Understanding Your Adverse Action Notice
Any time you are denied credit, the lender is usually required to supply you with an adverse action notice. Though it sounds sinister, this letter actually contains helpful information that can clue you in to why you were denied.
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According to the Federal Trade Commission, the letter should contain a few key pieces of information. It will indicate which credit reporting agency supplied the credit report that was used by the lender to make its decision, along with the agency’s contact information. It will note that the credit bureau simply provided the information and was not involved in making the decision. If your credit score was used, the adverse action notice will list it. There should also be a statement explaining your right to obtain a free copy of the credit report that was used and to dispute any entries you believe to be incorrect.
Though the law doesn’t state exactly how soon creditors must send you this letter, Tayne says that you should typically receive the adverse action notice within seven to 10 business days. Sometimes, the letter is provided digitally.
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How to Ask for a Reconsideration
Though the algorithms used to evaluate your credit card application are complex, computers don’t always get it right.
“If you would like a real human to reconsider your application for a more complete picture of your income or employment status, or to explain extenuating circumstances behind a missed payment, you can initiate the process of credit card reconsideration,” Best says.
Best notes that the opportunity to actually speak with someone can be advantageous, since you can appeal to their good nature and common sense. “However, it’s important to have your information for refuting or negotiating well prepared,” he says. For example, applying for an elite rewards card when you have a credit score in the 500s will get you nowhere. On the other hand, if a simple mistake or one-time slip-up might have gotten your application rejected, you might be able to convince the representative to approve it after all.
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“It is also important to present your case honestly and politely,” says Best. Being courteous can mean the difference between a no and a yes. And if you aren’t successful the first time, call back. Sometimes all you need is to speak with the right person.