Dear JRB,

The fraud alert may very well be why your application was declined. Or more accurately, it may be why the application process was stopped.

A fraud security alert tells lenders that you are a victim of fraud. Rather than continuing to process a credit application, lenders may simply stop the process and reject the application when they see a fraud alert.

There are at least two reasons for this. The first is that stopping the process protects you from continuing fraud. They lender doesn't know if it is working with you or the person posing as you, so rather than put you at further risk, they reject the application.

The second reason is that a fraud alert requires manual processing, which is costly to the lender. Rather than take on those extra costs, the lender may just refuse the application when a fraud alert appears.

This is particularly true for instant credit applications, where the application is reviewed and approved or declined through an entirely automated process in a matter of minutes, or even seconds. Automated systems are programmed to receive and recognize fraud alerts. But, because there is no way for a person to manually review the report or application or to call you to verify your identity, the only recourse is to decline it.

The lender should have provided you contact information for the credit reporting agency that supplied the report it used to make the decision. If not, contact the lender and ask them for it. They are required to tell you what credit reporting agency provided the report and how to contact the credit reporting agency to get a complimentary copy.

They are also required to tell you the reason for the declination so you will know if it was because of their inability to verify your identity, because your application did not meet their requirements, or if one or more areas in your credit history indicated more risk than they were willing to accept.

Thanks for asking.