A bad credit score can mean a higher interest rate on an auto loan or mortgage, a cost that can follow borrowers for years. Higher rates make debt harder to pay down, and a low score can get applications tossed out before they’re ever reviewed.

In fact, a new Lexington Law survey of 1,035 U.S. adults found that 61% of Americans have passed up applying for things like an apartment or a credit card because they figured their score would tank them.

People settle for a cheaper home than they wanted to or borrow money from a parent instead of a bank. What's more, although federal law gives people the right to see their credit report, many never request it to find out why they were denied. Lexington Law explores how credit scores affect major financial decisions and offers tips for understanding credit reports, improving credit and making more informed borrowing decisions.

Under 45, credit shapes which home you get

Your credit score can shape the home you get and what you’ll pay for it. Thirteen percent had to settle for a cheaper place, while another 13% had to pay a larger deposit to get approved.

The numbers vary by age. One in five Millennials (21%) settled for a cheaper place than they wanted because of their credit, and Gen Z was close behind them at19%. Baby Boomers, however, were only at 5%, about one-fourth the rate among adults under 45.

Focusing on under 45 makes sense. Many are trying to buy their first home in a difficult market, and a poor credit history can make that process much harder.

Borrowing from family keeps Millennials stuck

If the bank won’t give you a loan, the money has to come from somewhere. Forty-four percent of Millennials said they borrowed from a friend or family member, 2.5 times the rate for Baby Boomers (17%). But a loan from a parent doesn’t build your credit, so what solves this month’s issue may leave you with the same bad credit score next year.

Gen X and Gen Z are close together at 31% and 32%, respectively, with Millennials well ahead of both. Life stage may help explain the difference. Many Millennials are facing some of the biggest credit challenges now, such as applying for a first mortgage after years of renting, often while student loan balances still weigh down their debt-to-income ratio.

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Borrowing from relatives is the most common of the five alternatives to applying for financing that the survey tracked, chosen by 32% of all respondents. Twenty percent used a payday loan or high-interest lender, and 14% paid extra to skip the credit check entirely. Another 20% asked a friend or family member to co-sign, which creates real risks for the co-signer. If the borrower misses payments, that activity can appear on the co-signer’s credit report, and collectors can pursue the co-signer for the entire balance.

58% have been denied something they applied for, and half never saw the report

Separate from the 61% who skipped applying for something because of their credit, 58% of Americans have been denied something they applied for.

These denials reach well past the bank. Credit cards (41%) and personal loans (29%) lead the list, but 13% of respondents were turned down for an apartment or rental home, and 8% lost out on a job.

Under the Fair Credit Reporting Act, when a bank, landlord, or employer uses your credit report to turn you down, they must send you an adverse action notice. The Federal Trade Commission says the notice must include the name of the bureau that supplied the report, a statement that the bureau didn't make the decision, notice that you can get a free copy within 60 days, and information about your right to dispute inaccurate information.

Lenders have to provide even more than that. The Equal Credit Opportunity Act requires that a creditor tell you the specific reasons you were denied credit (or instructions for asking for them). And yet, 52% of Americans don’t know that creditors are legally required to explain why they deny a credit application. Thirty-five percent aren’t sure, and 17% think there’s no such requirement.

Among those who were denied something, half never requested the credit report used to make the decision, and a third didn’t ask because they simply didn’t know they could.

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People with an error on their report are twice as likely to be denied a credit card

Not checking your credit report can be costly, since the file itself may be part of the problem. Almost 18% of Americans say they’re not at all confident their entire credit report is accurate, and 35% have found an error on theirs.

People who had found an error were denied a credit card at roughly twice the rate of those with a clean report (53% versus 27%).

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That divide isn’t limited to credit card denials. Sixty-four percent of people with an identified error have been contacted by a debt collector about a debt they thought was already resolved, almost three times the rate of people with a clean report (22%).

Among people who were turned down, those who had found and disputed an error were more than twice as likely to have requested a free copy of the report used against them (68% versus 31% for people who’d never checked their report closely). The people least likely to know their rights may be the ones with an error they don’t yet know about.

The report is the one thing you can actually fight back on

A low credit score costs people the applications they never send out and housing they settle for. And many never see the file behind either decision. Federal protections only work if people know how to use them.

That’s why you should request your report when you're turned down based on information in your credit report and read it carefully. Federal law gives you the right to a free copy within 60 days of receiving an adverse action notice. Many people don’t know they have that right.

Once you've received your copy, dispute anything that's incorrect. The FTC advises contacting both the credit bureau and the business reporting the information and sending the dispute in writing with copies of supporting documents. The bureau generally has 30 days to investigate.

Methodology

The survey was conducted by Centiment for Lexington Law and fielded between Aug.7 and Aug. 16, 2026. Results are based on 1,035 completed surveys from U.S. residents ages 18 and older. The sample was balanced to U.S. Census proportions on age, gender, and census region. Data is unweighted, and the margin of error is approximately ±3% for the overall sample at a 95% confidence level. Generational results come from smaller subgroups and carry wider margins of error. The under-45 comparison combines Millennial and Gen Z respondents. Select-all-that-apply percentages reflect individual response rates and should not be summed.

This story was produced by Lexington Law and reviewed and distributed by Stacker.