Not sure why your loan or credit card application was rejected? These factors could explain it.
Now, you're probably aware that if your credit is poor, your chances of getting approved for a loan or credit card are pretty slim. But here are a few more surprising reasons why your application could get denied.
1. You've erroneously been declared dead
Your Social Security number is an important piece of personal identification, and you'll generally need to provide it when applying to borrow money in some shape or form. But if the Social Security Administration (SSA) mistakenly has you listed as deceased, your loan or credit card application is likely to get rejected.
Now, you might assume that this sort of error is a one-off thing that happens every few years, but actually, it's estimated that the SSA lists 6,000 people as dead every year when they actually aren't. Not only that, but proving that you are, in fact, alive can be a real headache. To do so, you'll need to visit your local Social Security office with various proofs of ID, like a passport, driver's license, or marriage license, and make your case. Once that mistake gets corrected, you should be able to apply for a loan or credit card successfully -- but it could take a little time to get that error sorted out.
2. Your identity has been confused with someone else's
You might think your credit is in good shape, only to be denied a credit card or loan unexpectedly. What gives? Unfortunately, there's a good chance the problem boils down to mistaken identity.
It's not uncommon to have someone else's debt or delinquency show up on your credit report, especially if you have the same name or similar Social Security number as the offending party. That's why it's crucial to check your credit report for errors every few months. If you spot a mistake -- namely, a debt or delinquency in your name that isn't actually yours -- you can take steps to get that error corrected so your own credit doesn't suffer.
You're entitled to a free copy of your credit report every year from each of the major reporting bureaus: Experian, Equifax, and TransUnion. A good bet is to request a different report every four months so that you're able to continuously monitor activity on your credit record.
3. You have no credit history at all
When it comes to getting approved for a credit card or loan, often, having no credit history is just as bad as having an unfavorable credit history. If you don't have a credit history, lenders won't have a way of knowing whether you're a responsible borrower or not, and as such, may be hesitant to take a chance on you.
How do you change that? For starters, put a few bills in your name. If you're a recent college grad now living with your parents, ask to take over the household cable bill. Another route you can go is to get added as an authorized user on someone else's existing credit card -- say, a parent's or sibling's. That way, when the main cardholder pays his or her bills on time, that good behavior gets recorded on your credit record as well.
If you've been denied a credit card or loan unexpectedly, it pays to dig into the reasons why. All three of the situations listed above are fixable, provided you know what issue you're dealing with, so the next time you're not approved to borrow money, don't hesitate to request an explanation.
Our picks for 2024's best credit cards
Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.
Click here to learn more about our recommended credit cards
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.