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There are some specific reasons why you might have been turned down. For example, it might be because you haven’t borrowed money in the past and have no credit history. It could be that you don't fit the lender's profile or that there were too many searches on your credit report. You could also be turned down because you’ve had financial problems in the past and have a low credit score.
Why most people are turned down
Most people are turned down because of the “financial problems in their past”. They may have missed payments on one or more of their debts, had a bankruptcy or defaulted on a loan.
Get your credit report
Regardless of why you were turned down, you need to get your credit report and check things out for yourself. You can get your credit reports free from the three credit reporting bureaus at the site www.annualcreditreport.com. Review them carefully. Be on the lookout for items that may be causing your problem. Be especially alert for errors in your reports. The Federal Trade Commission (FTC) recently released a report that nearly 26% of us have errors in our reports and at least 5% have ones that could be affecting their credit scores.
Don't fall for those credit repair scams
If you search Google on the term “credit repair”, you’ll find a lot of companies that say they can repair your credit. Despite what they might claim, nobody can get negative items removed from your credit report. The only thing that can eliminate bad items such as defaulting on a loan is time. This information will ultimately drop off your file but it may take seven years. In fact, the only thing those "credit repair" companies can do is review your file and have errors removed. However, this is something could can do yourself.
How to dispute an error
If you do find errors in your credit report, it's relatively easy to dispute them. You'll need to write a letter to the credit bureau whose report contained the errors and dispute them. The credit bureau must then ask the company that provided the information to validate it. That company has 30 days to respond. If it fails to do so, the credit bureau must remove the item from your credit report. Of course, if the company that provided the information can prove it was valid, the item will stay on your report and there's nothing that can be done about it.
What you can do
In the meantime, you should get to work and clean up your credit. You might start rebuilding your credit by getting a secured credit card. This is one where you make a deposit – usually $300 or $500 – and then charge against the card until you've used up your deposit. At that point, you could add more money to the card and continue using it. The credit card companies should report how you use your secured card to the credit bureaus, which will eventually help with your credit score.