What Do To When You're Turned Down for Loan or Credit Card

It's never fun to be turned down for something you want - and a loan or credit card is no different. But before you take it personally, or think you won't be able to get credit anywhere, read this article for some advice on handling rejection.

Lenders are required by a federal law, The Equal Credit Opportunity Act, to tell you in writing when you've been turned down for credit. Sometimes it can be hard to understand, though, exactly why you were turned down. Under law, two important pieces of information must be included in the letter you receive when you are denied credit:

Step One: Understand Why You Weren't Approved. Lenders will usually tell you in the rejection letter the reasons you were turned down, but once in a while they will include instructions for contacting the lender for that information instead. If that's the case, make sure you find out what those reasons were.

In any case, if you don't understand the reasons given for turning down your application, ask for more information. Sometimes it can be hard to pinpoint exactly why your application was not approved, because these decisions involve a lot of different factors. Don't be shy about asking, though, since the information you receive may help you improve your credit so you can qualify in the future.

Step Two: Get Your Credit Report. If the lender used a credit report in making the decision about whether to grant you credit, you are entitled to a free copy of your report. You must request it within 60 days, so don't wait to order it. Read your report carefully to make sure it is accurate and complete.

If you do find mistakes, dispute them directly with the credit bureau, which is required to investigate and make corrections, if necessary. If you believe that mistakes on your report led to the rejection of your application, you can ask the credit bureau to send a corrected copy to the lender. Follow up with the lender to find out if your application can be reevaluated.

Step Three: Try Again. All lenders have different approval standards. Just because you didn’t get a credit card or loan from one financial institution doesn't mean you can't get one somewhere else. Try again with another financial institution. Just don't apply for more than four or five loans or cards in a six-month period, otherwise, the fact that several companies have reviewed your credit report recently can count against you.

Credit card issuers may have different programs with different terms, and qualification standards. Other lenders may approve a loan if you can come up with a larger downpayment or accept another interest rate, for example. It never hurts to ask if there is a program that's right for you.