Applying for credit cards and navigating the credit world may be challenging, especially if your credit card application is refused. You miss out on the card and terms you wanted and now have a hard inquiry on your report, making it more difficult to get authorized in the future.
At times, it may appear to be an uphill fight, and you may want to give up. However, the period immediately after the denial of your application is the greatest time to keep moving; taking action to raise your credit score or adjusting your aspirations to meet your present score.
In any event, here are some pointers to help you get back on track and reapply for a credit card if your initial application is refused.
Learn why your application was declined.
First and foremost, you’ll want to learn why your application was turned down. Credit card companies are required by the Fair Credit Reporting Act to tell you if your application has been declined. If the credit card company utilized your credit report in their decision, the message should include which agency provided the credit report and what credit score they used.
Understanding why your application was refused will assist you in ensuring that it does not happen again. For example, if your application appears to have been declined owing to a credit score that emphasized your excessive credit consumption, you can take action to minimize your overall credit usage before applying again.
Improve your overall credit standing.
If you understand why your credit card application was declined, it may point you in the right direction for your future application. Even if you are unsure why your application was declined, you may still take efforts to enhance your general credit health and increase your chances of approval the next time.
While there are no fast cures for your credit score, being proactive and improving your overall credit health is critical. Payment history and credit use are two of the most crucial criteria here. Making all payments on time helps to enhance your credit score over time and demonstrates that you are well-equipped to handle additional credit.
It is also critical to keep your credit usage low. Using too much of your available credit indicates to creditors that you require that credit, which may look hazardous. Most experts think that a credit usage rate of 25 to 30 percent is acceptable. So, for every $1,000 in available credit, you should only utilize $300.
Additionally, review your reports for mistakes and file a dispute with the reporting agency or the credit bureau. Occasionally, eliminating one or two glaring errors might have a significant influence on your credit score.
Allow some time before reapplying.
There is no hard and fast rule here, but after being refused, you should normally wait before reapplying for a credit card. Each case is unique, but the general rule of thumb is to wait 6 months before reapplying. This also provides you with plenty of time to work on improving your credit score.
This figure may alter depending on various personal circumstances, such as:
- How many hard queries have been made on your credit reports?
- How low is your credit score?
- How much credit you are using
For example, if you have an extremely low credit score and are refused, it may be advisable to simply wait it out and work on improving your credit before proceeding. It may be more challenging in the near term, but it will result in a healthier relationship with your credit in the long run.
Apply for the appropriate card
In certain circumstances, you may simply be applying for a card that is not within your financial means or is beyond your credit range. If your credit score is poor, you won’t be able to get many premium cards or offers, which is great. Instead, concentrate on cards that might assist you in moving toward a better financial future.
Secured cards may be quite useful in these instances, and many people who are denied ordinary credit cards may be authorized for a secured card.
Secured cards normally need a cash deposit, usually of around $200 or $300 to begin. The institution then establishes an account in your name for that amount, and you use the card in the same way you would a standard credit card. This reduces the lender’s risk while also allowing you to build a good credit history and help rebuild your credit.
Balance transfer cards are an additional alternative for folks with other credit card obligations. Balance transfer cards typically offer introductory promotions such as % APR on transferred debts, allowing you to work toward debt reduction while building a good credit history.
Determine your odds of approval.
While not all credit cards provide preapproval, conducting some research can make all the difference in this situation. Examining the standards for the cards you want and comparing them to your personal credit reports will help you determine your chances of being accepted for specific offers or general conditions.
To enhance your chances of approval, you should always apply for a credit card that is well within your credit range.
Last thoughts
While being refused a credit card might be humiliating, don’t give up. Credit cards may be an important component of your great credit history provided you develop good practices.
While it may appear easier to accept a card with poorer terms, in many circumstances it may be preferable to simply wait it out. Other credit solutions exist that may allow you to get a line of credit while also helping you repair your credit record.
In any event, taking immediate efforts to better your financial status may bring you to the financial future you seek.