Question about impact of credit denial on credit record.

SoCal_Engr
Contributions:5661

Back in 2008, we applied for a refi through a local credit union. In the process, it was discovered that one of the credit agencies had mixed a history of several delinquent accounts into my wife's history. I took care of the mix-up and had the records corrected (took about 2-3 days). However, the CU took forever to re-check our credit. While waiting, we found another lender and cancelled our application with the CU.

End of story, right? We thought so.

We just got a letter from the CU. In it, they reference our 2008 application and say that they are required (by law?) to provide a decision on the credit application - even if it was withdrawn. The letter goes on to state that the reason our application was denied was due to the several delinquent accounts. Of course, since all of this was cleared up in 2008, I no longer have the record of the interactions with the credit reporting agency.

The letter from the CU goes on to state that "this notice has no impact on your consumer credit report or your credit score." Is this true? It seems like a credit denial would be reported to the credit reporting agencies, or are denials not reported?

Bottom line is...I'm just curious as to how seriously I should treat this notification. I'm at least going to try and clear things up, but the CU is not likely to make things easy (they're already providing an out-of-state POC to mail responses to, vice a human to talk to).

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February 12 - US

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Answers (3)

Mark Anderson, "MarkAndersonMortgage"
- 4.6/5.0
- (27 reviews)
Contributions:12

Institutions that offer mortgage loans often fall behind on their reporting requirements. I'm betting that a lot of other folks got denial letters the same day you received yours! The good news is that it truly has zero impact on your credit rating.

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February 12

Steve Felty, "SteveFelty"
- 4.9/5.0
- (29 reviews)
Contributions:396

It certainly does seems odd to me that the CU would send such a notice 3+ years after denying/cancelling your loan.

A lender's credit report will include previous inquiries (normally 24 months) which is why many lenders ask new applicants to address recent inquiries; however there is no way for a lender to know why the inquiry did not lead to a new credit/loan.

Since there is nearly zero chance the 2008 inquiry would be picked-up by a future lender, and even if it was, there is no way for a future lender to know the reason why that inquiry did not lead to new credit, I suggest you just ignore the letter.

For all of the advertisements we're hearing about how 'freindly' and 'non-big-bank' Credit Unions are - this is a clear example of them operating under the same rules as banks.

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February 12

wayne lancaster, "funds2"
- 0.0/5.0
Contributions:1174

When you did not complete/withdrew your application with the credit union in 2008 they were required to send you a notice of incompleteness and that your application was withdrawn. If you had completed the application they had were required to either approve or deny the application and notify you typically with in 30 days. For them to send you a letter of denial is not proper, and 3-4 yrs later is prosperous and seriously stupid. The good news is none of these reports involve or are reported to the credit bureau, so they have no impact on your credit.
If you really want to hold their feet to the fire, ask them to give you the proper notification Application Canceled/Withdrawn. They will probably tell you the don't have a record of you canceling the application, and your stance would be you don't have a record of asking them to process an application. Bottom line, you can chalk it up to a unsatisfactory experience that did no harm fortunately.