Ideally, you should know almost immediately whether your credit application was successful. But things turn out differently when you are denied a credit card. The providers normally don’t tell unsuccessful applicants why they have been denied. Rather, they send adverse action letters within a period of one week or so to explain their decision. These letters outline the specific explanations as well as suggestions for improving the credit score. But before you receive the letter, you might want to understand why the application could be denied especially if you are not sure about your credit history. Here are the possible reasons.
- Failure to fill out the entire application form
When you miss out on important information, such as date of birth, ID number, and physical address, you can easily be denied. Luckily, most online credit applications don’t accept submission until the form is filled out completely. By filling out all the details, you are sure to reduce the risk of a rejected application.
- Too many credit inquiries
If you have been applying a lot of loans and credit cards in a short timeframe, credit card issuers may not consider you to be a competent cardholder. It doesn’t matter whether you have been approved before or not. It is important to avoid making inquiries too often.
- Too many credit cards
How many credit cards do you have? This can greatly affect whether your application is denied or approved. There are no hard or fast rules concerning the number of credit cards you should have. It is upon the credit card issuer to determine whether you are fit or not. Just make sure that you always use the cards wisely no matter how many of them you have.
- A recent delinquency
Apart from the type of delinquency that appears on your credit report, credit card issuers must consider how recent it is. For instance, if you made a late payment in less than 6 months ago, your chance of getting denied credit card is very high.
- Unstable work history
If your credentials don’t show job consistency, your credit card application has infinitesimal chances of getting approved. Employment instability is clear indications of poor financial status and so you might have a difficult time trying to convince credit card providers to offer you an account.
- A recent public record or collection
Over time, public records and collections influence your credit score less and less. Nonetheless, they can be the worst factors the first time they appear on your credit report. These are serious delinquencies that show you don’t have sufficient funds to fulfill your financial responsibilities.
- Huge amounts of loans and unpaid bills
Have you been paying your debts and monthly bills on time? Your credit provider might be reluctant to open an account for you since you have a potential risk of not paying it off. So, it is important to minimize your loan balances before you apply for new credit cards to boost the chances of getting approved.
Having a charge-off on your credit report for more than six months is very detrimental. This is a credit balance which hasn’t been paid and one of the worst credit report elements. No credit card company wants to deal with cardholders who don’t pay their dues on time. So you might want to pay the charge-off balances to improve your approval odds.
- Limited credit history
If you haven’t used a credit card before, you are said to have a thin file as you don’t have much experience on credit utilization. You should have an account that has been active for the past six months to show your credibility, which is measured in terms of FICO scores. Without the score, a credit issuer may find it hard to approve your application. If you are new to credit, consider applying for a secured credit card or student card.
Before your next credit card application, make sure you have improved your credit. Order for free reports from the three reporting bureaus and take the opportunity to improve your credibility.