Picture this: You had your eye on a credit card, but you find out that your credit card application was rejected. Something like this can feel like a personal blow, and can frustrate you to the core. What makes it worse is that your credit score has now taken a hit with a hard inquiry, for no apparent benefit whatsoever.
Fret not, my friend. Reassessing your approach for the next time can improve your overall credit health. With some effort, you can increase the odds of getting your desired credit card the second time around.
If that is the destination, where exactly do you start?
When failure strikes, it’s always better to take stock of what went wrong first. Avoiding your past mistakes solves half the problem, if not most of it.
Let’s do that now, shall we? Here are 9 possible reasons for credit card denial.
Your credit card issuer would ideally want you to use a portion of the credit available to you. Thus, if you're going overboard on your credit limit all the time, you can count on having your credit card application rejected. Keeping your credit utilization rate below 30% can boost your credit score and increase your chances.
If your current debt is soaring high, it might reduce your chance of approval. It should not come as a surprise if credit card issuers are hesitant to hand you a brand new credit line while you are still under debt. Thus, the only way out is to pay down your loan balances.
Your income can stand in the way of getting a new credit card. Though the income eligibility varies for each credit card company, your application could be rejected if you don't make enough in a month. The best way to avoid any credit card rejection would be to estimate which credit card fits the budget and your income.
Any recent delinquency or default will show up on your credit report for over seven years. It invariably dents your credit score as well. These defaults serve as a sign to the credit card issuer about your financial oversights.
Late payments or missing your payments can severely damage your credit score. It is one of the worst things that can appear on your credit report. If you fail to pay for at least one credit card, it's a red signal for the new credit card company.
If you already have a huge number of credit cards in hand, rest assured on having your credit card application denied. The number varies among credit card issuers, but the fact remains that having too many lines of credit makes an applicant seem credit hungry, and therefore less likely to be responsible with a card.
If you are new to the credit world or have never used a credit card, you have a limited credit history. Without prior credit experience, your credit card issuer is more likely to reject your request. Thus, if you're just starting out, take a secured credit card to establish your credit history.
Did you apply for way too many credit cards all at the same time?
If so, then it will hurt your credit score and your creditworthiness. Applying for too many credit cards and loans within a short period can make you look desperate for credit. Minimizing your credit inquiries over time and keeping long intervals between applications can help you get hold of a new credit card.
If you miss filling out vital information, like date of birth or address, you are more prone to rejection. However, most online credit card applications won't let you submit until you have filled the form. That way, you can eliminate the risk of having your credit card application rejected.
Make sure that you check your credit report frequently to repair your credit score beforehand. The next time you apply for a credit card, take these steps and be extra cautious. Also, if you seem not to understand how to do it on your own, you can always talk to us here at mymoneykarma.