Reasons Why Your Credit Card Application is denied

Nowadays, getting a credit card is as tough as applying for a traditional loan – it is more difficult, and the process is more stringent than before. Understandably, the effects of the recession still resonate all over and cast a shadow of fear on lending companies as to whether they will be getting their money back. They are now more careful in approving applications, and would carefully screen each minute detail to ensure that the risk is worth it. This article discusses the most common reasons why credit card applications are declined.

  • You already have enough credit cards

Regardless of your credit score, lending companies may still be wary of the amount of credit you have in your hands that you can use anytime. Indeed, you may not have maxed out your credit limit, but in the eyes of the lender, there still exists the risk that you can and will, and it might leave you with too high a debt to handle.

Thus, one recommendation that can be done to avoid being declined because of this reason, is to terminate other credit cards that you do not use, since you are applying for a new one. This way, not only are you limiting the possibilities that you could incur more debt but, also helps in protecting yourself from any potential fraud.

It is also possible that credit card companies may decline applicants that already have existing cards with them.

  • You are not on the electoral roll

If you are not listed on the electoral roll, it may affect your application as credit card companies look at the register to ensure that a person is creditworthy and helps in counteracting fraud. In the event that you changed addresses, it is best to always keep your information updated. It should be noted though that there is no need to vote, just that you are registered in the electoral roll prior to making credit card applications.

  •  You applied for several cards at once

It is possible that a person will make the mistake of submitting more than one application within a short space of time. Lending companies are concerned by patterns of multiple credit card applications; for it gives the impression that you may be trying to access more credit that you may not be able to repay.

If this applies to you, it is recommended that you discontinue applying and give a window of 6 months before applying for another card.

  • You have errors on your credit file

There may be instances where there are errors, omissions, and other mistakes on your credit file that could give a misleading image of your creditworthiness. It is always a good thing to regularly check your own credit file to ensure that the information is up to date and accurate.

  • You have been victimized by identity fraud

If you know your credit history is good, and that you have only a few (or one) credit card/s, and yet you are rejected, it could be due to you falling victim to identity fraud and that there is another person who is borrowing under your name.

This is something that a regularly credit file check should be able to address. There are also credit monitoring services available that charge a small amount of money every month – they send alerts to you when there are changes that occur in your file and history, making it easier to look out for fraud.

 

  • You are not the lender’s ideal candidate

Credit card companies have an idea of who their ideal customer is – and whether you fit or not in that picture may play a role in what your application will result to. There are no standard guidelines for companies to follow, and so what is applicable to one may not be for the other.

  • Your old monsters are still haunting you

Bad credit history will continue to show up in your records for six years after finally settling your debts. A County Court Judgment or CCJ, usually represents this, and is taken by credit card companies as a warning sign that you have a history of not being able to manage credit well.

  •  You are new to the borrowing business

While a bad credit history is a detriment to getting a new credit card, having no history at all may just produce the same results. Credit card companies like seeing that an applicant has a history of being able to manage debt to deem you not risky enough to be given a credit card.

There are credit cards that are specifically targeted towards new borrowers, and although they have higher interest rates and tend to be more expensive, they can provide the history you need to apply for the mainstream cards. Just be sure to always make regular, timely repayments to ensure that the history you are writing is a positive one.

  • You transferred jobs or changed addresses

A new job or a new home may send signals to credit card companies that you are not yet as stable as they hoped their credit card holders are, and would likely cause them to decline your application. It is suggested that you wait until regularization before applying for a card, or until you’ve settled in for at least 6 months in your new home, to show the lenders that you have settled and are stable enough to handle credit.