What is a Credit Denial?

Diane Goettel
Diane Goettel
An adverse credit history can prevent a person from getting a credit card.
An adverse credit history can prevent a person from getting a credit card.

Credit denial, which is also sometimes called "credit rejection," is an event during which a person or company that has applied for a line of credit is turned down. There are a number of reasons why an application for a line of credit may be denied. The two major reasons are a lack of credit history and a bad credit history.

A lack of credit history is a situation in which a person has never before maintained a line of credit or has only maintained a very limited line of credit. A credit denial may ensue if a person with no credit history applies for a line of credit or if a person with a limited credit history applies for a line of credit that will make large amounts of money or credit available to them. A bad credit history can also lead to credit denial. One's credit history may be seen as poor by a credit institution if one has previously been late on payments, defaulted on loans, or applied for bankruptcy. There are a number of other factors that a credit institution may look into, but these are the key points that lead to credit denial due to poor credit.

Filing for bankruptcy is one factor that can lead to credit denial.
Filing for bankruptcy is one factor that can lead to credit denial.

Another reason for credit denial may be lack of information. If the applicant does not include enough or sufficient information in his credit application, this may result in credit denial. In these cases, the applicant may have the opportunity to apply for credit once again with a more complete or amended application. In cases where a person experiences credit denial due to poor credit or no credit, however, it is unlikely that a second application will result in a positive response from the credit institution. All that can be done is to work on improving one's credit history and try again with a new application at a later date.

If a credit denial is because of credit history, an individual has the right to request a copy of his credit report.
If a credit denial is because of credit history, an individual has the right to request a copy of his credit report.

In the United States of America, under the Equal Credit Opportunity Act, a federal law enacted in 1974, credit lenders must respond to credit applications within 30 days. If an application results in a credit denial, the credit lender must offer a reason for the denial. The reason cannot be based on age, nationality, marital status, race, or a person's dependence on public assistance. If a person is denied credit due to credit history, he has the right to see a copy of the credit report that led to that denial.

Diane Goettel
Diane Goettel

In addition to her work as a freelance writer for , Diane is the executive editor of Black Lawrence Press, an independent publishing company based in upstate New York. She has also edited several anthologies, the e-newsletter Sapling, and The Adirondack Review. Diane has a B.A. from Sarah Lawrence College and an M.A. from Brooklyn College.

Diane Goettel
Diane Goettel

In addition to her work as a freelance writer for , Diane is the executive editor of Black Lawrence Press, an independent publishing company based in upstate New York. She has also edited several anthologies, the e-newsletter Sapling, and The Adirondack Review. Diane has a B.A. from Sarah Lawrence College and an M.A. from Brooklyn College.

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Discussion Comments

anon339233

Nice job here, thanks. The best thing that someone can do if they are rejected is learn from the situation and apply what they have learned towards their next attempt.

It is always a very good idea to find out what the lender's approval standards are up front to determine what your credit report needs to reflect in order to be accepted.

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    • An adverse credit history can prevent a person from getting a credit card.
      By: Andrey Bandurenko
      An adverse credit history can prevent a person from getting a credit card.
    • Filing for bankruptcy is one factor that can lead to credit denial.
      By: woodsy
      Filing for bankruptcy is one factor that can lead to credit denial.
    • If a credit denial is because of credit history, an individual has the right to request a copy of his credit report.
      By: alexskopje
      If a credit denial is because of credit history, an individual has the right to request a copy of his credit report.
    • A credit denial occurs when a consumer is turned down after requesting to purchase an item on credit, obtain a credit card or establish a line of credit.
      By: neirfy
      A credit denial occurs when a consumer is turned down after requesting to purchase an item on credit, obtain a credit card or establish a line of credit.
    • If an applicant does not include sufficient information in his credit application, this may result in credit denial.
      By: bagraphix
      If an applicant does not include sufficient information in his credit application, this may result in credit denial.