Credit Denial Letter Templates and Samples

What Is a Credit Denial Letter?

A Credit Denial Letter is a document that contains the rejection of a Credit Application by a potential lender. The purpose of the letter is to notify prospective borrowers that their application for credit has been denied. The letter can be used to decline a home loan, a study loan, a credit card, etc.

Alternate Names:

• Credit Application Denial Letter;
• Denial of Credit Letter.

One of the main parts of the Credit Denial Letter should be a statement that explains why the Credit Application was denied. It can be because they have a limited credit history, low income, too much debt, or other factors. Stating the reason why the application was rejected gives the applicant a clear understanding of the situation and the opportunity to improve their position in order to reapply.

Credit Denial Letter Types

1. Generic Credit Denial Letter. Fill out this template to tell the credit applicant about the shortcomings or gaps in their documentation once you thoroughly analyze their request for credit. Set a deadline for the letter recipient to deal with the remaining issues and give them another chance to apply for credit with your bank if you offer this opportunity.
2. Sample Credit Denial Letter. This sample template can be used for reference when you compose your own note to the credit applicant. You should express your gratitude to the recipient who reached out to you asking for credit, notify them about the denial and say you are sorry to opt for this decision, list the circumstances that could not allow you to make a different choice - for instance, the letter reader's creditworthiness is below the level you demand, and tell the future borrower what they can do to rectify their mistake and reapply.

Haven't found what you were looking for? Take a look at these related templates below:

• Letter of Credit;
• Credit Dispute Letter;
• Debt Dispute Letter.