Quick overview

When a lender declines an application it will usually send an adverse-action notice that lists the reasons (or explains how to get them). An appeal or formal request for reconsideration is your chance to supply updated documents, correct credit-report errors, clarify income or business performance, and ask for a re-review by a more senior underwriter. The process and timing vary by lender, product, and whether the application was automated or manually underwritten.

Why this matters

An appeal can change the outcome if the denial was driven by incomplete information, a reporting error, or a policy rule that a reviewer can exercise discretion on. Even when an appeal doesn’t reverse the decision, it often produces a clearer explanation that helps you improve future applications.

Step-by-step: how to prepare an appeal or reconsideration request

  1. Review the denial notice carefully. Federal rules (ECOA/Reg B) require creditors to provide an adverse-action notice; it will usually list reasons or tell you how to obtain the factors that led to denial (CFPB).
  2. Check your credit reports for errors. Order reports at AnnualCreditReport.com and dispute inaccuracies under the FCRA (FTC, CFPB).
  3. Gather targeted evidence that addresses the stated reasons: recent pay stubs or bank statements for income verification, corrected credit reports, updated business financials, additional collateral documentation, or a stronger business plan.
  4. Draft a concise appeal letter that:
  • Identifies you, the loan product, application date, and account or file number;
  • States the denial reason(s) you were given;
  • Presents the new evidence or correction and explains why it changes the lender’s decision;
  • Lists enclosed documents and provides a clear ask (reconsideration or escalation to underwriting manager);
  • Includes best contact information and a polite closing.
  1. Submit the appeal through the lender’s preferred channel (secure portal, email to the loan officer, or certified mail) and request confirmation of receipt.
  2. Track timing and follow up. Response timelines vary; many lenders respond in 7–30 calendar days but there is no universal deadline. Ask the lender for an expected decision date and note it.

What to include (document checklist)

  • Updated credit report and dispute confirmations (if applicable).
  • Proof of income: paystubs, signed tax returns, 1099s, profit-and-loss statement for self-employed applicants.
  • Bank statements showing cash reserves or revenue.
  • Collateral documentation: titles, appraisals, equipment lists, or inventory valuation.
  • A short cover letter summarizing key points (see step 4).

(For a full documentation checklist for business loans, see: Documentation Checklist to Speed Up Small-Business Loan Approval.)

Common reasons appeals succeed

  • The denial was based on outdated or incorrect credit report information that you can document and correct.
  • Income or assets were under‑verified and you supply stronger, recent evidence.
  • Collateral was undervalued or omitted but you provide appraisal or title documents.
  • A manual underwriter can exercise discretion for borderline debt-to-income or cash-flow metrics.

(If credit report errors are part of the denial, read: Reading your credit report: spotting errors lenders care about.)

Who can appeal and when to use other options

Anyone denied credit can request reconsideration. Appeals are most effective when you can produce new or corrected information quickly. If the lender denies reconsideration or the denial is policy-based (for example, product not offered in your state), consider these alternatives: apply with a different lender type (community bank, credit union, or CDFI), add a qualified co-signer, or improve credit metrics before reapplying (see: What lenders look for in a small-business loan application package).

Real-world example (brief)

A small-business borrower was declined because the lender used bank statements reflecting a seasonal dip. The borrower supplied a 12-month rolling revenue statement and an accountant-signed P&L; the lender escalated the file and approved the loan with a slight rate premium.

Professional tips to improve your chances

  • Be targeted: only send documents that directly address the denial rationale.
  • Keep communications professional and factual; list dates and figures.
  • Ask for a re-underwrite with a senior reviewer or an explanation of what specific threshold you must meet for approval.
  • Consider timing: if your credit score or cash flow will materially improve within a few months, it may be better to pause and reapply with stronger metrics.

Common mistakes to avoid

  • Sending an unfocused packet of irrelevant paperwork.
  • Failing to dispute obvious credit-report errors before appealing.
  • Missing deadlines for requesting adverse-action reasons or failing to ask for confirmation of receipt.

Timeline and legal rights (brief)

Creditors must provide adverse-action notices when they deny credit and generally must disclose the key factors that led to the decision or how to get them; federal resources explain your rights under the Equal Credit Opportunity Act and Fair Credit Reporting Act (CFPB; FTC). You also have the right to obtain and dispute credit-report errors and to receive written reasons for denial—use AnnualCreditReport.com to pull reports and the CFPB/FTC resources for next steps.

Sample appeal letter outline

  • Subject: Appeal / Reconsideration request — [Your Name], [Application #]
  • Opening: Briefly state the denial and your request for reconsideration.
  • Body: Point-by-point rebuttal addressing each stated reason and citing enclosed documents.
  • Close: A clear request (reconsideration/escalation), contact details, and a thank-you.

Sources and further reading

Professional disclaimer

This article is educational and not individualized legal, tax, or financial advice. For guidance tailored to your situation, consult your lender, a licensed attorney, or a financial professional.