Credit Refusal Letter

Credit Refusal Letter


A financial institution that functions as a lending or crediting agency usually gives a credit refusal letter to a company or individual who has applied for some credit with the financial institution. The letter informs the recipient the financial institution’s decision to refuse the credit application, with the appropriate reasons. The letter is formally written as it is considered a business letter. The refusal can be due to several reasons such as not sufficient mortgage being offered, the client’s ability to repay the amount not being satisfactory to the company.

A few things need to be kept in mind while writing such a letter. Such a letter should be precise, formal, impeccable in grammatical, structural and spelling aspects of writing. The letter should begin concerning the request message sent by the client seeking the loan. The writer should then proceed to inform the customer that their request for the loan has been denied. The reason for the denial of the loan should follow immediately in a manner that is clear and understandable to the client. The letter should end with the writer wishing the client the best for their future.

Sample Letter:

Following is a sample of a Credit Refusal Letter.



San Francisco Main Bank
3305 Harrison Street
San Francisco, CA 94112



Edward R. Alcaraz
Sparkles Renovation Enterprise
2103 Payne Street
Houston, TX 77073

Re: Decision on Credit Application

Mr. Edward Alcaraz

Thank you for your interest in applying for credit with San Francisco Main Bank. We have looked intently into your credit application and would have welcomed your business. Unfortunately, we are unable to extend any credit to you at this time. Your credit application was refused because you do not have sufficient collateral to put forward for your credit request. Moreover, your business has not been performing well. Our study of the market for your renovation skills and services has shown a sharp decline for such services at this time with a weak real estate market. The real estate market is at its lowest in the past decade and therefore makes for a very unstable market to invest funds in.

San Francisco Main Bank would be happy to reconsider your credit application when the real estate market situation changes. An increase in the stability of the housing market will allow us to invest in this field again. That would help us reassess the ability of your company to pay back the amount lent and also allow you to submit sufficient collateral for easier processing of the loan. Our bank laws require us to ask our client to offer at least 80% of the loan sought value as collateral in property in the form of a mortgage or the form of valuable jewelry. We have attached our required by laws for your better understanding.

We wish you the best in your endeavors and hope to be able to serve you in the future.

Respectfully Yours,

Credit Department
San Francisco Main Bank

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