Do You Know Why Your Credit Card Application was Denied?
When you apply for a credit card, you hope to receive an immediate approval. If this happens, you know it won’t be long before you can start using your credit card.
Unfortunately, there is no guarantee of an approval. If your application is denied, it’s important to do two things:
- Learn more about what went wrong
- Continue your search
There are many reasons an issuer may deny a credit card application, with these seven among the most common :
1. High Loan Balances
Do you have several high loan balances? If so, a credit card issuer may have concerns about your willingness to pay them in the future. By reducing loan balances before applying for a credit card, you increase your likelihood of an approval.
2. Low Income
It doesn’t matter if you’re applying for a credit card or loan, the creditor always looks at your income. This gives them a clear overview of your debt to income ratio, which allows them to make a final decision on your application.
Tip: list all income sources on your application.
3. Too Many Credit Cards
There is a big difference between someone who is applying for their first credit card and someone who already has a handful of these in their wallet.
If you have too many credit cards, it could stop you from receiving an approval the next time around.
4. You Have a Collection on Your Credit Report
Credit card issuers never want to see that an account has been sent to collections. This means you were late making a payment, and didn’t take action to make things right.
5. Limited or No Credit History
If you have a limited credit history or none at all, credit card issuers may be concerned about approving your application. The best way to protect against this is to establish at least one account before applying for a credit card.
Tip: there are credit card offers designed for people with limited or no credit. If you fit this mold, start with one of these offers.
6. Lack of Employment, Short Employment History
If you don’t have a job, you shouldn’t expect to receive an approval. Just the same, if you have a short employment history, such as only a couple months at your current position, it may work against you.
As the length of your employment grows, so does the likelihood of an approval.
7. Incomplete Application
It sounds silly, but it’s easy to make a mistake when completing a credit card application.
You’re asked for a lot of important information, such as: full name, date of birth, physical address, and social security number. Neglecting to supply a key piece of information could result in a denial.
These are seven of the most common reasons for a credit card application denial. With these points in mind, you can take the steps necessary to improve your chance of an approval in the future.