Credit glossary
Reason code
A short statement that comes with a credit score naming a factor that held it back, listed in order of impact.
Under 15 U.S.C. 1681g(f), a score disclosure lists up to four key factors that adversely affected the score, plus a fifth if inquiries were among them. You'll find them on adverse action notices, with the scores mortgage lenders disclose, and with scores you buy. Even very high scores come with reason codes, because they explain where the score fell short of the maximum.
Read the order before the list. The first code is the biggest drag. Codes about balances or recent inquiries can change quickly, while codes about account age only fade with time. Score reason codes also differ from a lender's reasons for denial under Regulation B, which can cite income or debt-to-income, and a denial letter often contains both.
Guides that go deeper
- Credit score reason codes, decoded: what each one is telling youReason codes list what held your score back the most, in order. What the common ones mean, which you can act on, and which to leave alone.
- Adverse action notices: how to read the letter and use itA denial letter must name the bureau, shows the score used if there was one, and opens a 60-day window for a free report. How to read and use each part.
Sources
- 15 U.S.C. 1681g, Disclosures to consumers (credit score and key factors), Legal Information Institute, Cornell
- 15 U.S. Code 1681m, Requirements on users of consumer reports, Legal Information Institute, Cornell Law School
- 12 CFR 1002.9, Notifications (Regulation B), Consumer Financial Protection Bureau
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