Finance & Insurance

Why is Your Credit Card Application Declined?

Did you know that people with excellent credit scores get denied for credit card application? 

Oh, yes, they do! Even though they have the perfect score, they are still not qualified for another credit card. 

Frustrating. Applying for a new credit card does not only rely on your credit score. There are other factors to consider. It pays to know the reason why your credit card application is declined. Get the facts straight from this article. 

Reasons for a Declined Credit Card Application

Every time you apply for a new credit card, approval is disclosed right away. However, rejection is addressed differently. An adverse action letter is addressed to you and includes all the reasons why your application is denied. Usually, it takes 7-10 days. While waiting, assess yourself what went wrong. Listed below are the common reasons why a credit card application declined. 

Age

Applicants under age 18 are denied because they are still under the legal age. Luckily, there are some exceptions. If you’re below 18 years old with a source of income, approval is possible. Also, you won’t get denied if you’re an authorized user of your parents’ credit card. Age is nothing but a number, especially if you can prove that you’re worthy of a new credit card. 

Incomplete Application Form

Missing vital information on your form is a great risk for a declined credit card application. Remember that physical address and birthdate are important details. Fortunately, an online credit card application is available. When you sign up, you must complete all the data required. If not, you won’t proceed to the next step. This strategy minimizes the number of declined credit card applications. 

Unstable Job History

Significantly, job history affects a new credit card application. If you have a record of job-hopping, denial is inevitable. Credit card issuers reflect it as your inability to repay debts. The same thing goes when you have been unemployed for a long time. They’ll question your capability for a new financial responsibility. It’s better if you stay for the work you love for a long time before applying for a new credit card. 

High Loan Balances

Having an existing loan balance while applying for a new card is a red flag for credit card issuers. They know you’ll have a hard time taking a new payment. Thus, the application is rejected. Avoid getting your credit card application declined. Prioritize first in paying off your outstanding balances. 

High Credit Card Balances

All credit card companies review how you use your cards. They check if you only use a portion available to you or if you maxed it out. Too much use of available credit gets your credit card application declined. Instead of doing this, keep your balances below 30%. It’s not only good for your credit score but also the approval of the new card application. 

Too Many Credit Report Inquiries

One of the biggest mistakes of credit card applicants is too many applications – credit cards and loans, especially if done within a short period. According to Cash Mart Singapore, every application made is equivalent to a credit report inquiry. Too many inquiries lead to a declined credit card application. Minimize credit inquiries by getting a new card suited for you. 

Too Low Income

Every credit card requirement varies depending on the issuer. One of these is the client’s minimum income. Some companies declined credit card applications due to low paycheck, while others don’t. To ensure approval, estimate which credit cards fit your income. 

Recover From a Declined Credit Card Application

Getting a declined credit card application is disappointing. Although you can still reapply, you’re paranoid that you get the same result. Don’t stress yourself out. Ease your mind by doing these: 

Check Application Status

With the online system, you can check the application status while at home. Make an online inquiry at the official website or call the bank or issuer. 

Find Out the Reason

Avoid making the same mistake on your next application. Be familiar with the reasons – stated above – why a declined credit card application is highly possible. For sure, you can raise the likelihood of getting card approval next time. 

Reapply After 3 Months

After receiving the devastating news, don’t reapply immediately. It is recommended that you wait for 3 to 6 months before applying again. Remember, too many credit card applications within a short period hurts credit history. Thus, the reason for your declined credit card application. 

Check Credit Report

Make it a habit to review your credit report, regardless if your application is approved or denied. See if there are any errors and dispute it with the concerned lender. Find ways on how to increase credit score. This is a good habit for your future financial plans. 

Apply for the Right Card

There are many credit cards available. If you get denied, find the right card for you. Approval is most likely if it matches with your financial situation. Shop around credit card issuers. Compare the types of cards they offer, annual income requirements, interest rates, and annual fees. 

Solving the problem behind a declined credit card application is easy. Please take note of the important ways on how to recover from them. Sure enough, you’ll secure one for yourself.

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