Credit bureaus or credit reporting agencies do not approve or deny credit. Their business is credit reporting and they have a vested interest in the accuracy of those reports. Each lender decides what standards you must meet to be granted credit. There are many reasons why a credit grantor may deny your request for credit:
Low Credit Score
The information contained in a credit report is combined using a complex calculation method that results in a credit score. Often creditors will deny applications based only on the score without looking at the individual elements in the calculation.
Incorrect Information
Your credit report may contain information belonging to another individual. For example, if you are a Junior (Jr.) you may have your parent’s (Sr.) credit information in your file. A regular credit report review is the best way of making sure that the information is accurate and true.
Debt to Income Ratio
If the ratio of your total monthly debts compared to your total monthly income is too high, the creditor may decide against extending more credit to you because the lender feels you may not be able to afford the payments. Some banks or lenders may illegally discount non-salary income in arriving at this ratio, but the Equal Credit Opportunity Act requires creditors to consider earned income, Social Security, child support, and alimony as sources of income.
Delinquent Payment History
If the report contains a history of late payments or collection accounts that were never paid, there is a very strong chance that a future application for credit will be denied.
Lack of Credit History
If you've never had credit or you've just begun building your credit, the credit bureaus may not have enough information to accurately give you a score. This is called a thin file.