ensure that all of the information is correct.
5. Insufficient Credit History- If you have recently established credit history, or you do not have long term account history, it may make it challenging to build your personal credit. Work proactively to build your credit over time.
Work to proactively build your credit report over time and monitor your report to ensure that your personal score is as strong as possible.
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