Common Reasons Credit Is Denied.
Here are some common reasons for denying credit include...
- too little time in your current job or residence;
- too much existing unpaid debt;
- unacceptable reason for requesting credit;
- limited credit history;
- repossession or foreclosure;
- delinquent credit history or present credit obligations.
Factors for Deciding Credit.
Generally, creditworthiness MUST be decided on the basis of factors related to your ability and willingness to repay. You cannot be denied based on sex, marriage status, race, color, religion, nationality, age, reliance on income from public assistance, or because you exercise your rights under the Consumer Credit Protection Act.
If Denied Credit...
If denied credit, the creditor must give you, in writing, a statement. It MUST have the action taken, your rights, with the reason for denial (or how to get the reason).
Improve Your Poor Credit.
If you are behind on your payments, the only choice you have is to immediately repair your credit record. Here are some suggestions.
- Face the problem.
- Immediately stop any purchases with credit.
- Consider debt consolidation.
- Contact credit counseling.
- Do not expect miracles.
Accept that you are overextended. Contact your creditors to get a new pay schedule you can maintain. Never ignore bills.
Remove your credit cards from your wallet. Do not carry them. Put them in a safe place that is hard to access. Or, just destroy them.
It might be easier to make one payment than many. You might get a lower interest rate to make it easier to make your payments. Remember, debt consolidation is no cure-all. You still have to learn to control your spending habits to avoid debt in the future.
Get referrals for organizations in your area through the National Foundation for Credit Counseling.
Do not believe companies promising to fix poor credit ratings quickly, or painlessly, for a price. An accurate and timely negative report cannot be removed from your credit record. The only way to fix it is letting time pass and establishing a record of on-time payment.
Divorce and Credit.
A marriage that dissolves does not erase the debts of you and your former spouse, while a couple. It doesn't matter if your spouse is ordered, in court, to pay marriage debt. You can be liable if payments are not made. Here are some suggestions to protect your credit history...
- Have a plan to divide or dispose property. If necessary, get a mediator to help you work with your former spouse.
- Joint accounts need to be closed or separated. Decide who is responsible for paying bills and let your creditors know of the divorce.
- Establish your own credit, if you do not already have it.
- Be sure to pay your bills.
Early Loan Repayment.
If you apply for credit and may pay it off early, be aware that lenders may have different ways of calculating interest. The method they use affects how much you owe if you pay off early. Since lenders do not have to disclose which method they use, you may need to ask. Here are several of the most common interest-depreciation methods...
Rule of 78.
When most loans were for 12 months, this formula originated. It derives from the sum of the numbers 1 to 12. State law may mandate its use. The rule of 78s MUST NOT be used to calculate interest rebates for loans made after September 30, 1993 AND a term exceeding 61 months.
Actuarial Method.
This is used most often for mortgages or other loans where a periodic rate is applied to a diminishing balance. It does not consider if a payment is made before or after the due date.
Daily Simple Interest.
An outstanding balance has a daily periodic rate applied. Thus, borrowers benefit since the outstanding balance is reduced by early or lump-sum payments. Both reduce the balance and interest due. Under the simple system, late payers ultimately owe more.