Credit Card Application Denied? Here's What to Do Next

Rejection hurts! Whether it's a job application, college admission, dating, or a loan, facing rejection can be a tough pill to swallow. 😖 

When it comes to credit card applications, a denial can feel particularly frustrating, especially if you were counting on that new line of credit to manage your finances, build your credit score, or take advantage of rewards and perks.

But don't worry—being denied a credit card isn't the end of the road. In fact, it can be an opportunity to improve your financial situation and ensure your next application is successful. In this blog, we'll guide you through the steps you should take after receiving a credit card denial, helping you understand why it happened and how to boost your chances of approval in the future.

Coverings 

• Reasons Your Credit Card Application Can Be Denied
• What to do if your credit card application is rejected?
• How to get approved for your next credit card?

Reasons Your Credit Card Application Can Be Denied

There are a number of reasons why your credit card application might get rejected. Here are some of the most common ones:

1. Low credit score: This is one of the most important factors that credit card companies consider. A low credit score indicates a higher risk that you won't be able to repay the debt, so the bank may be less likely to approve your application.
    

2. Limited or no credit history: If you don't have a credit history, it can be difficult to get approved for a credit card. This is because credit card companies have no way of knowing whether you're a responsible borrower.
    

3. High credit utilisation ratio: This is the amount of credit you're using compared to your total credit limit. A high ratio indicates that you're heavily reliant on credit, which could make you a risky borrower in the eyes of a credit card company.
    

4. Insufficient income: Credit card issuers want to make sure that you have enough income to afford the monthly payments on a new credit card. If your income is too low, they may reject your application.
    

5. Unstable employment: A stable employment history is another factor that credit card companies consider. If you've changed jobs frequently in the past, it could be a red flag for them. 🚩
    

6. Errors on your application: Even a simple mistake on your credit card application, like an incorrect address or phone number, could lead to rejection.
    

7. Too many recent credit card applications: If you have applied for several credit cards within a brief timeframe, it might signal a warning to credit card companies. They could be concerned that you are attempting to incur an excessive amount of debt.

Read more about- 10 Credit Card Mistakes to Avoid.

What to do if your credit card application is rejected?

Getting rejected for a credit card application can be frustrating, but it's a golden opportunity to take control of your credit health and build a stronger credit profile. Here's what you can do:

1. Understand the reason: You should receive a letter explaining why your application was denied. This will be your roadmap for improvement. Common reasons include low credit score, insufficient income, or a high debt-to-income ratio.
    

2. Check your credit report: Get a free copy of your credit report from each of the three major bureaus (Equifax, Experian, and CIBIL TransUnion) and scrutinise it for errors. Dispute any inaccuracies you find, as they can negatively impact your score. You can check your credit score for free at Finology Select.
    

3. Improve your credit score: If your credit score is low, focus on making on-time payments for all your bills. You can also try to lower your credit card balances and avoid opening new lines of credit unless absolutely necessary. 
   If you are interested in learning how to improve your CIBIL Score, then click on the link.
    

4. Consider a secured card: If your credit is poor, you might want to consider getting a secured credit card. These cards require a security deposit, which becomes your credit limit. Using a secured card responsibly can help you build your credit score.
   Check out Best Secured Credit Cards.
    

5. Wait before reapplying: Once you've addressed the reason for rejection, wait for at least six months before reapplying for the same card or a different one. Applying too frequently can further lower your score due to multiple inquiries.
    

6. Apply for a card with lower requirements: If you need a credit card sooner, consider applying for a card with more relaxed approval criteria. These cards might have lower rewards or higher interest rates, but they can still help you build credit.

How to get approved for your next credit card?

Before you apply:

1. Check your credit score and report: A good credit score (typically above 670) is essential for getting approved for most cards. 
    

2. Know your credit needs: What are you hoping to get out of a credit card? Cash back, travel rewards, or a low interest rate? Different cards offer different benefits, so choose one that aligns with your spending habits.
    

3. Research pre-qualified offers: Many banks offer pre-qualified credit card deals to their existing customers. These cards typically have a higher chance of approval because the issuer already has a positive relationship with you.
    

4. Consider a secured card: If you have a limited credit history or a poor credit score, you might want to start with a secured credit card. Secured cards require a refundable deposit that becomes your credit limit. Using a secured card responsibly can help you build your credit score.

When you apply:

1. Apply for only one card at a time: Multiple credit card applications in a short period can hurt your credit score.
    

2. Meet the income requirements: Most cards have minimum income requirements. Make sure you meet or exceed the requirements before applying.
    

3. Have a stable employment history: A steady job shows lenders that you have a reliable source of income to repay your debt.
    

4. Keep your credit utilisation ratio low: This ratio is the amount of credit you're using compared to your total credit limit. A lower ratio is better for your credit score.

By following these steps, you can increase your chances of getting approved for the credit card that's right for you. Remember, using a credit card responsibly is important for building good credit and avoiding debt.

Conclusion

In conclusion, by understanding the reasons behind the rejection and taking action to address them, you can get back on track to building a strong credit history and securing the credit card that best suits your needs. Remember, a little planning and work now can make a big difference down the road. So, don't give up– take control of your credit journey today!