Question about impact of credit denial on credit record?

Question :

Back in 2008, we applied for a refinance 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 Credit Unions (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 to provide a decision on the credit application - even if it was withdrawn.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?

The 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).

Answer :

It certainly does seem odd to me that, the CU would send such a notice 3+ year 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 'friendly' and 'non-big-bank' Credit Unions are - this is a clear example of them operating under the same rules as the banks.

Date: : February 12