| Denied Credit? Turn Rejection into Approval |
| By Credit Federal |
Published
10/8/2007
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Financial Tips
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Denied Credit Application
Don't be denied credit unfairly. Learn what not to include on credit applications so you can get approval instead of unfair rejection.
A report by Genworth Financial revealed a large percentage of mortgages approved to African American and Hispanic home buyers were high cost subprime (bad credit) loans. Turn rejection into approval. Here are tips to prevent being denied credit; or to prevent being unfairly discriminated from receiving fair terms.
The purpose of the Equal Credit Opportunity Act is to make sure all consumers are given an equal chance for credit approval. Understand that this doesn't mean every consumer credit application will get approved, instead it protects you when you deal with any creditor who regularly extends credit, including banks, retail and department stores, credit card companies, and credit unions. Your financial factors; such as income, expenses, debt, and credit history, are the actual considerations creditors are allowed to use when making their approval or rejection decisions.
Under the Equal Credit Opportunity Act, you cannot be asked to give your gender, race, national origin or religion if you're applying for a loan. You may; however, offer this information voluntarily. Also, a creditor cannot ask if you're widowed or divorced. Also, a creditor cannot ask if you plan on having children or if you receive alimony or child support. Once again; however, you may provide this information as 'additional revenue' sources.
There are some legal questions you may be asked, such as your residence or immigration status. You may also be asked if you have to pay alimony or child support.
If you're on public assistance income or you have a pension or an annuity, this must be considered in the same way as other income. Alimony, child support, or separate maintenance payments should also be considered income. In addition, anyone; including a creditor, may assume a woman of childbearing age will stop working in order to raise children.
Denied credit?
If your credit application gets denied, you have the right to know why but you must ask within 60 days. Upon your timely request, the creditor must give you a notice with specific reasons for your rejection.
If you feel the loan terms were less favorable than you expected; such as higher finance charges, you have the right to know why. Make sure you don't accept the offer until you know why, otherwise you will relinquish this right.
Acceptable reasons for a denied credit application:
Per the Federal Trade Commission (FTC), these are examples of valid, legitimate reasons to deny credit:
"Your income was low."
"You haven't been employed long enough."
Per the FTC, this is an unacceptable reason for rejection:
"You didn't meet our minimum standards."
If you get a similar response for the reason, don't accept it. Force the creditor to give you a specific reason why you didn't meet the minimum standards.
Get assistance:
If a retail store, department store, Credit Union, mortgage company, or government lending program denied you credit, contact the FTC's Consumer Response Center. If your complaint concerns a nationally-chartered bank, contact the Comptroller of the Currency at www.occ.treas.gov
If your complaint concerns a state chartered bank which is insured by the Federal Deposit Insurance Corporation (FDIC), contact the Consumer Affairs division of the FDIC www.fdic.gov. If you're not sure who to complain to, go to the Civil Rights Division of the Department of Justice at www.usdoj.gov.
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