Why Credit Card Requests Get Rejected & What to Do After
You have decided to apply for a credit card but then you discover that your request has been rejected, this is a scenario that can happen to anyone for a number of reasons. And what’s worse, if you have a record-time history of credit card approvals, this situation may feel like a personal insult.
This happens to many and a reasonable answer to why this happens is there. Thankfully, there are steps you can take to ensure that your next application is successful.
Possible Reasons for Credit Card Denial
To have a successful credit card application, you must complete the form accurately and show an acceptable credit history and credit score.
Most likely is that, since you’re reading this, you’ve done all of that but still got rejected. Here are some possible reasons why that happened.
1 – Incomplete Application Form / Not Properly Filled
As mentioned above, filling out credit card applications properly is very important and one of the most common reasons for a credit card rejection. That involves making sure your annual income is above the card minimum.
Even if you have years of credit history and an excellent credit score, your request will not be approved if your annual income is $45,000 and the cardholder’s minimum is set to $60,000. So pay attention to the minimum income requirement.
2 – Limited Credit History
When your credit score is perfect, but your application for a credit card has been rejected due to your limited credit history, it can be really upsetting.
Patience is the key in this case because this simply means you have to maintain your perfect credit score for a couple more years before qualifying again for this particular credit card.
3 – Credit Card Balance Is Too High
When your balance is relatively low or entirely paid off, that is a great time to make a credit card request. That’s proof for banks and creditors that you are reliable and able to repay credit card balances.
If you don’t have any credit available across your credit cards, and you’re not paying your credit balance regularly – transferring debt from month to month, the chances that you’ll get an additional card are very limited. The recommended amount that you should use is less than 30% of your available credit.
4 – Accounts in Collections or Public Records with Negative Information
Your credit card history has it all saved. Whether it’s a legal action taken against you, or your debt went into collections, it shows on your credit history and remains there for up to 7 years and more, depending on the case.
Eventually, these issues will influence your credit card score and, unfortunately, affect your long-term financial plans.
5 – Too Many Credit Inquiries In a Short Period
Every company has its limits, there is no universal number of inquiries. However, six inquiries are considered too much, and when that limit is exceeded, your request won’t be approved.
The safest way to get credit card approval is to not apply for more than one credit card at the same time.
Steps for Getting Your Credit Card Approved
When you get rejected, the first thing you want to do is call customer service believing that it will resolve the situation. Sadly, that’s not the case, and it hardly works.
This is what you should be doing instead.
1 – Read the Adverse Action Notice
A credit card company should give you a reason why your credit card application was denied. They will inform you through an Adverse Action Letter that usually arrives 8 to 10 days after the credit card application was rejected.
The letter clarifies why you have been rejected and is very useful in planning out your next moves.
2 – Check Your Credit Report
You have the right to demand a free copy of the document if the reason why you’ve been rejected is on your credit report.
When you get the document, check to make sure that all the information is accurate. Errors and mistakes in credit reports are frequent.
3 – Check Your Credit Score
Right after your credit card application gets rejected, you’ll automatically receive a free copy of your credit score.
Look thoroughly, as you previously did with the credit report. Then, in that same document, look where your credit can be improved.
4 – Fix Your Credit
When you’re done analyzing your credit report and credit score, the first thing you need to do is repair and rebuild your bad credit.
Make an effort to pay all the debts, if there are any, and pay your bills on time. If bills aren’t continuously paid on time, your credit will not improve.
5 – Wait Before Applying Again
Be patient, and don’t apply for the same credit card again immediately. By doing that, your chances of being rejected again are higher.
Even though there’s no rule for how much you should wait, it’s advised to give it three to six months. What’s more important is that you use this time to fix all the issues that were a reason for why you got rejected in the first place.
6 – Search for Other Credit Products
There are other credit products, other than credit cards, that can suit your needs. If you just cannot get that approval, look for a retail credit card or a secured credit card. Both credit options have a more simplified approval process but they also come with their own requirements, of course.
7 – Check Your Credit Card Approval Odds
There are online tools that don’t ensure that your application will get approved, but they can definitely help you assess if it’s even worth submitting. With these tools, you can reduce the number of needless inquiries on your credit report.
Sometimes applying for a credit card can be tedious, confusing, and nerve-racking. The part when you get rejected feels disappointing and discouraging.
Thankfully, all this information can make it easier to come up with a plan that will lead to a successful credit card application.
With a deeper understanding of your credit card, the application process and its criteria, your application will definitely be more successful next time.