Having your credit card application denied can be disappointing. You may feel embarrassed or frustrated because you did not meet the credit card issuer’s requirements.
If your applications repeatedly get denied, you may start to wonder if you will ever be able to get a credit card or loan.
When your credit card application gets denied, you can take steps to improve your chances of a successful application in the future.
The solution can sometimes be as simple as defining why your application got rejected, learning how to correctly apply for a credit card, and selecting the right credit card for your current financial situation.
You may have to take additional steps such as improving your credit score, dealing with current debts, and avoiding late payments.
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Reasons I Was Denied a Credit Card
The first step in determining what went wrong with your credit card application is to define the reason for the denial. There are several common reasons for having a credit card application denied.
Here are some red flags that credit card companies look for when reviewing credit card applications:
Too Much Debt
Credit card companies look at the amount of debt you have. This information makes up an essential part of your FICO credit score. Roughly 30% of your score gets based on the amount you owe compared to your credit limit. This figure, called the credit utilization ratio, can help banks measure your risk of defaulting on your credit card payments.
If you have too much debt relative to your income or your credit limit, you likely will not qualify for credit cards or other types of credit.
If this is an issue for you, one solution is to pay down some of your debt before applying for a credit card again. Paying down your debt can lower your credit utilization ratio. It is one of the best ways to improve your credit score.
If you can take steps to get out of debt, it will be much easier to get credit cards in the long run.
Too Many Credit Cards
Lenders are wary of people with too many credit cards. Having too many credit cards, especially if they are active, can hurt your creditworthiness by increasing the likelihood of late payments and other mistakes.
Also, when you get new credit cards, your score will drop temporarily. However, new credit can also be a good thing because it can lower your credit utilization ratio.
How many cards should you have? It depends on how many you can manage effectively. If you can make on-time payments and keep your credit utilization ratio low, you do not have too many credit cards.
Late payments can raise a red flag for credit card companies, and these mistakes can cause your credit score to plummet. One-third of your credit score comes from your payment history, so repeated late payments will take your score down in a hurry, and even a single late payment can affect your score.
If you have multiple cards and difficulty with managing payments, you have a couple of options. You can either consolidate your debt into one or two cards or connect a checking account to your credit card account and arrange automatic payments on the due date each month. These autopayments will protect you from forgetting the due date and suffering a late payment.
Negative Payment Information
Negative payment information can stay on your credit report for up to seven years. Negative payment information includes payments over 30 days late, accounts that get referred to a collection agency, or bankruptcies or other court judgments against you.
How to Deal With a Denied Credit Card Application
It’s alright to be frustrated if your credit card application gets rejected. However, once this happens, you can take steps to deal with the issues that caused the rejection so that your next application will be successful.
Review the Rejection Letter
The first step after receiving a rejection letter from the credit card company is to review the information it contains. If you have further questions, you can contact the issuer and speak with someone about the reasons for the denial.
This step should not make you feel frustrated or embarrassed. Instead, it helps you clearly define what issues you need to work on before you apply for the next credit card.
Sometimes, you may have overlooked something, such as the credit score requirement or some other requirement that the issuer has for that particular card. Once you know about these requirements, you can find other credit cards for people with your income level and credit score.
Fix Your Credit
Your credit score is the most critical factor in determining your eligibility for a credit card. If your applications for credit cards get rejected repeatedly, you should take steps to fix your credit before you start applying again.
Here are some ideas for building a positive credit history.
- Improve your credit score by never having a late payment. You can avoid the hit to your credit score by setting payment reminders or, better yet, setting up autopay so that the minimum payment gets automatically drawn from your bank account each month.
- Increase your debt-to-income and credit utilization ratios by paying down existing debt.
- Check your credit report to dispute any errors or pay down any accounts you have forgotten. You can access a free credit report once per year at AnnualCreditReport.com.
- Another option is to contact companies who issued your existing credit cards. Ask them to increase your credit limit. This step will decrease your credit utilization ratio and, therefore, improve your credit score.
- You can also contact credit card companies to ask them to forgive a late payment. If you make the payment as soon as possible after the due date, they may overlook the lateness.
Double-Check the Application
Sometimes the fix is a simple one. Perhaps you made a mistake when filling out the application. These mistakes could be typographical errors, such as entering the wrong income amount when you fill out the application form online. It could also involve forgetting income from a second job or other types of income or assets.
Another thing that you can do is double-check the requirements for the card. If a card requires a very good credit score (which is a FICO score of 740 or higher), you will get denied if you have a credit score in the 650 range. However, if you can double-check the requirements before applying, you can ensure that your current credit score and income match the card’s requirements.
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