“John, I made an application for a credit card about 3 weeks ago. Today I received a letter from the charge card company telling me that my demand for credit’s actually been denied.
The letter also consisted of by credit score, which was a 598. Why did I receive this letter?”
What you received was a letter formally described as a notification of unfavorable action. In plain English, that’s a declination letter.
The reason you got that letter is not really always because you were denied credit.
You received that letter because the Fair Credit Reporting Act (hereafter “FCRA”) requires loan providers to send those letters to anyone who’s denied credit based upon their credit reports or credit scores.
That letter represents a variety of things, a few of which is great news and some of which is bad news.
The bad news, certainly, is that you were not able to obtain the charge card for which you applied. The good news is that letter contains a great deal of information that’ll serve to you.
The declination letter must consist of the following products,
Adverse Action letters will include a high level reason your application was refuted.
The reason can be as particular as “insufficient income” or “credit rating too low” to as unclear as “information on your credit report.”
Declination letters are form based, which means normally boxes are checked and specifics are usually doing not have.
Point being, you will not ever see a declination letter that reads, “We rejected you due to the fact that you’ve several late payments on your car loan.”
The Credit Bureau
Adverse Action letters are required to consist of the business that supplied your credit report information.
So, if the loan provider drew your Experian credit report then the letter will include Experian’s contact info.
This is essential since the truth that you were rejected based on details in your credit report indicates you’re entitled to a free copy of that report if you request it within 60 days of the date of the letter.
The Credit Score
In 2011, loan providers that utilized your credit score as a basis for a negative decision (like a denial of credit) were needed to begin providing the candidate the actual score they used.
So, in the situation above the loan provider would’ve needed to provide the 598 to the customer.
In addition to the rating, the letter has to provide the range of the rating utilized (generally around 300-850) and vital factors that adversely influenced the rating.
A Few Things You Should Know
There are a few things to bear in mind concerning these letters. To begin with, the adverse action notification is going to appear, whether you ask for it or not.
The auto-pilot nature of the credit rating disclosure is nice since candidates who’ve simply been refuted credit, at least, understand simply how bad their credit’s without needing to go somewhere else and ask for it.
That’s not the case with your credit report.
If you want to take advantage of your right to obtain a complimentary copy of your credit report then you’ve to speak to the credit bureau and ask for it.
If you don’t ask for it, or you wait too long to ask for it … you either won’t get it or you’ll be charged for it.
Finally, that truth that you were refuted credit doesn’t go on your credit report and won’t ever go on your credit report.
In fact, the only record that you applied for credit’s the credit “inquiry”, which is a record of name of the lender drawing your credit report and the date the report was drawn.