Don"t Worry. Being Turned Down Doesn"t Hurt Your Credit Score
Having an application denied can affect your credit score, but not for the reason that you think. Consider what happens when you make a credit card or loan application. The lender pulls a copy of your credit report or score or both and reviews them to make a decision. Then, they either approve you or deny you. You may find out on the spot, or the bank may notify you by mail.
If you’re approved, the bank opens up the account and then begins reporting your account history – payment, credit limit or loan amount, etc.
– to the credit bureaus. On the other hand, when you’re denied, there’s no additional entry added to your credit report.
A record of each credit-based application you make is added to your credit report in the Inquiries section. Your credit report will list the name of the company who checked your credit report and the date your credit report was checked. That’s it. The inquiry doesn’t give any information about the credit decision.
The only way someone would know whether you were approved is to look for an account opened around the time the inquiry was made. If there’s no new account, one could assume it’s because you weren’t approved. A credit inquiry with no matching new account doesn't mean you were declined - it could also indicate that you turned down the offer.
That’s the good news – being turned down for credit doesn’t affect your credit score (but your credit score could be the reason you were turned down). However, that you applied for credit at all can affect your credit score since inquiries are 10% of your score.
One application may not affect your credit score significantly. But if you make several credit card applications, especially within a short period of time, your credit score will take a hit.
If you were turned down because of information on your credit report, the creditor will send a letter - an adverse action notice - in a few days letting you know the reasons you were denied. You’ll also have an opportunity to request a free copy of the credit report that was used in the decision. When you’re turned down because of your credit score, you’re automatically sent a free credit score and an explanation of two major factors that affect your credit score. This information will be useful in helping you improve your credit so that you also improve your chances at having your next application approved.
If you’re approved, the bank opens up the account and then begins reporting your account history – payment, credit limit or loan amount, etc.
– to the credit bureaus. On the other hand, when you’re denied, there’s no additional entry added to your credit report.
A record of each credit-based application you make is added to your credit report in the Inquiries section. Your credit report will list the name of the company who checked your credit report and the date your credit report was checked. That’s it. The inquiry doesn’t give any information about the credit decision.
The only way someone would know whether you were approved is to look for an account opened around the time the inquiry was made. If there’s no new account, one could assume it’s because you weren’t approved. A credit inquiry with no matching new account doesn't mean you were declined - it could also indicate that you turned down the offer.
That’s the good news – being turned down for credit doesn’t affect your credit score (but your credit score could be the reason you were turned down). However, that you applied for credit at all can affect your credit score since inquiries are 10% of your score.
One application may not affect your credit score significantly. But if you make several credit card applications, especially within a short period of time, your credit score will take a hit.
If you were turned down because of information on your credit report, the creditor will send a letter - an adverse action notice - in a few days letting you know the reasons you were denied. You’ll also have an opportunity to request a free copy of the credit report that was used in the decision. When you’re turned down because of your credit score, you’re automatically sent a free credit score and an explanation of two major factors that affect your credit score. This information will be useful in helping you improve your credit so that you also improve your chances at having your next application approved.
