What happens when you are denied a credit card and what to do next

Woman looking at her APR credit card

Tempting credit card offers are everywhere – from closed-loop store cards offering a plethora of rewards to the most elite credit cards on the planet. But just because you want to add a particular credit card to your wallet doesn’t mean you can – first, you need to apply. This is true even if you receive a pre-approved offer for a credit card. In this case, the credit card company only thinks you will qualify and you will still need to complete an application.

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Once you apply for a credit card you need to be approved and depending on various factors you may not have it. If you have recently applied for a credit card that you did not get, or are considering applying but are not sure whether you are approved, here are some reasons why a credit card application may be. refused and what to do if it happens to you.

You don’t have enough income

“Most credit card issuers have a minimum income requirement for their credit cards, although it varies by issuer, ”said Mike Pearson, credit expert and founder of personal finance site Credit take-off. “If you have no income, or if you not earning enough money for a particular credit card, your request could be refused. Here is the even trickier part: card issuers usually do not publish any minimum income requirements for their credit cards on their websites, so it can be difficult to know how much income you need. One tip is to search Reddit and other personal finance forums for the card you are interested in for see if other users are discussing the income they had to get approved for the map. This will give you general indications of the income you need to get your card approved.

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You have a limited credit history

“A very common reason why people’s first loan applications are often turned down is because they have a limited credit history, ”said Scott Nelson of MoneyNerd. “It is difficult for a creditor to judge the likelihood of you repaying your credit if you don’t have a history. To fix this, before applying for a large loan, take out a manufacturer’s credit card.

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Your credit card balances are too high

“A high use of credit, which is the amount of revolving debt you are using divided by the amount of debt available, is a common reason credit card applications are refused, ”said RJ Weiss, CFP and founder of Paths to Wealth. “AT improve your credit utilization rate, your options are to repay the debt or increase the amount of debt you have to borrow. the the latter can be done more easily by contacting your existing credit card company and ask for a rate increase. A good rule of thumb is to keep your credit utilization rate of less than 30%.

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You have bankruptcy or other negative points on your credit report

“Bankruptcy stays on your credit report for seven to 10 years, and is definitely a red flag for credit card companies, ”said Jenna Vasquez, senior financial writer at Best company. “Especially if you’ve recently declared bankruptcy, credit card companies will likely deny you a credit card because your recent the financial history has been a bit rocky. The best thing to do in this situation is to patiently begin to rebuild your credit. Imagine that you have pressed the reset button and after a while since filing for bankruptcy, talk to your bank on getting a starter credit card with a very low credit limit. You won’t see changes to your credit score overnight, but in the world of credit, time is your friend, and you will start to get back on your feet financially and build your credit little by little.

Other negative information about your credit report, such as overdue payments of 30 days or more or write-offs (failing to make your payments six months in a row), can misrepresent you as a user. credit, adversely affect your credit score and cause your application to be denied. Unfortunately, defaults and write-offs can stay on your credit report for up to seven years. The good news is that their impact can diminish over time. While waiting for them to drop, develop good credit habits, such as always paying off your credit and paying off your loan on time to show responsible use of credit.

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Your credit report has too many tough questions

“If a bank sees that you’ve applied for many other credit cards or received too many inquiries, that’s a sign you’re trying to get credit – and fast,” said Alex Miller, founder and CEO of Upgrade Points. “People in this category tend to abuse this credit and cannot manage it well, and the bank is likely to refuse a credit card. The solution for this is to wait to apply for the next credit card; allow several months to elapse before applying.

Your credit report contains errors

A credit card denial can happen without your being responsible, such as errors on your credit report. Common errors are unrecognized accounts, unrecognized debts reported to collections, or a payment falsely flagged as overdue or missed. You can get your TransUnion credit score and $ 1 credit report for free from GOFreeCredit.com. If you find an error, here are some tips on how to fix it:

“Contact both the credit bureau and the organization that provided the information to the bureau,” said John Corraro, a financial planner at Barnum Financial Group. “Both are responsible for correcting inaccurate or incomplete information in your report. Let them know what information you think is inaccurate. Credit bureaus must investigate the item (s), usually within 30 days. Include copies of documents that support your position.

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Last updated: June 23, 2021

This article originally appeared on GOBankingRates.com: What happens when you are denied a credit card and what to do next

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