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I looked on the MT website today and couldn't find something to guide me on what to say to a candidate that I was going to pass on (even though I hadn't found another suitable candidate yet).  I didn't find anything and so I cobbled together the following script that worked for me:

Recommended Script:  "HI Frank - Thank you so much for interviewing with me and Bill last week. I really enjoyed speaking with you. Although we thought your qualifications are good we have decided to continue looking for another candidate that more closely fits the position’s requirements at this time.  I just wanted to call you personally and let you know."  

Result: Candidate sent me the following email right after the call:  

Hi Scott,

Thank you for taking the time to call me regarding your company's candidate decision.  I appreciate you and Bill for taking the time to interview me.  It is unfortunate that my qualification did not meet your needs.  If it is not too much trouble, I would like to add you to Linkedin.  Good luck with your candidate search.   Have a great day.

Please feel free to use my script and/or share your own.

Best,

Scott