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When a Credit Report Leads to a Denial or a More Expensive Offer

This guide presents selected U.S. government consumer education from CFPB and Federal Trade Commission. References to “we” or “us” in the source material refer to the issuing agency. Source dates and links appear below.

What can I do if my credit application was denied because of my credit report?

If you were turned down for a loan or a line of credit, the lender is required to give you a list of the main reasons for its decision or a notice telling you how to get the main reasons.

First, find out what caused the lender to turn you down. If a lender rejects your application, it’s required under the Equal Credit Opportunity Act (ECOA) or Fair Credit Reporting Act (FCRA) to send you an adverse action notice telling you the specific reasons your application was rejected or telling you that you have the right to learn the reasons if you ask within 60 days.

If a lender rejects your application based on your credit report, the lender is also required to:

  • Provide you the numerical credit score it used in taking the adverse action and the key factors that affected your score
  • Give you the name, address, and telephone number of the credit reporting company that provided the report
  • Tell you about your right to get a free copy of your credit report from the credit reporting company that provided it within 60 days of your adverse action notice
  • Explain the process for fixing mistakes on your report or adding information to make your report more complete

If you find information in your credit report that you believe is inaccurate, you can dispute what is in the report with the credit reporting company and the company that provided the information. The credit reporting company is required to conduct an investigation and correct any errors it finds. If after the investigation you still believe that the report is wrong, you generally have the right to add a statement to the report stating that you dispute the information.

If you were denied due to an “insufficient credit file” (also known as a thin credit file), you can use this checklist to learn how to build and keep good credit .

It is illegal for a creditor to discriminate in any credit transaction, including mortgages, against any applicant because of:

  • Race
  • Color
  • Religion
  • National origin
  • Sex
  • Marital status
  • Age, unless the applicant is not legally able to enter into a contract
  • Receipt of income from any public assistance program
  • Exercising in good faith a right under the Consumer Credit Protection Act (such as disputing information in your credit report)

If you feel you may have been discriminated against, learn more about your rights under ECOA and FCRA. If you have a problem with credit reporting, you can submit a complaint to the CFPB.

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

Did you apply for credit and get turned down? Or did a lender offer you less favorable terms for credit? If so, they have to give you a notice with certain information. Improving your credit may take some time, but taking some steps will help you do it. 

If a Business Denies You Credit or Offers Less Favorable Terms

Disputing Mistakes on Your Credit Report

Improving Your Credit

If a Business Denies You Credit or Offers Less Favorable Terms

Your credit report and credit scores can affect whether you get credit, as well as the price you pay to get it. If a business denies you credit or offers you less favorable terms — like a higher interest rate — 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 it was a factor in the decision to deny you credit or to offer you less favorable terms

This can help you figure out what to do next.

Disputing Mistakes on Your Credit Report

If you get one of these notices and think there's 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 the business used to check your credit report. The bureau's contact information will be in the notice. You have to ask for your free report within 60 days of getting the notice.
  • Dispute mistakes in your credit report. If a creditor denies your application or offers you less favorable terms because of mistakes in your credit report, dispute the inaccurate information with the credit bureau and the business that supplied the inaccurate information. To learn more about how to do this, see Disputing Errors on Credit Reports.

People sometimes hire credit repair companies to help them fix mistakes on their credit reports. But credit repair companies can’t spur the removal of negative information that’s current and accurate. Only a scammer will promise to do that.

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.

Improving Your Credit 

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 handle your money problems. They won’t promise to fix all your problems or ask you to pay 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 says you were denied credit 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 credit applications. Many scoring models look to see if you've applied for credit recently. If you've applied for too many new accounts, or taken out large amounts of new credit, it could hurt your score.
    • 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.

Sources and publication details

The federal agency source text is U.S. government work in the public domain. Fynoptic selected, adapted, and formatted it for this guide. No agency endorsement is implied. Follow the linked sources for current program details and the rules applicable to your circumstances.

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