While you might feel down thinking your credit card denial is the worst that could happen, remember it’s only one of the numerous financial options. People experience this situation more often than not, regardless of how financially stable they are. For instance, your denial might be the result of an oversight on your credit reports and not a defect on your part.
A letter stating the reasons for your credit card denial always accompanies the notice. It gives you a pointer about what went wrong and the next steps to take – credit raise or income boost. If you recently faced a credit card denial or are on the verge of applying but have a high chance of denial, here’s how to get things sorted.
Why Was Your Credit Card Denied?
1- Your Credit History Might Be Insufficient
Many credit cards will approve your request even with a limited credit history, but some prefer seeing an extensive report before granting approval. You might be an individual who has their act together; however, your short credit history might be the rock in your path towards qualifying for a credit card.
2- Your Credit Score Might Be Below Average
Average credit scores vary with zip codes and the credit card you apply for. These factors determine how high your value has to be before being eligible. Take, for instance, premium cards. Getting one means you have an excellent track record and a good credit score.
In some application forms, the minimum credit score required is highlighted. With FICO, you might be able to examine your eligibility for the credit card and know your chances of approval. This will save time and gear you toward the next step. It could be learning to get your score above 800.
3- There Might Be Many Credit Accounts To Your Name
If you register for many credit cards within a short period, it might impede your chances of a successful application. Credit card issuers expect you only to have a certain number of cards, and anything more is considered unnecessary. Some rules prevent people from making credit card applications if they open up to five accounts within two years, and going ahead with the application usually leads to auto-rejection.
4- The Issuer Is Unsatisfied With Your Previous Track Record
Issuers have first-hand knowledge of how you handle your finances once you have an account with them. If you request another card from the same issuer, expect them to consider your track records.
If you delete credit accounts a little after creating them or only use the cards as keepsakes, your chances of getting a new one approved are slim. The issuer believes you can’t generate much profit for the institution or suspects your involvement in fishy techniques of earning rewards. And, as such, denies your application.
5- Your Earnings Are Below the Average
Credit card application forms usually contain a section where you input your income level. Your response is one of the most significant determinants of approval. High-level risks are always attached to granting requests of low-income earners since the issuers fear the customer’s debt might override their earnings.
Remember that earning below the required amount does not seal your rejection. There are still chances of approval if you have no prior debt. More so, an above-average income does not give you automatic approval, especially if your financial lifestyle isn’t appealing. Other factors, like the number of credit cards you own, are also considered.
If you have a new source of income, you will need to give your issuer time to conclude that it is indeed a stable way of generating cash.
6- Your Credit Report Might Contain Irregularities
As a responsible customer with a good track record and a perfect score, you expect nothing in the way of your credit card approval. Experiencing anything otherwise may be due to an error in your credit history. Request to see your report and carefully go through the details. For instance, look out for misreported late payments or closed accounts. If you find errors, make sure they are fixed.
Steps To Take When Denied a Credit Card
What to do after getting denied has to be factored from the reasons for your denial. Below are general ways to handle the situation:
- See if the Issuer Could Reconsider
Your rejection might be due to incomplete details, which can easily be sorted when you send the issuer the required information. If you are married but left your source of income empty, consider adding that of your spouse. This might get you reapproved.
- Comprehend Details of Your Credit Reports
Review your reports to see what could have made your credit card application disapproved. Determining that will help you know the aspects you need to improve.
- Reduce Credit Use
If you already have a high credit balance, try paying a significant amount. This will improve your chances the next time you apply.
- Clear Other Debt
Your credit card might be denied due to a high debt-to-income ratio, meaning your debt is way higher than what you earn. Take time to clear some of your debt.
- Try a Different Card.
If you were denied because your credit score is lower than what’s required for the card, you could try another that accepts credit scores within your range. There are websites available that compare your profile with numerous credit cards and determine the best match.
If you plan on getting a credit card soon, you now know what to pay attention to for guaranteed approval. If you applied and got denied, work towards improving aspects of your application that are weaker than others and reapply. You can also get emergency loans from MoneyZap within 24 hours. The application process is straightforward, and the repayment terms are flexible.