Denied Credit for Derogatory Public Record on Credit Report

Reader Concern: I have recently been denied credit. I responded to a pre-approved credit offer and was denied due to these things: 1) Derogatory public record or collection filed. 2) Length of time accounts have been established. 3) Recent derogatory public record or collection 4) Lack of recent information on installment accounts.

This is the second time in two months I have been denied credit, by two different creditors. I've not been any of these things as far as I'm concerned, and the free credit report that I've acquired seems to support that. Why have I been denied credit, when all accounts in my report are in good standing?

Response:

The "public record" information they are referring to has to do with legal judgments such as IRS tax liens, bankruptcies, foreclosures, and other legal matters. This is separate from your account history, and it shows up in a different section in your credit reports. It's possible to have credit accounts in good standing at the same time you have derogatory public records in your credit report. I don't know if this is the case for you or not -- I'm just saying it's possible.

From what you've described, the creditor is finding something negative in the Public Records section of your credit reports. If they are telling you this, there are several possible reasons:

• There is, in fact, some kind of negative information in this part of your credit report.
• There is some kind of data mix-up that leads them to believe you have derogatory items in your public record (when you really don't).
• The creditor is giving you a bogus reason for why they've denied you credit. Perhaps they are sending you a form letter used for everyone who is denied.
  

The first possibility is the easiest to rule out, and it sounds like you may have done this already. You would simply check the "Public Records" section of all three credit reports (from Experian, TransUnion and Equifax) for some kind of legal judgment against you. This can include a variety of tax liens and other judgments. If you've ruled this out with 100% certainty, then your answer lies within one of the other bullet points listed above.

Have you had your wages garnished in the past? Have you had problems with the IRS that led to some form of tax lien? Have you ever declared bankruptcy, or had a house foreclosed upon? Any other type of legal action(s) against you? If you answer "yes" to any of these questions, then you've identified the problem. If you answered with a resounding "no" across the board, then there's something else wrong.