Credit

How to Handle a Credit Card Rejection

 

credit card rejection, credit card advice, credit card tips

Whether you’ve been stood up for a date or passed over for a job, rejection hurts. A “no” from a credit card issuer can be disappointing, too, but it’s nothing personal.

Call the issuer and ask why you were rejected, says NerdWallet’s credit cards expert Sean McQuay. Under the Equal Credit Opportunity Act, the issuer has to give you a specific reason, as long as you inquire within 60 days of being notified. Next, follow these steps, depending on the reason you receive.

If you have a limited credit history

It’s difficult to get a card if you have a short credit history. Here are a few things you can do to obtain a card while building your credit:

  • Look for a card that allows a co-signer. Ask a family member or close friend with good or excellent credit to co-sign. Make sure you both understand that the co-signer will be on the hook to pay your debts if you don’t.
  • Apply for a secured card. Secured credit cards require a refundable security deposit that’s usually equal to the amount of the credit line, which serves as collateral if you don’t make payments. Before you sign up, verify with the issuer that it reports your payment activity to the credit bureaus. This way, you can be sure this route will help you build your credit history.
  • Become an authorized user. Consider asking a family member or partner to add you as an authorized user to their credit card. You don’t legally own the account, so the main account holder is responsible for any charges you don’t pay. Some cards report authorized user activity to the credit bureaus and some don’t — ask before signing up.

Think of these options as starter cards. “By paying your bills on time, you’ll be able to build up your credit to the point that you can apply for the card you want,” McQuay says.

If you have a poor credit score

A credit score is a three-digit number between 300 and 850 that reflects your credit history. Card issuers put a lot of weight on this score, because it shows how responsible you’ve been when borrowing money. In simplest terms, a good or excellent score shows issuers you’ve borrowed money and consistently paid it back. A fair or poor score can hurl your application into the rejection pile.

If you have bad credit, consider getting a co-signer, applying for secured card or becoming an authorized user. That way, you’ll have access to a credit card and an opportunity to repair your credit. Boost your score by paying bills on time and keeping your balances to less than 30% of your credit limit. Follow these best practices for six to 12 months, and you’ll likely see your score rise.

If your income is low or you’re unemployed

Issuers are typically wary of applicants with little or no income. When applying for a credit card, list all types of funds to which you have “reasonable access,” McQuay says. That includes side-gig payments, your spouse’s earnings and, for students, loans and Pell Grants, he says.

If you’ve been denied for this reason, “call your bank immediately and lay out your case,” McQuay says. Mention any sources of income you didn’t include in your application or assets that you have. If you’ve been loyal to the institution or have a glowing financial history, it doesn’t hurt to mention that, either.

A solid case may prompt the bank rep to reverse your rejection or point you toward a card for which you’re more likely to be approved. A pleasant demeanor helps, too.

“Always be nice,” McQuay says. “They’re real people, too.”

This post was written by Laura McMullen on behalf of Nerd Wallet.

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3 Comments

  • Many banks also allow you to put some money into a CD and borrow against it with a very low interest rate. They report this to the credit bureaus and you then have a credit score.

    Say you put $1000 into a CD at 1%, then borrow against it at 2%. The bank gets to keep the 1% difference, you have to make monthly payments, and you get a credit history. It’s great for brand new borrowers.

  • When I got a rejection from a credit card I didn’t really understand. What I had been doing was getting a new credit card maxing it out then paying the minimum on that then getting a new card to max out.. I realize now of course that was a bad course to take but it still stung to get that rejection. I’m pretty glad I did though because who knows how much more debt I would have now if I had gotten that card.

  • I have excellent credit and was really surprised to be denies a rewards card this week. I had opened a different rewards card like three weeks ago and then three different bank accounts – all part of travel reward churning – but this was the first time I was shot down for a card based on how many credit inquiries I had recently. My score was still really high, but CapitalOne could see specifically that there were about 4 new inquires on my credit score.

    I did think it was cool though that they send you a letter telling you exactly why you were denied. Its helpful to know next time I do a round of credit card applications, I should do that one first.

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