Top 12 Reasons Your Credit Card Application May Be Rejected
Receiving the news that you have been declined for a credit card you applied for is always hard to accept. There is no sugar coating the decision, it means there is something wrong with your credit in one way or another. It can definitely serve as a wake up call, and increase your awareness on the importance of credit. Many people think if they have a good credit score, they will automatically be approved for another credit card. However, this is not the case as there are many other reasons why your application could have been denied, which will be explained in depth in this article.
1: You already have to many credit cards
If you already have a lot of credit cards, and apply for another one, you can simply be denied because of this fact. Credit card companies deny you because they view you as a high risk applicant, who might have a difficult time making their payments on an additional card. The more credit cards you have, the harder it will be for you to get another card. There is not specific number that you can or cannot have, as it varies by company but you should definitely not have more then 3 credit cards.
If you have a lot of cards to begin with, you should not be applying for a new one, instead your focus should be paying down the cards you currently have..
2: Your Credit Card Balances Are To High
If you have a high balance on any of your current credit cards, then you will have a tough time being accepted for a new credit card. This is because the card companies see this as a sign that you will accumulate a high balance on the new card. Generally, there is a rule of thumb saying you should only use 30% of your available credit. If you have used more then that, then it can be detrimental, especially when applying for a new credit card.
3: You Have Several inquires On Your Credit Report
If you have applied for to many credit cards, or any other loans, then it can negatively affect your credit rating. Also the credit card company views it as a desperate act to obtain more credit. Furthermore, it shows you do not have enough cash flow to pay down your other debts, resulting in you obtaining more credit. This is especially the case if you have had many inquires in a short time period. Ensure that you do not apply for to many credit cards in a short time period.
Also, keep in mind every time you have your credit score checked, it results in a soft hit on your credit score, brining it down a few points.
4: You Have A Short Credit History
If you have no credit at all, it can be very difficult to be approved for a credit cord. Generally, if you don’t have any credit or loans for at least a 6 month time period, then no credit score can be generated. If you have had credit a short amount of time, the credit card companies might view you as a risk since there is not a lot of credit history to illustrate your behaviour, so they won’t be able to see how effective you are when it comes to paying bills on time, use of credit limits etc.
5: You have Had Recent Delinquencies
Credit card companies take an in depth look at your delinquencies. Obviously, if you are delinquent several times, it shows them that you have trouble making payments and as a result, you are viewed as a high risk applicant. They analyze how often, and how long its been since your last delinquency. The more recent your delinquency is, the bigger the impact it will be on your credit score. If you were delinquent a few years ago, it usually won’t have a large impact, however if your are delinquent within the last few months , the chances are high you will be denied.
6: You Have Large Existing Loan Balances
If you have any other loans that you aren’t paying down regularly, with reasonably high balances, you can be denied for a credit card. These loans include can include vehicle loans, mortgages, lines of credit etc. If you owe several large amounts you might be denied because the loaner would be worried you wouldn’t be able to handle more debt and more payments. This is especially true if you aren’t showing that you are decreasing your debt load over a period of time. If you have other loans but you are consistently paying down the debt load, then it should not be an issue when applying for a credit card.
7: You Are Classified with a Low Income Status
If you do not make enough money, there is a chance you could be denied for a credit card. Different card company’s require different minimum income levels based on the type of credit card you are applying for. If it is a rewards card with an annual fee, chances are you will require a larger income then a card without a rewards system. Ensure that you know the approximately income level required before applying. Keep in mind that on many applications, it asks for your household income, rather then just your own personal income, which can make a large difference.
8: You Have Not Been At Current Job Long Enough
If you have not been with your current employer long enough, there is a chance you could be denied for an application. This is can be due to the fact that you might not have a high level of job security. This is usually the case if you have had many different employers in a reasonably short time period. Credit card issuers really like applicants that have had the same job for a longer period of time. You are usually denied because of this reason in a combination with another factor such as low income, to many different debt loads etc. If you have strong credit and good income, the length you have been with your current employer won’t always have a large impact.
9: You Have A Charge-Off On Your Credit Report
This is one of the worst things you can have on your credit report, that definitely raises a red flag to the credit card issuers. A charge-off occurs when you have gone six months or more without making a payment on an existing credit card. Even if you have high income, you could still be denied with a charge-off as it shows that you are careless when it comes to making payments regardless of your income. Paying the entire amount of the charge-off balance will make it easier to be approved, but you should not apply until you have paid the charge-off balance.
10: You Made A Mistake/Didn’t Completely Fill Out Application
If you made a mistake when filling out the application you could be denied because of this, especially if it was a big mistake in an important area such as income. Ensure that the application is accurate as possible. Also, if you did not completely fill out the application you can also be denied. When applying online, many times it will not let you submit it if you did not fill out all the required areas, so many times it is better to apply online.
11: You Have A Recent Collection
If you have had a recent collection, or even a public record, it will most likely result in a denied application. A collection is when the loan issuer writes off the debt as a loss and refers it to a collection agency. This happens when you have gone a long time without making payments. The longer it’s been since your collection, the less it will affect your credit score. Also if you have a public record which includes any foreclosure, tax liens, wage garnishments etc, you will be denied. Similar to a collection, the longer its been since the public record, the less it will affect your credit score. Do not apply for a new credit card if you have had any of these issues recently.
12: You Have a Mistake On Your Credit Report
Obviously if there is a mistake on your credit report there is a good chance you will be declined. Although rare, this can happen and result in a lot of problems. You can view your credit report online for free, to look it over and verify that your personal information, as well as your financial information is correct. If you find errors, you need to contact the credit bureau that is displaying the information. You have the right to a free copy of your credit report, as well as the reason for a denied application. Furthermore, any company that has denied your application, must provide the name and address of the credit bureau that they used, as well as the name of anyone that has received your credit report in the last year.