If your credit card application is denied, there are some things you can do. First, you have to wait for the credit card issuer to tell you why you were denied. Card issuers are required to send an adverse action letter explaining the reasons for their decision. They are required to give you access to a free credit report, if one was used in making the decision. Here are 7 steps to take if your credit card application is denied.
01 Apply Again With Caution | Steps To Take If Your Credit Card Application Is Denied
Applying for many credit cards over a short period of time could affect your chances of getting approved. That’s because additional inquiries on your credit report make you look desperate for credit. Inquiries may show up on your credit report right away, so if your credit card application is denied, it’s best you take some time off before applying for another credit card.
02 Read Your Adverse Action Letter | Steps To Take If Your Credit Card Application Is Denied
As stated earlier, credit card issuers are required to send an adverse action letter explaining the reasons your credit card application was denied. This could take 7 to 10 business days. These reasons could be related to something on your credit report, recent late payments or high credit card balances, for example. In that case, you’re entitled to a free copy of your credit report to make sure the information in it is accurate.
If you were denied because of your credit score, the credit card issuer would send a copy of the credit score and the top factors contributing to your credit score. You could also be denied for a reason unrelated to your credit, like your income or employment history.
03 Request Your Free Credit Report | Steps To Take If Your Credit Card Application Is Denied
When your credit card application is denied because of information on your credit report, you’ll have 60 days to request a free copy of the credit report used in the decision. If you’d like to view your credit reports from the other bureaus, you’ll have to order them separately.
Once you order your credit report, you can dispute any errors that may have caused your credit card application to be denied. After your credit report has been updated, consider asking the credit card issuer to review your credit card application again. You can ask the credit bureau to automatically resend your credit report to anyone who’s reviewed it recently.
04 Review Your Free Credit Score
Banks are now required to send a free credit score when your credit card application is denied. Unlike the adverse action credit report, you don’t have to do anything to get your free credit score; the creditor should send it automatically after denying your credit card application. The free credit score will also list a few factors affecting your credit score, e.g., too high balances or too few installment accounts.
Your credit score, along with the adverse action notice, will give you a better understanding of why you were denied. Work on improving your credit score to improve your chances of having your application approved next time.
05 Repair Your Credit
Your credit card application may have been denied because you have bad credit. Unpaid collections, recent delinquencies, and high credit card balances are all things that need to be fixed before you can be approved for a credit card (or a decent one at least).
Use your credit report as a starting point for repairing your credit. You can improve your credit by disputing errors, getting caught up on past due accounts, paying down high balances, and minimizing the number of new credit applications you make.
06 Apply for a Retail Store Card
Retail credit cards are often easier to be approved for than major credit cards, even if you have a low credit score. If you apply and are approved for a store credit card, you’ll likely start out with a low credit limit. Fortunately, you can increase your credit limit over time based on your purchases and payment history.
Interest rates on store credit cards are typically higher, so be careful about carrying a balance. Keep your purchases to a minimum and pay in full to avoid paying expensive finance charges on your balance. Using a store credit card wisely can help you improve your credit score and qualify for a better card in the future.
07 Get a Secured Credit Card
Try getting a secured credit card. When credit card issuers turn down your credit card application, it’s because they view you as a risky borrower. A secured credit card shifts the risk because you have to make a security deposit against the credit limit. The credit card issuer is more likely to approve you because they can use the security deposit if you default.
Once you have a secured credit card, or two, use it as an opportunity to turn your credit history around. Make your payments on time each month and manage your credit card balance. After several months of timely payments, your credit card issuer may convert your card to an unsecured card. And, if not, you may have built up a solid enough credit history to qualify on your own.