If you apply for a loan and you are rejected many lenders tend to use a 2 digit reason code to tell you why, instead of a proper explanation. Instead of explaining fully why you have been rejected from a loan lenders are using the codes as general rejections and all you have to do is look at the glossary and see which part of credit history made you get rejected. In the past lenders legally did not have to disclose information with borrowers as to why they were rejected and although using codes has this information, it is still quite confusing to the consumers as the explanations are so equivocal. If you have been rejected from a loan and are struggling to understand the codes, here are some ways to make sure you stay in control:
If you are unsure about your code just ask
There are many complaints about the reason codes – they use terms that people are not familiar with and do not define the codes properly, therefore confusing people when they should actually be helping them understand why they have been rejected. Although they have been designed to help the borrower see why they have been rejected from a loan the language the lenders use is often confusing. If you find a reason code unclear ensure you understand it properly before you accept the lenders decision. VantageScore has created a website where you input your reason code and it gives you a more informational explanation or you could just simply contact the lender and ask them what it means – they will be happy to help!
If your credit score is poor you may feel like you have been unethically rejected when applying for a loan or any type of credit. You are allowed to examine the situation and check that the lenders have not overlooked anything and that none of your information was used unfairly. Make sure you don’t let the situation pass – sorting it out could help you to better your credit score and it could help you get the credit or loan that you want. If there has been some information used that shouldn’t have, they will remove this and go over your application again – giving you a second chance at obtaining a loan or credit.
Keep an eye on your credit score
Make sure you look at your credit score on a regular basis to see what your credit is like and which bracket of credit you are in. You can get three credit reports a year – free of charge – but it is better to set up a tracking service, which will allow you to check and monitor your credit more regularly. Therefore if you do get rejected from a loan you will not be shocked as you have your credit report there so you can see why you have been rejected.
Boost your credit score
Your credit improves slowly over time, but it is vital to take action as soon as you notice a decline in your credit score. Every little action you make will improve your overall score. A decline in you score may be down to a clerical mistake or late/missed payment. As soon as you discover an error fix it right away to ensure your credit is not harmed. You can also improve your credit score by making payments on time and keep accounts that have been paid properly open – even if you do not use them.
Credit scores affect a lot of things
As you probably already know it is important to check your credit report regularly. Your credit score is normally what sways a lender when it comes to offering or rejecting you for credit or a loan. A credit score can affect a number of things:
- Mortgage terms
- Interest rates
- Apartment rental qualification
It is important to check your credit score regularly so you know how to keep yourself from getting into financial trouble later on. The more you know about your credit score, the better your relationship will be with your finances and the better your finances will be in the future. Read your credit report carefully so that you understand it and you know what things you may or may not meet the requirements for. When you know what it all means you will understand what you qualify for and what to do in the future.
Try to avoid difficult situations
When you have been rejected from a loan try not to get yourself into a situation that makes you feel confused. If you know how your credit score affects you financial openings – even an offer of a job – you will stop yourself being confused at a later date. Let’s just hope they don’t start using reason codes for job rejections too.