In order to establish credit, I recently deposited $500 into a checking account and applied for a secured credit card. I received a letter from Experian stating that the secured credit card application was denied based on my past credit history. If the credit card is secured by the money in the account, why is my past credit history being considered by Experian?
Experian doesn’t approve or decline credit, and it doesn’t send letters to tell you that your application was declined. Take a closer look at the letter your received. We are certain you will find that it was sent by the lender and says it based its decision on a credit report from Experian.
Lenders may review your credit history when you apply for credit, even when it is a secured account. If you look at your application documents you will probably find a statement indicating the lender may review your credit history as part of the application review process.
Federal law requires lenders to provide a declination notice that describes why your application was declined and, if a credit report was used, how to get a copy of a credit report from the credit reporting company from which the lender received the report.
The declination letter must state the decision was not made by Experian or any other credit reporting company.
It must also provide information about why the application was declined. If a credit score was used in making the decision, the lender must provide a credit score it used along with the risk factors that most affected that score.
Thanks for asking.
– The “Ask Experian” team