If you’re used to always getting your credit card request approved, the shock of getting a card request rejected will be immense. It will lead to you ask several questions like “Why me?”, “What did I do wrong?” and a couple of other self-searching questions. Well, the good news is, sometimes, you didn’t do anything, and getting a credit card request rejected is pretty common. It happens to everybody. But why then is it happening to you?
A CLERICAL ERROR
Sometimes, you made a mistake while filling the application. Make sure you read and understand every part of the document you’re filling out. And make sure you’re aware of the minimum threshold of the card you request. Because even if you have perfect credit scores for decades, if you make $50000 per year, and you apply for a card whose minimum threshold requires you to make at least $70000 per year, you’ll almost certainly always be rejected. Little details like this count when it comes to getting your card request accepted.
YOUR CREDIT CARD HISTORY IS LIMITED
This is a situation where being young can work against you. You might be making timely payments and have a great credit score, but if you haven’t been doing it for too long, the banks tend to trust you less. In this case, there’s literally nothing you can do except continue to make timely payments and wait.
Your credit card age is not just impacted by how long you’ve been using it though, it’s also affected by all your credit accounts. So, when you get a new loan or a new credit card, this reduces your credit age.
YOU STILL OWE A LOT
It’s generally a bad idea to apply for a new credit card if your balance is high. Always apply when your balance is low or completely paid off. This tells the credit company that you’re trustworthy. In an ideal world, most credit companies would like to see you using very little of the credit you can use. In fact, studies show that most companies give better treatment to people who use under 30 percent of their available credit.
Regularly carrying over a monthly balance and having a maxed out existing credit card is another reason why credit companies will be unlikely to give you a new credit card.
A BAD RECORD ON YOUR CREDIT HISTORY
If you’ve ever had legal action filed against you by a credit company, it automatically appears on your credit history. It doesn’t matter how the case ends, it will still be there, like a red stain on a white cloth. If you apply for a new credit card with another company after recently having a case filed against you, credit companies are more likely to want to steer clear of you, and chances are you’ll be rejected more often than not. A case filed against you stays on your credit history for seven to ten years, and it also affects your credit score.
As more and more time passes though, it affects your credit score less and less.
“CREDIT HUNGRY” BEHAVIOR
If you apply for a credit card, credit companies generally do an inquiry into your credit report. And for every inquiry, a credit company makes, it shows on your credit report. So, if you apply for a card at too many companies, you’ll most likely get rejected by all, as they’ll see the number of inquiries in your credit report, and take that as a bad sign. Because while it is not always the case, credit companies see people eager for credit as people whose financial life is a mess.
Ideally, you should apply for just one credit card at a time.
WHAT TO DO AFTER YOUR CREDIT CARD REQUEST WAS DENIED
While getting a credit card denied is painful, it is by no means the end of the world. So rather than calling customer care and spending hours on the phone pleading your case to no effect, Here are some steps to take after getting a request declined:
1. FIND OUT WHY YOU WERE DENIED: Eight to ten days after your rejection, you’ll get an ADVERSE ACTION LETTER from the credit company. This letter will generally tell you exactly why your request was denied, and it’s extremely helpful in figuring out what to do next.
2. CHECK YOUR CREDIT REPORT FOR ERRORS: If you’re pretty certain there is a mistake somewhere, you can request a free credit report and have it delivered to you. Then you can look it over for errors. Credit companies have been known to make clerical errors, so make sure you’re not being punished by someone else’s careless mistake. Also look over your credit report carefully, to see where there’s room for improvement.
3. MAKE A PLAN: After reading the adverse action report and going through your credit report, you’ll have an idea of what went wrong and how to fix it. Next, you have to make a plan to avoid it repeating itself. If you were rejected for having a high credit balance, the next logical step is to try and pay it off before applying again. If you’ve gotten too many inquiries in your credit report and was denied because of it, it would make sense to take some time off applying before applying again.
4. WAIT BEFORE REAPPLYING: It would be in your best interest to wait a few months before reapplying for a particular card again, because as much as one might be tempted to immediately reapply, you’re most likely to be rejected. The recommended waiting time is six months before reapplying. Within that time, you can always improve your credit score within that time.
5. CHECK OTHER CARD PRODUCTS: If after all these you’re still unable to get a card, it’s advised to look at other credit card options, like retailed credit cards or secured credit cards. These come with their own rules and restrictions, so it’s advised to read up on them before getting one.
6. CHECK YOUR APPROVAL ODDS BEFORE REAPPLYING: There are online tools you can use to gauge whether your application will be successful. And while it’s not 100% guaranteed that your card will be approved, it helps show you whether your application is worth it, and it reduces the number of unnecessary inquiries on your credit report.
Getting a credit card application can be hard on anyone. But with these tools provided, it’s easier to know what to do next to ensure you get approval next time you apply.