What to Do When Your Credit Card Application Gets Rejected

Vault’s Viewpoint

When your application for a credit card gets turned down, you must be provided with an adverse action notice explaining why your request was rejected.
Declines for credit cards might occur because of excessive debt, a poor credit score, insufficient credit history, or various factors that classify you as a high-risk borrower.
To boost your chances of getting approved for a credit card down the line, consider actions like correcting inaccuracies in your credit reports, enhancing your credit score, and being added as an authorized user.

Causes for Rejection of Your Credit Card Application

The Fair Credit Reporting Act demands that credit card issuers inform you of the reason behind your application denial via an adverse action notice—typically, this notification will be sent approximately one week following your rejection. Below are several typical causes for credit card denials:

Too much debt. Having a high credit utilization rate This figure, determined by dividing your overall revolving debt by the total credit available to you, indicates that you might be stretching your finances too thin. If this ratio is excessively high, credit card companies could reject your application for a new credit card. Although there isn’t an exact threshold defining excessive debt, many financial advisors suggest maintaining your credit utilization rate under 30%, with levels around 10% being preferable.
Poor credit score. High-end credit cards usually demand that applicants possess good or excellent credit, equating to a FICO Score of at least 670. Should you apply for such a card without meeting these criteria, your request would probably get turned down.
Thin credit file. If you have a slim credit history, it indicates that your credit report lacks sufficient data. In such cases, credit card issuers may avoid extending you credit since they can’t accurately determine your creditworthiness. Having a thin credit file is common among young adults who are new to credit or those who purposefully avoid credit.
Negative account information. Unfavorable account details, including overdue bills, bankruptcies, property seizures, and write-offs, can harm your credit score and cause credit card companies to hesitate before approving your application. Sometimes, such adverse entries may remain on your credit reports for as long as a decade.
There have been too many credit applications submitted recently. If you submit applications for several new lines of credit within a brief timeframe, credit card companies might reject these applications because they could view you as a potentially risky borrower facing financial difficulties. As an illustration, the informal Chase 5/24 guideline stops you from getting approved for another credit account if you've applied for five credit cards over the last two years across all issuing institutions.
Low income. Although your earnings do not have a direct effect on your credit score, they are considered by credit card companies during the application process for both approving your request and setting your credit limit. Should your income fall below their required threshold, you might be denied.

What Actions Should You Take If Your Credit Card Request Is Rejected?

Getting turned down for a credit card via a mailed rejection letter can be both annoying and disheartening. Below are steps you can take to bounce back from this setback and boost your likelihood of being approved next time.

Request the card issuer to review their decision.

Should you believe there was an error with your credit card application or possess further details that might sway the original decision of the credit card company, reach out to their reconsideration hotline or customer support division to present your argument. Generally, your rejection letter will provide guidance for how you can ask the credit card provider to review your submission once more.

Check Your Credit Reports

Federal law entitles you to obtain one complimentary copy of your credit report annually from each reporting agency. three nationwide credit bureaus Experian, Equifax, and TransUnion. If you haven’t already done this, visit annualcreditreport.com to request copies of your credit reports to understand your current standing regarding your credit health.

When examining your credit reports, look out for incorrect details that could be harming your credit score. If you find such inaccuracies, you can challenge them with the credit reporting agencies to get them deleted from your records.

Reapply in the Future

If you've had your application for a credit card rejected because of numerous recent hard inquiries or other unfavorable marks, you might simply need to be patient before trying again. Hard inquiries can mar your credit report for as long as two years, whereas more serious issues such as bankruptcy and late payments can remain visible much longer.

Boost Your Credit Score

Credit cards offering substantial sign-up bonuses Typically, cash-back rates and various enticing benefits often require a high credit score. Should you be turned down for these cards because of a not-so-great credit score, do not lose hope. Begin by taking actions to improve your credit score instead.

The initial step toward improving your credit reliability involves comprehending the elements that influence your credit score:

Payment history (35%)
Amount owed (30%)
Duration of your credit history (15%)
Credit mix (10%)
New credit (15%)

Below are several methods to improve your credit health and secure approval for credit cards with attractive conditions:

Make sure to pay all your bills completely and promptly every month.
Maintain low credit card balances (preferably under 30% of your credit limit).
Check your credit report frequently
Restrict your new credit applications
Keep a varied selection of credit accounts.
Manage your credit wisely and steer clear of hitting the limit on your credit cards.

Apply for a Credit Card That Better Fits Your Needs

An alternative approach following a rejection letter is to apply for another credit card more aligned with your current financial circumstances. If your credit score isn’t ideal, think about exploring options that might be a better fit. credit cards aimed at individuals with poor credit ratings Or those with less stringent approval requirements to boost your odds of obtaining a credit card.

Become an Authorized User

Many card issuers and financial institutions may deny your credit card application if you have a limited credit history. One way to thicken your credit file is to become an authorized user By using a family member’s credit card, their complete account history will get included in your credit reports. Ensure that this person has strong or outstanding credit scores and consistently manages their credit well. If not, being an authorized user may not significantly improve your own credit standing.

Think About Obtaining a Secured Credit Card

If you're unable to qualify for a standard credit card, think about submitting an application for one. secured credit card Secured credit cards necessitate an initial security deposit, usually equivalent to your credit limit, at the time of opening the account. This deposit safeguards the issuer against potential losses should you neglect to make payments, making such secured credit cards more accessible for individuals with low credit scores.

Frequently Asked Questions

Could Being Denied a Credit Card Affect Your Credit Score?

No. Merely getting turned down for a credit card application isn't going to negatively impact your credit score. However, the hard credit check tied to this application might cause your FICO score to drop slightly, but only for a brief period.

Is It Possible to Apply for a Credit Card More Than Once Within the Same Day?

Although it is technically feasible to apply for a credit card twice in one day, it isn’t advisable. Every application triggers a hard inquiry into your credit history, potentially reducing your credit score momentarily. Several such inquiries over a brief span might further harm your credit rating.

What Credit Cards Are Hard to Obtain?

The American Express Centurion Card, often referred to as the Black Card due to its appearance, is notoriously hard to obtain because it operates on an invitation-only basis. Although American Express hasn’t publicly revealed exact criteria, various sources online indicate that potential cardholders typically spend between $250,000 and more than a million dollars annually to qualify.

The post What Actions Should You Take If Your Credit Card Request Is Rejected? first appeared on Pawonation.comVault .