The application for my first credit card was rejected, and it left me disappointed and frustrated. I had spent hours browsing through my options and finally zeroed down on one. The card that I had an eye on slipped out of my hands; and most annoyingly, I had a hard inquiry on my credit report.
When I decided to reapply, I wasn't willing to take 'No' for an answer again. I was adamant - I had to increase my chances of grabbing that much-coveted credit card. I geared up my credit health and reapplied. Voila! A shiny new credit card smoothly made its way into my wallet.
Are you in a similar situation? Read this article for some of my tricks and tips that proved very effective.
Patience is the keyword. Wait for the right time. I don't have a perfect definition of 'right time.' It mostly depends on how messy your credit report is. If you have a stellar credit record, six months would be ideal. If your credit report isn't exactly bright and shiny, you must preferably wait a little longer.
However, if your credit score is too less, the wait will be much longer, my friend. You will need enough time to improve your score before reapplication. You don't want any more hard inquiries sabotaging your score further.
If a card-issuing company rejects your application for a credit card, you are entitled to get an 'adverse action notice.' This notice must tell you which credit bureau provided your report to the issuer and what your credit score was in it. However discouraging it might be, you must not chuck it away. It will be your stepping stone to success.
Use the information in this notice to understand why your application was rejected. Once you know what went wrong, it'll only be a matter of time before you set it right and reapply.
There are no hard and fast rules for improving your finances, but you can put some extra effort into managing your money and your credit profile. Maintain a clean payment history - pay all your bills on time; pay your monthly dues in full. Don't miss a single payment - be it your phone or utility bill, or even your loan payment. Keep your credit utilization rate within 30% of your credit limit.
Try to resolve the past issues that reflect on your credit report - settle pending debts or try convincing your existing card issuers to strike a late payment record off your reports. Closely inspect your credit report and resolve reporting errors, if any. Each person has a unique way of improving their credit health. Do your best to tidy up your finances before you reapply.
Research thoroughly what scores you might need if you wish to get a particular card. You must apply for a card only when it falls within your credit range. Make sure you aren't walking towards a second rejection. Also, do not apply for cards with high APR. You might yearn for a credit card, but don't be desperate enough to take a card that charges you too much.
You can consider going for a secured credit card if you are trying to rebuild your finances. These cards are sanctioned either against a cash deposit or through a linked savings account. There are high chances of approval as well. You can later upgrade it to a traditional credit card if you exhibit responsible credit use.
If you have credit card debt, balance transfer cards could be the right option for you. These cards let you settle your debts in other accounts and transfer the entire balance to the new card. Additionally, these cards provide a promotional offer during the first few months, with which you might not have to pay any APR. It could be a great chance to save money on interest. You should research thoroughly and find out which card would be most suitable for your financial situation.
Credit cards are an important part of finances, and getting your application rejected can be rough. However, it is not doomsday. Consider it as an opportunity to learn how you can improve your financial health.
Make smart choices and build a good credit profile; a plethora of new directions will open up before you. Keep track of your credit score to know when it is best to apply again.