hi, my name is john ulzheimer, and i'm acredit expert who contributes to creditcardinsider.com. if you have any questions then please submit them in the comments section below. today's question is this: what happens if you are denied for a credit card? well, when you're denied fora credit card or a variety of things happen or have happened.
How To Get Approved For A Credit Card, generally speaking it's pretty easy toget a credit card. there's a fairly low barrier to entry and most people whohave anything other than just horrific credit can get some form of a creditcard. there's a wide variety of credit cards all the way to subprime credit cards, andthose are for people who've got really bad credit,
all the way to the super prime creditcards, and those are for people who've got fantastic credit. those are going to be the ones with the really high credit limits. when you make an application for credit, thecredit card issuers pulls your credit report and your credit score. based onthat information, they're going to either approve the application or they're goingto deny the application, or they may actually counter offer you for someother product that they feel is a better fit for the risk that you pose to thebank. if, however, they have nothing for you because your credit is just so poor, then they're going to send you what's referred to as an adverse action letter, or a noticeof adverse action, which is more informally
referred to as a declination letter. thisis what happens when you're denied for a credit card. one of the myths aboutcredit denials is that some record of the denial is reported to the creditreporting agencies. that's absolutely untrue. there is no section of any creditreport, and frankly there has never been a section in any credit reporthistorically, where information about denials is housed. so there is no sectionthat says "john was denied an american express card in may of 2015." thereis no section, there is no information, it can not be gleaned from looking at acredit report. impossible. the notice that they send you, and it's generally aletter that they're going to mail to you, has some
information on it about the information they used as thebasis for their decision. because the information that was used as a verylikely going to be a credit report and credit score, the issuing bank has todisclose to you where they got the information from. so, if they pulled your experian credit report and used that as a basis for their decision, they've got to tell you that. they've also got to give you experian's contact information and also let you know that you have the right to a free copy of that report because it was used as the basis for denial. they alsohave to disclose your credit score, if in
fact they did get a credit score and usethat as well as part of their decision-making process. so, again, let's say they pulled you vantagescore from experian, and it was 520, and that's below theirminimum standard, and they denied you as a result, they've gotta tell you that theypulled your vantagescore and it was a 520. they also have to let you know where yourank relative to other people in the united states so you'll know "hey, i rank in the lowest 10% or i rank in the highest 10%," so it gives you anidea and indication of how you're performing relative to your peers. the obligation tosend you this letter, or some form of notice that you've been denied, is in fact an obligation. it's not a choice.
the fair credit reporting act requires that any time you're denied a credit card or any other form of credit based on information in your credit report, which includes a credit score, then the issuing bank or theservice provider has to send you this notice. it's not voluntary, it isin fact a requirement under federal law. when you're denied credit it is verylikely that you're going to find out you were denied for credit based on that letter. so it's very unlikely you're going to get a call from the bank saying "hey, we just want to let you know you've been denied credit. we're gonna send you a letter in a few days." it's very likelyyou're not going to get any phone call from anybody, you're just going to get the letterand the letter is going to be the delivery
mechanism of the denial related information. it's unfortunate; thegood news is that you are not precluded from going out somewhere else and applying for credit with another bank and after you are able to improve your score tosome extent then there's nothing to preclude you from applying for creditwith the same exact bank, although you may choose to to look elsewhere because youalready know that they've got fairly rigid standards relative toyour credit rating and credit report information. so if you have any otherquestions about credit or financial topics then please submit them to creditcardinsider.com or in the comments
section below. thanks a lot for watching, and have a nice day.
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