Did a Lender Offer Less Favorable Terms or Deny You Credit?

Did you apply for credit and get a notice that you got less favorable terms because of your credit report or credit score?

Your credit report and credit scores can affect whether you get credit or the price you pay to get it. If a business denies you credit or offers you less favorable terms for it, they must give you a notice that includes

• the contact information for the credit bureau that supplied the information about you and
• your credit score — if your credit score was a factor in the decision to deny you credit or to offer you less favorable terms

This can help you figure out why you were offered less favorable terms and what to do next.

What to do if you get one of these notices?

If you think there is a mistake with your credit report:

• Get your free credit report. You’re entitled to a free copy of your credit report from the credit bureau used to check your credit report. Their contact information will be in the notice. You must ask for your free report within 60 days of getting the notice.
• Fix mistakes in your credit report. If a creditor denies your application or offers you less favorable terms because of mistakes in your credit report, be sure to dispute the inaccurate information with the credit bureau and the business that supplied the inaccurate information. To learn more about this right, see Disputing Errors on Credit Reports.

People hire credit repair companies to help them investigate mistakes on their credit reports. But credit repair companies can’t remove negative information that’s accurate and timely from your credit report. Companies that make these promises are scammers. Anything a credit repair company can do legally, you can do for yourself at little or no cost. Read Fixing Your Credit FAQs to learn more about the rules credit repair companies must follow and how to tell if you’re dealing with a scammy credit repair company.

If your report is accurate but you want to improve your credit:

• Know how to find legitimate help. A reputable credit counseling organization will spend time discussing your entire financial situation with you before coming up with a personalized plan to solve your money problems. They won’t promise to fix all your problems or ask you to pay a lot of money before doing anything.
• Know what negatively impacts your credit score.
  • Paying Bills Late. If you think you might be late on a bill, call the company you owe money to. Explain that you’re having trouble paying your bill and ask for a payment plan.
  • Keeping Balances High. Credit scoring models look at how close you are to being “maxed out,” so try to keep your balances low compared to your total credit limit. Check your credit card limits — and pay down your balances, if you can. If the creditor or insurance company says you were denied credit or insurance or more favorable rates because you’re too near your credit limits on your credit cards, you may want to reapply after you pay down your balances.
  • Frequent or Large Credit Applications. Credit scoring formulas look at your recent credit activity as a signal of your need for credit.
  • Read more about managing debt.

• Monitor your credit report. Get a free copy of your credit reports every year from AnnualCreditReport.com. Read Free Credit Reports to learn more. It’s important to make sure your credit report is accurate because credit scores are calculated using information in your credit report, including your payment history and information about the debts you owe. Creditors use your credit score to help decide whether to give you credit and what the terms will be, including what interest rate you’ll pay to borrow money. Your score often changes when the information in the credit report changes. Learn more about your credit score.