“Sorry, your request for credit has been denied…”

The dreaded words we all wish we don’t have to encounter when we apply for a loan or credit. Sometimes, there’s not much you can do about it. Beyond your credit history and score, economic reasons may also be a factor when it comes to the decision process to grant you credit. As many of us are no doubt now painfully aware, the recent credit crunch has left people with stellar credit baffled as they receive rejection lenders to application for credit cards, student loans, auto loans, and even at times mortgages.

While sometimes there’s nothing you can do after receiving a rejection, there are times where you should take immediate action after being denied credit.

Here’s three things you should do immediately after being denied credit:

1. Contact, follow up, reach a representative to see if there’s flexibility.

Sometimes, a credit report and score can’t tell the whole story. This is especially the case if you’re applying for a credit card. Many card issuers have uses computerize models and formulas to instantly grant credit. If you’re denied instantly, you should try to call the card company in question and speak with a representative to see if there’s anything that can be done. Though you may not be able to receive the exact credit card (or rewards/benefits) that you were hoping for, you may be able to get a lower-tiered card (e.g., a gold card vs. a platinum card). Take note that at times you may be subjected to a higher annual percentage rate for interest.

2. Request for your free credit report to spot potential errors.

When you’re denied credit, federal law dictates that you’re entitled to one free credit report. Sometimes you’ll have to request this free credit report via a written letter, often times you’ll be able to immediately log on and receive your free credit report straight from the credit reporting agency’s website. If you were expecting an approval without problem, now would be a good time to go over your credit history to see if there’s any erroneous information that you may have missed. If you spot any misinformation, follow up and have the reporting agency remove them.

3. Depending on what you were applying for, stop or keep going.

Did you know that if you’re applying for a home or auto loan, you have a certain duration of grace period where you can go shop for different credit without fear of multiple inquiry dings on your credit history? If you were recently denied auto/home loan from one lender, the credit scoring model has a buffer period that ignores hard inquiries within a 30 day period of applying for an auto or home loan. This allows consumers to shop around for different rates/lenders without damaging their credit worthiness.

Remember that your credit worthiness takes time and diligence to build and repair. If you’re having issues being granted credit, you should take a hard look at your current report and standing to see if there’s any actions you can take to fix the negatives. With proper on-time payment, diversity of credit profile, keeping credit utilization ratio low, you’ll be having a solid history in no time, and rejection would be the last of your worries!

Having a good credit score can help you qualify for low rate private student loans, credit cards, auto loans, and historically low mortgage rates. But how do you know if you have a good credit score or not? Is there a way to calculate my credit score? We will try to answer these questions over the next few moments.

Your FICO score can land anywhere on a 500 point range from 300 to 850.

Take a look at the numbers below at the factors that determine your FICO score:

35% Payment History – equal to 192.5 points of your score
30% Amounts Owed – 165 points
15% Length of Credit History – 82.5 points
10% New Credit – 55 points
10% Types of Credit in Use – 55 points

As you can see if you want to have the best chance of obtaining a high score, you want to pay all your bills on time and keep the amounts you owe to creditors to a minimum.

Now what you can do is obtain all 3 of your free credit reports from the government’s annualcreditreport.com site and start reviewing all the information. The longer you have paid all your bills on time the higher the chance you’ll receive all 192.5 points in the payment history section. 24 months of on time payments is good, 36 months is better, 48 months and longer is best.

Next you check how much you owe on each credit card or outstanding loan. If all your credit cards are maxed out you will have a lower score somewhere in the 600s or below. If you have used half of your outstanding credit lines, you may be able to get 80 points or more from the amounts owed section.

Next you look at how long your accounts have been opened. Five years is good, 10 years is better, and 15 years or more is best. If you are a 21-year-old recent college graduate, it is not possible for you to have a long-term credit history so you will be unfairly dinged for this section of your FICO credit score. The only way to get more points from this section is to keep your accounts open and pay all your bills on time.

The next section to help you manually calculate your credit score is looking at your new credit. MyFICO states that you only apply for credit that you really need. Even hard inquiries can lower your score. These can come from insurance companies, mortgage companies, or credit card companies to name a few. So if you don’t need new credit, don’t apply and you can add an easy 55 points to your FICO credit score.

The last section is the types of credit you have in use. Ideally you should have short and long term accounts plus fixed installment accounts and revolving credit types. However this does not mean that if you do not have one type of credit that you should go out and apply for that type. A good credit mix could include a mortgage loan, car loan, student loan, and credit card.

Now you add up all your points and you have approximately calculated your FICO credit score. This is a long and tedious process. A much faster way is to obtain your free FICO score in seconds and then use a credit score calculator to show you the effects potential changes have on your score.

If you’re confused by some of the credit card jargon; you’re not alone. The terminology can be confusing but, before you sign on the dotted line, you’ll want to take time to educate yourself on a few of the basics. Revolving credit is one of the key terms. When you apply for a credit card, most of the time you’ll be getting an open or revolving credit account.

In simple terms, revolving credit means that once you’re approved and have been given a credit limit (the amount you’re allowed to borrow based on your credit score and history), then you’re free to make charges and payments at will as long as you stay within the preset credit limit. Each month you’ll be required to make a minimum payment that will include interest charges. As you reduce your balance, you’ll have more of the funds available to use, up to your credit limit. As an example, if your credit limit is set at $2,500 and you charge purchases totaling $500, you’ll have $2,000 remaining for future purchases. If you then make a payment of $100 when the bill is due, you’ll have $2,100 in available credit to use.

Of course, any interest charges will need to be paid off with the monthly payment as well. Revolving credit accounts can be either secured or unsecured and, they can include rewards, cash back, miles offers or gas cards. MasterCard?, Visa? and Discover? cards are examples of revolving credit cards. American Express also offers revolving credit cards but they’re more well-known for their non-revolving or closed account charge cards. The difference is that with the charge cards, you won’t be charged interest but you will be required to pay your entire balance off each month. There are literally hundreds of revolving credit cards available.