A credit card application rejection is not the end of the world, despite how it can seem at the time. Even to clients who control their business, it occurs more frequently than you may imagine. Your creditworthiness and the particular card you applied for may only sometimes match. Other times, there’s a reason you never gave your rejection much thought.
Here’s how to react if you’ve recently been rejected or if you believe there’s a chance it will happen with a credit card application you’re considering. What’s more, here’s how to prevent it from happening again.
Why Your Credit Card Application Might Be Denied?
- You might have a short credit history.
Although some issuers of popular credit cards will approve applicants with a brief credit history, many prefer to see a consistent history before approving. You may need a longer credit history to qualify, even if you are a conscientious customer. If so, keep paying your bills on time and using otherwise credit practices to continue establishing (and lengthening) your credit history.
- You might have a bad credit rating.
The minimum creditworthiness standard for each credit card is different. There is no hard and fast rule, but more premium cards generally require excellent credit.
You could occasionally see hazy allusions to the minimum credit requirement on application forms. You can use these FICO categories to assist you in deciding if you qualify for a particular card if you see score descriptions.
Keep in mind that various criteria determine your FICO score. A history of late payments—or never paying your card—and often using your cards to the limit or having a high utilization rate are important factors.
- There may be too many credit accounts for you.
Too many new accounts being opened quickly is another frequent cause of credit card application denials. The Chase “5/24” Rule is a well-known example of an explicit rule that some issuers have regarding the number of cards they consider reasonable. Customers are discouraged from applying if they’ve opened five or more accounts in the previous 24 months because it’s frequently met with an automatic rejection due to this rule.
- You can have a bad history with the issuer.
If you’re applying for a new card from an issuer with which you’ve previously (or currently) had an account, they will consider your client history when making their decision.
Customers who have in the past closed their cards soon after getting them or those who apply for cards but never use them aren’t very beneficial to the bank. Additionally, if the issuer believes you are “gaming the system”—earning points via deceptive means—they may stop issuing you new cards indefinitely.
- Your income may be insufficient.
You are required to include your current income on almost all credit card applications. This is so that it can be considered when determining whether or not to approve you. Card issuers want to avoid working with clients who run the risk of accruing excessive debt relative to their income.
You might have to wait a few months before the card issuer recognizes your income as stable if it has risen due to a new job or other reasons.
- Your credit report may contain an error.
There’s likely a mistake on your credit report if you believe you are the ideal applicant but were rejected. You can review your credit report for free to discover whether anything was reported incorrectly. Examples of errors include accounts that are incorrectly labeled as late, incorrect balances, or accounts that are incorrectly labeled as open or closed. Examine your credit report carefully, and if necessary, raise any issues.
What to do next When Your Credit Card Application Is Denied?
- Find out why you were turned down for a credit card.
To increase your chances of being accepted the following time, you should first determine why your credit card application was rejected. Ask the lender why your application was rejected by contacting them. Although you might not get specifics, it might provide a broad explanation.
- Verify your credit history.
Check your credit report to learn what is hurting you if you were rejected due to a factor involving your financial past. Anything working against you on your credit reports, such as debt accumulation or a pattern of missing payments, should be highlighted.
- Reapplying right away is not advised.
You might need the money, but you should wait to apply again, even with a different lender, if you want a better chance of getting approved the next time. More unsuccessful applications will only lower your credit score and limit your ability to borrow more money.
This is because every credit card application you submit, whether approved or denied, is recorded on your credit report, so if you submit several in a short period, lenders may assume you urgently need money.
This blatant “red flag” might make them hesitate to lend to you.
How Long to Wait to Reapply?
Patience is essential unless your rejection resulted from a credit reporting issue that has since been fixed. Card companies seek proof that your habits have changed for the long term. Be sincere with yourself before reapplying: have you resolved the issue? Do you currently have a significantly different financial status than you did previously?
You may be prepared to reapply if you can affirmatively respond to both questions. Guidelines from several issuers specify how long should pass between applications. A good rule of thumb is to wait six months when they need to establish policies. That’s frequently sufficient to raise your credit score and demonstrate a history of creditworthiness, both of which will increase your chances of getting approved.
Even if you consider yourself a reasonably good candidate, not all credit applications are immediately approved. Various variables can impact your approval, and being rejected is frequently just a temporary hold-up rather than a final rejection. Most reasons for rejection are within your power to alter, so making a small effort now can position you for success the following time you apply.
That said, introducing Money-Wise could help you resolve this issue. We help you with all your rejected credit applications as to why this happened and what should be the next step. Contact us today and solve your credit issues!