If you have applied for credit cards in the past and have been turned down, the credit card company provided you with some cryptic reason of why you were denied. In fact, whenever you are denied credit, the lender or credit card company must give you a legal and valid reason for the denial. These reasons are often vague and they usually provide no insight with regards to how to remedy the situation.
Some of the reasons you may have been given if you were not approved for a credit card include:
Reason 1: Amounts Owed On Accounts Too High
Credit card companies often compare your level of debt with that of other consumers and, if your debt level is on the higher end, you may be denied for the credit card. This reason is frustrating because the acceptable ratio of debt to available credit is unknown.
To address this factor, pay your credit balances down before you reattempt to apply for a credit card. Experts recommend that you pay down the balances that are nearest to the account limits first. Create some leeway between your credit limits and balances. You will increase your changes of being approved for your desired credit card.
Reason 2: Too Many Inquiries in 12 Months
Each time an inquiry is made on your credit report, the inquiry is noted on your report. Many inquiries in a short time is a red flag for many lenders. Apply for credit sparingly, especially retail credit accounts, and keep the inquiries on your credit reports to a minimum.
Reason 3: Level of Delinquency
If you have received this reason for credit card denial, this means that your payment history reflects delinquent payments to creditors. The further your accounts fall behind,
the more your credit score will be negatively affected.
Pay your bills on time. Pay more than the minimum payment on your credit cards. Pay off credit card balances and build a history of making timely payments.
Reason 4: Delinquency Too Recent/Unknown
If you missed a few payments on an account three years ago, but have maintained an excellent payment history ever since, your credit score will be less affected than if you missed payments within the past year. Sometimes, the age of the missed or late payments is unknown. Credit card companies frequently use this reason to deny applicants.
To minimize this factor, establish a recent history of paying all bills on time. Once your history reflects a year or two of on-time payments, the effects of any late payments years ago will be lessened.
Reason 5: Serious Delinquencies, Collections, Derogatory Public Records
Certain delinquencies are charged off by lenders. Other delinquent accounts may be turned over to collection agencies. Both of these actions are recorded on the individual’s credit report. Additionally, public records, such as foreclosures and bankruptcies, are listed on the credit report.
Some derogatory public information may remain on the credit report for up to 10 years. Foreclosures and seriously delinquent accounts will remain on the report for 7 years. If this information is correct, and not entered in error, you simply must wait it out. Continue to pay your bills on time and eventually, these entries will expire from your record.
Reason 6: Lack of Revolving Balances/Installment Loan Information
Simply not having enough recorded accounts, or if your credit history spans a short length of time, may preclude you from being approved for a credit card. If you have a lack of revolving balances, occasionally using your credit cards, and then paying off the balances will address this factor.
Individuals with the best credit scores tend to have a mixed balance of credit. Consider taking out a small loan the next time you purchase a car. With an excellent credit score, you may even qualify for a 0 percent APR loan. Make sure to pay your payments on time and pay off the loan to boost your credit rating.