3 Reasons for Getting Rejected Even with an Excellent Credit Score
Just because you have a good credit score doesn’t mean it’s with certainty that you’re going to be rewarded with credit. That’s not just the way the world of finance works. Even those with excellent credit scores have found themselves on the receiving end of bad news.
So the question is: why does this happen at all? Here are three reasons for rejection to help you understand better:
There are a variety of credit scores available.
When you say credit score, that doesn’t just mean getting a rating from one agency. While FICO may be the most popular one, there are several other varieties available like VantageScore. To make matters more complicated, your score will depend on the data from the credit bureau.
Additionally, banks don’t make decisions based on getting a score from an agency – they have their own custom application scores. Meaning, if they deem that your score is below what is accepted, you will be rejected.
This means that you shouldn’t take your credit score as a vote of confidence. Just use it as a guide because as you now know, that figure on the paper isn’t enough to get you an approval.
Being unemployed and earning minimum income.
Applying for credit means completing an application, and the data from which will be used in making a decision. It’s when this information is used for a fatal cutoff that means automatic rejection.
For example, a typical cutoff is your income and employment status. Most lenders would reject you if you don’t have a job or your income is below the minimum value they have set.
The amount of debt that you have
Every lender needs to be rest assured that you can pay back the money you borrowed and on time. So, they will check your current debts and measure that against what you make in a month. Once the math has been performed and they deemed you are capable of making payments despite being in debt, then you have a chance at getting approved.
Since credit scores are not surefire proof that you can apply for credit, this is a wakeup call to improve finances and make less mistakes along the way. This is so when the time comes, you’ll have a greater chance at being approved because your credit score is not only excellent but you’ve got a good financial record as well.