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It’s disappointing when you apply for a credit card and are denied. You don’t get the card you want and now you have a hard inquiry causing your credit score to drop.
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While frustrating, it’s time to think about the next moves to up your chances of being approved for a new credit card. Finding out why you were denied is key. You may need to improve your credit score or make other financial changes to increase your odds of nabbing that credit card next time.
Read on to find out how to recover and improve your chances after a failed application.
1. Learn Why Your Application Was Denied
First things first, find out why your application was denied. The Fair Crediting Reporting Act stipulates that credit card issuers must send you an adverse action notice that lists out the reasons you were rejected. The reasons will depend on your personal financial situation but common ones are low credit score, insufficient income, too much debt, and recent late payments. Once you understand the reason behind your denial, you can take targeted steps to address it so it won’t hurt your next application.
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2. Double-Check the Application
Everyone makes mistakes. It’s possible that you made a mistake on your application that made you seem less creditworthy. Perhaps you didn’t include all of your income? You can include income from other sources like social security, government assistance, alimony, child support, and even spousal income. It doesn’t hurt to double-check since even a small error can result in a rejection.
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3. Ask Again
If you think you were close to meeting the issuer’s criteria or found a mistake on your application that decreased your creditworthiness, you can call the issuer and ask to be reconsidered. Politely lay out your case. Explain how you will be a good customer and how you’ve fixed passed issues that led to your initial rejection. The representative does not have to honor your request, but if you have a good case, you might just get the answer you’ve been looking for.
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4. Wait to Reapply
While it may be tempting to immediately reapply for a different credit card, doing so can be counterproductive. When you apply for a new credit account, it generates a hard inquiry on your credit report, which can cause a temporary dip to your credit score. Experts suggest waiting at least six months before applying again. During this time, address the issues that led to your initial denial.
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5. Improve Your Credit
Find out your credit score, review your credit report, and learn what you need to do to improve it. Payment history and credit utilization are the two biggest components of your credit score. Pay your bills on time and in full, do not use more than 30% of your credit limit – the lower the better – and pay down your debt. You can also check your credit report for any inaccurate negative marks that you can dispute. While it takes a bit of effort, it’s not too hard to boost your credit fast.
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6. Apply for the Right Card
Once you’ve fixed the issues it’s time to choose the right credit card for your situation. If you have bad credit or no credit look for cards designed for people with low credit scores. There are plenty of credit builder cards out there. Or look into a secured credit card – these ones require a security deposit but will help you build credit. If you find a card you like but are unsure if you meet a credit issuer’s criteria, call them and ask before you apply. You can also check and see if you prequalify, which will help you avoid getting rejected again. There are plenty of cards out there for all credit types. Find the one that works for you.
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Final Thoughts
Being denied for a credit card doesn’t mean you’ll never get approved. Yes, it’s tough but it is not the end of the world. There are actionable steps you can take so that next time round you will be told yes.
So think of your rejection as an opportunity to improve your finances. You never know, you might just be able to get a better card in the near future. There is a credit card out there for everyone.
