No one likes being rejected, even when it’s just for a credit card. So if you’ve recently applied for a new credit card and been turned down, you might be wondering what it was that made them say “no” to your application.
Here are a few of the reasons you might have been turned down, and what to do to increase your chances of getting approved next time.
You applied for the wrong card. This has everything to do with your credit score. Some credit cards are targeted toward people who have a certain level of credit. Elite travel rewards cards, for example, are generally for people with excellent credit scores. So if your credit is only fair and you applied for one of these cards, chances are that you’ll be turned down. The solution is to apply for a card that’s commensurate with your credit level. No matter what your credit is like—bad, fair, good, great, or even nonexistent—there’s a credit card out there made for you. The trick is simply to find it.
You’ve been applying for a lot of cards recently. This is one that can sneak up on you. There are so many great credit cards available that it can be hard to narrow down your choice. Why not apply for the amazing travel rewards card, the small business owner card, and the cash back card that gives you 3% back on all your dining? But if you are constantly applying for credit cards, this doesn’t look good to prospective creditors. Take it easy and apply for one at a time. There’s no need to apply for every card that looks good, or that offers a promotional 0% APR. Choose wisely when looking to apply for a card, and your chances of being approved will increase.
You’re in too much debt. Revolving debt is debt that you keep paying the minimum on, or transferring to another card, without substantially or significantly paying down. If you’ve got a lot of revolving debt, credit card issuers will likely take a pass on your application. Pay down your debt before you apply for a new card, and think hard about why you need a new credit card and what you hope to use it for. That way you can be sure you’re going to use your new card responsibly and not sink further into debt—or into debt again, at all.
Remember that the main thing creditors look for when deciding whether or not to approve your application is a healthy credit score. There are five key components to your credit score: length of credit history, debt to available credit ratio, amount of new credit, payment history, and types of credit. Having a good track record of making payments on time is the number one important thing when it comes to your credit score. After that, a low debt-to-credit ratio counts for a lot of your score. The remaining three factors all matter as well, but less so than those two big ones.
Keep your debt low and always make your payments on time, and you’ll have a better chance of getting that great credit card next time.