What can I do if I am denied credit?

If you apply for credit and you are denied because you have a low credit score, then you should be aware that you have the legal right to know exactly why they denied you. Reasons for denial may include having too much debt that is still outstanding, having too large a number of credit accounts or having a balance that is too high in comparison to your credit limit.

You should know that you are also entitled to receiving a free copy of each of your credit scores from the three credit bureaus or credit reporting agencies, so make sure that you actually request this copy. It could potentially take a little while for you to receive the credit reports, but once you do receive them, you should take the time to study them, finding out what factors are contributing to the weakness of your credit score so that you can work on improving them.

How can I improve my credit score?

The biggest way that you can improve your credit score is to work on paying your bills on time. Additionally, you are going to want to reduce any of your outstanding debt, stop putting in applications for new credit, you are going to want to avoid creating any new balances, you are going to want to avoid credit checks by no longer applying for loans or credit, and you are going to want to keep your longest open accounts open while cancelling the others. Above all else, you are simply going to want to hang in there, because longer credit histories are always better in comparison to shorter ones. It is likely going to take some time before you begin to experience positive changes in your credit score, but if you actively work on improvements, then they will happen.

What if I see an error on my credit report?

You should dispute it. If you find anything that is amiss you will want to dispute it immediately. In a lot of cases, this dispute can be placed online at the agencies website. The reporting agency is then required by law to investigate your dispute, and the person/company/entity that gave that information to the agency must also respond to the dispute within a given amount of time with proof that the data they provided was correct.

If this dispute doesn't end up in your favor, then you should make sure that you add a permanent statement to each of your credit reports in order to explain and identify the nature of this dispute and the information that has been found to be inaccurate. Credit reporting agencies are required according to the law to include these statements within your credit report.

You can obtain more information about disputing information found to be incorrect in your credit report by visiting the official website for the Federal Trace Commission or FTC.

Photo Credits: Casey Serin

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