A rejected credit application can be disappointing and many factors that go into the decision a lender makes to approve an application often feels arbitrary. However, being turned down for a charge card or an advance doesn’t have to be the end of the world.
Here are the 5 ways to rebound from a denied credit application:
1. Understanding why your application was rejected
Becoming more acquainted with why a money lender or charge card organization denied your advance or credit application is important. It could expand your odds of endorsement for new credit later on. For instance, let’s say that they refer to a past late installment, you can concentrate on taking care of bills on time moving forward. Loan specialists consider various elements when choosing whether to support a credit application. For instance, they will, in general, see things like your pay, business status, and your FICO assessment. A forswearing for new credit could result from issues like genuine wrongdoing or a high credit use proportion. (That is the amount of your all-out credit line you’re utilizing.)
2. Understanding your credit score
Whenever you’re denied credit, you’re eligible for a free copy of your credit report. Check out the details of your report to make sure that the items mentioned are accurate. Sometimes, error exists on credit reports that can be rectified by reaching out to each of the credit bureaus. Note that each of the major credit bureaus report different items, and it is likely that there can be an error on one report that doesn’t show up on another. In the event that there’s a record on your credit report that you never opened, that can hurt your FICO assessment
3. Understanding how to supplement your application
Lenders consider you to be a greater credit risk if you’ve quite recently changed occupations and your salary diminished. The credit organization or the bank may not realize that you’re foreseeing a major increase in salary sooner rather than later. Keep them in the loop on any salary or occupational changes. Supplementing your application with information about other income sources and financial obligations may allow a second chance for your application to be approved.
4. Understanding your credit options
Aside from credit cards and charge cards, there are other ways to get credit or funding including cash advances, personal loans, business loans, invoicing advances, and other sources. Depending on the type of purchase you plan to make, specialized credit options exist to obtain a desired item or service. For example, financing for car loans exist from the dealership as well as leasing, but there are other sources such as banks and credit unions that also supply car loans. If an individual is making a business-related purchase and don’t qualify for the restrictive qualifications for a traditional business loan, a personal loan may suffice or a company owner can work with a third-party and get an advance payment against an invoice he or she is owed. Explore different options according to your individual needs.
5. Understanding what is affecting your credit the most
In the event of a credit application denial, it’s important to understand what is affecting your credit the most and improve your FICO rating. Installment history represents 35% of your FICO score, which is the credit scoring model loan specialists utilize regularly while 30% of your FICO score relies upon the amount you owe contrasted with your complete credit limit. In addition, the length of overall credit history and number of accounts also affect your score. Paying bills on time and more than the minimum due each month will gradually decrease credit utilization while also reflecting a history of on-time payment which helps to increase your credit score.