Lenders aren't obliged to give credit to consumers, including you. They receive tons of applications for credit, and they prefer to reject a few good quality ("lower risk") applicants rather than spending too much money on detailed vetting procedures or accepting large numbers of unprofitable customers.
Banks have a lot of information about you, and they use that information to judge you.
They generally have three ways of getting information about you:
1. The Application Form
When filling out the application form, you need to be careful to write everything accurately and double check in order not to make any mistakes, since you are letting your lenders know about your salary, address, the reason why you want the loan, if you possess or hold any personal property, and the size of your family. If you make any mistake when filling out the form, whether it's big or small, such as missing a letter or number, you jeopardize not only the application you just made, but any future ones.
2. Past Dealings With The Company
Have you dealt well with the companies you've borrowed from? Depending on the dealings you've had in the past, and your behavior in those cases, your creditors will evaluate you and decide accordingly whether or not to give you the credit you're asking for. Generally you're more likely to be given the credit you're asking for if you've acted responsibly with that company.
3. From Credit Bureaus
Credit bureaus are companies that keep a large database of meticulous and comprehensive financial data about consumers. The three major bureaus in the U.S. are Equifax, Experian and TransUnion.
Before lending you the money you requested, banks and lenders check your credit report –which is issued by credit bureaus– where they can see the details of your financial history, employment history, marital status, habits, borrowing and spending practices, both the positive and negative ones, such as your late payments and how much money you owe in each of your accounts, your credit limits and current balances. Your credit report also includes lawsuits which you may have been involved in, whether you owe child support, any liens or bankruptcy information.
Stagger Your Request For A Free Credit Report
If you would like a free copy of your credit report, you have the right to receive one, at your request, every 12 months from each of the major credit bureaus. To ensure the accuracy of your credit report, you should request for a free copy of your credit report every 4 months from a different credit bureau so that you can get a time-scale snapshot of your credit report over the course of a year, all free of charge since you only request once a year from each bureau.
For example, request a report from Experian in April, then request a report from Equifax in August, then in December request one from Transunion.
To get a free copy from all three credit bureaus, the easiest way is to call 1-877-322-8228 or by going to www.annualcreditreport.com .