Denied for Credit, Should I Re-Apply Immediately?

Consumers that have been turned down for a loan are often frustrated and unsure of where to turn, and most individuals that are denied for credit wonder if they should reapply immediately. While there is not a definitive answer that will prove to be accurate for every single set of circumstances, being aware of a few factors can help a person determine what their best course action is.

There are many different reasons that can cause an individual to be denied for credit, and the simple fact of the matter is that the lender may just not be in a position to provide an approval. Few people realize that banks and lending institutions often must limit the number of loans that they do. A person may not be able to qualify for a loan immediately upon application, but an approval could be obtained just a few weeks later.

Credit Card Denial Explanation

Although lending laws and guidelines restrict a lender from discussing particular reasons for a decline, it is not inappropriate to expect an explanation if it has to do with company policies or procedures. By law, after being denied for credit, you will get an explanation (although not always specific) for why you were rejected. In that same document, it should include information about the credit bureau involved with the issuer and a chance to challenge the denial. Make sure the denial was not the result of mistaken identity, improper reporting of payments or old outstanding payments.

Certain guidelines are not going to change, such as an individual’s debt to income ratio or their employment status. If a person has reason to believe that they have been denied for credit due to these such factors, reapplying immediately is not going to result in an approval. However, if a person is able to drastically reduce their expenses, improve their credit or change these factors with time, reapplying could be the best way to obtain the desired loan. A good amount of time to reapply for denied credit is 90 to 120 days after the initial rejection.

Reapplying Too Often Causes Decreased Credit Scores

Consumers should also be aware that every time they apply for credit, their financial rating is going to take a hit. Do not immediately reapply for rejected credit cards because the chances of the lenders changing their minds is slim. In addition, more credit card inquiries can cause a credit score to decrease, so it is wise to be careful about how often a person applies for new loans.

If a credit report has collection accounts or negative history on it, the best way to improve the chance for approval is to take necessary steps to resolve those issues. Another solution is to call the credit card lenders directly and prove your case with them. They may require you to send in income information as well as tax forms. Anyone that has credit problems preventing them from being approved for a loan should seek help to rebuild their credit and improve their situation.

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