Opinion: Credit Rejection Fears Rise, But Lenders and Issuers Want to Say ‘Yes’ to Responsible Borrowing

As anyone in the dating world knows, asking a person out is often fraught with worry. Will they say yes or no?

It gets even worse if you’re not exactly at your best at that moment. Maybe you’re not as fit as you’d like to be or your job isn’t exciting enough. Whatever your insecurities, you may feel sick to your stomach before making the simple request, “will you go out with me?” 

In many ways applying for a credit card or loan evokes similar emotions, especially when the person’s credit rating is low. Credit scores range from 300 to 850, with higher numbers being most attractive to lenders because they indicate less risk.

For VantageScores, 300 to 600 is considered very poor to poor, and for FICO, numbers below the mid-600s are bad to fair. When consumers have scores in those ranges, they may shy away from applying for anything, even when they’re certain it would benefit their life. 

Now pessimism is deepening to the point of paralyzation. 

A February 2025 microeconomics survey by the New York Fed indicated that an increasing number of Americans are hesitant to apply for a new credit product because they don’t believe they will be approved.

But are consumers with subprime credit scores destined to be financial wallflowers? No. As the old dating axiom goes, “There’s a lid for every pot.” 

The key is for people with bad credit to fix their problems, build and highlight their attributes, and identify the right creditor and product to pursue. There are plenty of lenders who will say yes. 

According to the New York Fed survey, a rising number of consumers say they expect to be refused a loan in the near future amid an anticipated tightening in credit conditions.

Almost half (46.7%) believe it will be harder to obtain a credit card, home loan, or auto loan a year from now. The share of discouraged borrowers is currently 8.5% — the highest level since the survey series began in October 2013. 

Consumers’ concerns are not unfounded. In a 2025 PYMNTS report, borrowers with FICO scores of 620 or less experienced higher denial rates than other cohorts of borrowers. Twenty-nine percent of subprime consumers applied for and were denied a credit card, compared to 12% of super-prime consumers. 

These statistics are alarming. Most people who have low credit scores want to increase them so they can enjoy more and better borrowing options.

Yet outside of removing inaccurate information from a credit report, the only way to boost scores is by adding a lot of positive information to their file. Once that data is factored into the credit scoring algorithms, the numbers will rise. 

If a person doesn’t have an active credit product, they’ll have to get one so they can start the credit repair process. Consequently, not applying for a credit product out of fear of rejection is counterproductive. 

The only way to get credit is to request it by submitting an application, so not seeking credit will prevent financially struggling consumers from moving forward. 

It is extremely important for consumers to understand what is on their credit reports because that data directly affects their credit scores. Free electronic copies of credit reports are available from AnnualCreditReport.com, a site operated by the three major credit bureaus — Experian, TransUnion and Equifax. 

I strongly urge consumers to check their reports at least once a quarter so they can identify potential errors. 

The problem is, however, many people don’t review their reports for the same reason they don’t apply for credit products. Worry. What will they see, how bad will it be? In my experience, most people are relieved and often find their credit reports are not as terrible as they feared. 

Checking reports also gives consumers the opportunity to remove damaging errors. 

According to a 2024 Consumer Reports and WorkMoney Credit Checkup project, 27% of the survey participants detected account information errors, reports of late or missed payments that the consumer knew had been made on time, and collection debts that did not belong to them. 

By knowing what is being reported and then disputing any errors, at least some of their apprehensions about qualifying can be alleviated. 

No matter where somebody is in the credit scoring spectrum, a credit product will most likely be available to them.

The PYMNTS report noted that credit issuers gain long-term benefits when they take on subprime consumers, who are 3.6 times more likely to show interest in getting a new credit card than those with the highest credit scores.

And since credit-challenged consumers also stated interest in personal loans and auto loans, extending credit to them leads to a deeper relationship. 

For this reason financial institutions developed attractive products to responsibly capture the subprime market.

People with very low credit scores may safely pursue secured credit cards, fintech products such as credit cards with limits tied to the amount the person has in their savings account, buy now, pay later loans, and credit builder loans.

Subprime consumers are 3.6 times more likely to show interest in getting a new credit card than those with high credit scores.

Consumers with slightly better credit scores may be eligible for unsecured consumer credit cards with small initial limits. 

Now, will any of these products be a match made in credit heaven? Perhaps not. But for the millions of people who are so credit challenged that applying for anything fills them with dread, these cards and loans can help them get over the hump.

As long as they manage the products responsibly, consumers can start to improve their credit and build confidence for the next phase of their lives.