Applying for a credit card can be sort a gamble. Once you press submit on your online application – or drop your printed and completed application in the mailbox – there’s no guarantee that you’ll be approved. Even people with excellent credit are sometimes denied for credit cards for a variety of reasons. Your application can be denied even if you were pre-approved. If you’re denied for a credit card, don’t panic or get angry. Take the right steps and your next application will be approved.
How Credit Card Issuers Evaluate Applications
When credit card issuers receive your credit card application, they use the information in your application along with your credit history to approve your application. They review your information and compare it to the qualification criteria for the credit card you applied for. If you don’t qualify, the credit card issuer will deny your application.
How Do You Find Out You’re Denied
When you apply for a credit card online, it takes the credit card issuer less than a minute to approve your application. If you’re approved, you’ll find out right away. However, if your application is denied, you won’t typically be notified online. Instead, you’ll receive an email or letter informing you of the credit card issuer’s decision.
So what do you do if you get the bad news that your credit card application is denied?
Don’t take it personally. The credit card issuer doesn’t have anything against you. Often, the decision is made automatically through a computer system with no human intervention.
Within 7 to 10 business days after your credit card application is denied, the credit card issuer will send a letter telling you why your application was denied. It might have been because of information in your credit report or your income was too low to qualify for the card.
If information in your credit report contributed to the credit card issuer’s decision, you are entitled to a free copy of the credit report that was used in the decision. You’ll have 60 days to order this free credit report. Take advantage of this right and the opportunity to view your credit report for absolutely free. Once you receive your credit report, review it to make sure all the information is accurate.
Sometimes your credit score is used in the credit card issuer’s decision to deny your application. In this case, the credit card issuer will send a copy of the credit score used in the decision and up to two factors that contribute to your credit score.
There are lots of reasons you can be denied for a credit card:
- Your credit history is too new or not yet established.
- You have recent delinquencies on your credit report.
- Your current balances are too high.
- It’s too soon since your last account was opened.
- There are too many recent inquiries on your credit report.
- You have a public record on your credit report.
- You do not meet the income qualifications.
- Credit card issuers are not allowed to deny your application because of non-financial factors like age, gender, or marital status.
Being denied for a credit card may hurt your pride a little bit, but it doesn’t hurt your credit score. The credit card issuer may keep an internal record of your denial, but it doesn’t go on your credit report.
How Soon Should You Apply Again?
There’s no hard rule on the amount of time you should wait to re-apply after being denied. It will depend on the reason you were denied and the type of credit card you applied for. If you applied for a credit card that was out of your league, e.g. a premium rewards credit card, you can apply for something that better fits your credit profile right away.
On the other hand, if you were denied because of recent delinquencies or high credit utilization, it’s probably better to wait until these have aged or have been corrected.
If you were denied because you have a short credit history, applying for a secured credit card can help you begin building the credit history you need to qualify for a regular credit card.
Keep in mind that each time you apply for a credit card, an inquiry is placed on your credit card. Each additional credit inquiry will make it increasingly difficult to be approved for a credit card. Inquiries remain on your credit report for up to two years and only affect your credit score for the first year. As these inquiries age, they affect your credit score less.
If a poor credit history is making it hard to get approved for a credit card, you’ll have to take a few important steps to prevent future credit card denials. First, paying off past due accounts and debt collections will improve your chances at getting approved. Second, you may consider a secured credit card – a card that requires you to make a security deposit against the credit limit. The security deposit lowers the credit card issuer’s risk and makes it easier for you to get approved.