Denied Credit? 7 Ways to Improve Your Chances Next Time

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As if being denied credit wasn’t bad enough, rarely are we told why. Not only are you stuck without the loan you needed, you have no clue what to do about it.

That’s all about to change.

We’re going to walk you through figuring out why you were denied credit, what you can do about it now, and how to make sure you’re approved in the future. Let’s get started!

Figure out why you were denied credit

First of all, you’re going to want to know why you were denied credit.

However, if a lender is not quick to divulge why they won’t extend you an approval, figuring it out might take some digging on your part. Here’s what you can do.

Step 1: Find your credit score

Even if you’re not denied credit, you should know your credit score. While it used to be quite difficult to get your credit score, now you can get your credit score for free from a variety of places.

Just keep in mind that the credit score you see may not be the exact same one the lender sees. That’s because everyone has multiple credit scores, but most lenders consider your FICO score. Even so, if you focus on the range your credit score falls into rather than the specific number, you’ll get a good sense of how strong your credit is.

Step 2: Examine the reason code

A lot of credit score platforms will give you a description explaining why your score is what it is. Some might also give you a numerical code called a reason code.

If you see a reason code, type it into and read the description that comes up.

For example, let’s say your reason code is “02: No accounts with valid credit amount.” Depending on where you checked your score, you might see the number and a description following it or you might just see the number. All you need is the number.

So with this example, if you type “02” into the website above, you’ll get a detailed description of what that means. This detailed information will include an explanation and advice telling you what you can do about it.

In this case, the explanation states more or less that the credit file doesn’t have enough credit behavior and the actionable advice is to maintain open and active credit accounts.

Step 3: Review your credit report

While credit reports aren’t the same as credit scores, the information on your credit report can factor into your score. That’s why it’s important to review your credit report regularly.

You can check your credit report once per year from each of the three major credit reporting bureaus at Comb through your report and look for any errors. You might find that an error or account you didn’t even know about (like an old library fine in collections) is hurting your score.

If there are errors on your credit report, dispute them immediately and start the process of repairing your credit score.

Step 4: Try to get some information from the lender

This one is a long shot, but you lose nothing by trying.

Ask the lender if they can give you some insight into why you were denied. Perhaps there’s a minimum income requirement or a credit score range the lender looks for.

Again, they’re not likely to tell you much. But if you do get some information, you’ll be able to improve your chances for next time.

What to do if you’re denied credit

1. Look at alternative credit

Just because you were denied credit doesn’t mean there aren’t other types of credit you can be approved for in times of need. There are types of alternative credit offered by certain lenders to help.

For example, Upstart awards personal loans based on more than just your credit report. They also examine your years of credit, education, your area of study, and your job history. In other words, other factors in your life can help you get approved.

Another personal loan lending platform, Avant, might also be more willing to work with you if your score or income weren’t high enough to get the credit you originally wanted.

Keep in mind that these other types of credit can come at higher interest rates. Therefore, they should only be used if you really need to get approved for credit in the next month or so.

Check Out loans through Avant Today

2. Wait and improve your chances

If you were applying for credit for a big ticket item like a home, then you might want to pause and work on your credit score or income first.

Other types of credit can be a great tool in times of immediate need. But if you’re entering into a long-term loan, then it’s best to optimize for the best interest rate and terms you can get. Even waiting one year to improve your credit score can make a huge difference over time.

Check out the graph below from myFICO to see just how much of a difference your credit score – and the interest you’re charged because of it – can make.

types of credit

How to make sure you’re approved next time

1. Start building credit if you haven’t already

One of the reasons someone can be denied credit is by not having enough credit in the first place. Lenders want to see some proof that you’ll repay your debt – and if you don’t have a credit history they can’t make that determination.

One way to start building credit is to get a credit card and use it for small purchases each month. Just make sure to pay your credit card off before the end of the month; going into debt to build credit is never a good idea. You don’t need to maintain a balance to improve your credit. You simply need to use credit and pay it off on time.

2. Make on-time payments

The good news about building credit is it can be pretty easy. Simply paying all of your bills on time can have a significant impact on your credit. That includes your cell phone bill, utility payments, medical bills, and more, which can all get reported to collections if you pay late.

Therefore, never pay late on any of your accounts. Payment history is a huge part of your score and the easiest to accidentally damage. Stay on top of your payments and your credit score will thank you.

3. Free up credit

If you’re currently battling credit card debt, it’s going to drag down your credit score. That’s because lenders want to see a credit utilization ratio of 30 percent or less. Essentially, you’re should only use 30 percent (or less) of all the available credit at your disposal.

So if you’re nearing the top of those credit limits, it’s time to focus heavily on paying those balances down.

I know paying off debt is easier said than done. But if you focus on paying more than just the minimum – even create a targeted debt payoff plan – you might find faster progress than you expected.

Few things will keep you in debt longer than only paying minimums on a credit card.

4. Increase your credit limit

If your debt payoff is going to take a lot longer than you would prefer, you can get a quick boost to your credit score by increasing your credit limit. That’s because increasing your credit limit will decrease your credit utilization ratio immediately.

Think about it this way: If you have a $5,000 credit limit and a $4,000 balance, you’re pretty close to maxed out. But if you increase your credit limit to $8,000 while not adding any more to your balance, now you’re only at the halfway mark. It’s still not the ideal 30 percent utilization or less, but it’s definitely an improvement.

Keep in mind that you have to apply for a credit limit increase with your credit card issuer, which means you’re again applying for new credit. However, because they already have a lending history with you, that could potentially improve your chances for approval.

Just make sure not to use any of that new credit limit. Continue to focus only on reducing your balances, not adding to them.

5. Clean up your credit report

As mentioned above, any blemish on your credit report can get in the way of developing a good score and being approved for credit. But that doesn’t just mean credit reporting errors.

If you see an unpaid account on your credit report that you forgot about, don’t ignore it. Contact the lender that has the account and bring it back to zero so you don’t have unpaid accounts bringing your score down. This won’t get them removed from your credit report right away, but it can get them marked as paid so you can move on.

6. Pick up a side gig

Income is a large factor in approval for credit. Plus, extra income can help you pay off existing debt and lower your credit utilization. So if your need a boost in your take-home pay, consider picking up a side gig to help.

7. Ask for a raise

Another effective way to improve your income without taking on any additional work is to ask for a raise.

Timing does matter: if you just got a raise or are a few months into a new job, it could look out of place to ask for a raise. However, if you’re nearing a work anniversary or the end of the year, start preparing that pitch. Even a small bump in your salary could get you into that coveted credit approval zone you’ve been aiming for.

Play the long game

There’s no question that being denied credit is frustrating. However, as you work towards eventually being approved, don’t get discouraged. Building credit, increasing your income, and generally gaining access to more financial opportunity isn’t a short game.

Stay focused, be consistent, and remember what you’re aiming for in the long run. With time, you’ll be able to get your finances where you need them to be and get the type of credit you want when it comes up.

Interested in a personal loan?

Here are the top personal loan lenders of 2020!
LenderAPR RangeLoan Amount 
5.99% – 19.16%1$5,000 - $100,000

Visit SoFi

8.69% – 35.99%$1,000 - $50,000

Visit Upstart

7.99% – 35.97%*$1,000 - $35,000

Visit Upgrade

99.00% – 199.00%2$500 - $4,000

Visit OppLoans

5.99% – 24.99%3$5,000 - $35,000

Visit Payoff

7.99% – 29.99%4$7,500 - $40,000

Visit FreedomPlus

7.99% – 20.88%5$5,000 - $50,000

Visit Citizens

9.99% – 35.99%6$2,000 - $25,000

Visit LendingPoint

10.68% – 35.89%7$1,000 - $40,000

Visit LendingClub

9.95% – 35.99%8$2,000 - $35,000

Visit Avant

1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 18.82% APR (with AutoPay). SoFi rate ranges are current as of March 19, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your creditworthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.


    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. The loan terms presented are not guaranteed and APRs presented are estimates only. To obtain a loan you must submit additional information and documentation and all loans are subject to credit review and our approval process. The range of APRs is 7.99% to 29.99% and your actual APR will depend upon factors including your credit score, usage and history, the requested loan amount, the stated loan purpose, and the term of the requested loan. To qualify for a 7.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available. All loans are made by Cross River Bank and MetaBank®, N.A., Members FDIC.

5 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Rates and offer subject to change. All accounts, loans and services subject to individual approval.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

6 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 9.99% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

7 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 9.56% and a 5.00% origination fee of $300 for an APR of 13.11%. In this example, you will receive $5,700 and will make 36 monthly payments of $192.37. The total amount repayable will be $6,925.32. Your APR will be determined based on your credit at time of application. The origination fee ranges from 2% to 6% (average is 4.86% as of 7/1/2019 – 9/30/2019). In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,001 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the website. All loans via LendingClub have a minimum repayment term of 36 months or longer.

8 Important Disclosures for Avant.

Avant Disclosures

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,900 loan with an administration fee of 4.75% and an amount financed of $5,619.75, repayable in 36 monthly installments, with an APR of 29.95% would have monthly payments of $250.30.

Based on the responses from 11,574 customers in a survey of 210,584 newly funded customers, conducted from 1 Feb 2018 – 1 Aug 2019 95.05% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 7.99%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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