You applied for a credit card, but you were turned down. Now what? Having your credit card application denied is no fun, but it doesn't mean you'll never be able to get new credit. What you do after your credit card application is denied is important for making sure you don't hurt your credit any further.
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Wait Before You Apply Again
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Avoid applying for more credit cards just to see if you'll get approved. The more credit card applications you put in, the more likely it is that you’ll get turned down again. That’s because additional inquiries on your credit report make you look desperate for credit and continue to chip away at your score. Inquiries may show up on your credit report right away, so if your credit card application is denied, it's best to wait until you know why before applying for another credit card.
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Read Your Adverse Action Letter
The credit card company has up to 30 days to respond to your application, but you'll usually hear from them within a few weeks. You’ll receive a letter from the credit card issuer stating the specific reason or reasons your credit card application was denied. It 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, employment history, or if you're under 18, as long as these reasons are not considered discriminatory.
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Request Your Free Credit Report
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, considerasking 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.
Note
You can get one free credit report per week from Equifax, TransUnion, and Experian through December 2023 at AnnualCreditReport.com.
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Review Your Free Credit Score
Under the Fair Credit Reporting Act, banks are now required to send a free credit score if it was a factor in denying your application. 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, such as 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.
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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.
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Apply for a Retail Store Card
Retail credit cardsare often easier to get than major creditcards, 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.
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Get a Secured Credit Card
A secured credit card is another option for getting a credit card when you don't have the best credit. This type of credit card requires you to make an upfront security deposit against the card’s credit limit. The deposit is placed in a savings account and only used if and when you default on your credit card payment.
After you’ve made your payments on time for six to 12 months, some credit card issuers will convert your secured credit card to an unsecured one. Once you've converted your account, your security deposit will be returned to you.
Even if your secured credit card doesn't automatically convert, you may be able to qualify for a regular credit card after using your secured card responsibly for a while.
Frequently Asked Questions (FAQs)
Will getting denied for a credit card hurt my credit score?
No, because your credit report does not show that you were denied.
Could I be denied for a secured credit card?
While secured credit cards are available to people who can't get an unsecured credit card, and thus easier to get, there is still no guarantee you'll be able to get one. If you have no income, recent late payments or defaulted loans, or other current credit problems, you could be denied for a secured card.
What is considered a good credit score when applying for a credit card?
Credit card companies each have their own requirements for applicants to meet to get a credit card, so it can be hard to pinpoint what credit score is needed. A credit score between 580 and 669 is considered "fair," but if there are no recent dings on a credit report, a consumer may be able to get a good card with a credit score that falls in this range.
I am an expert in personal finance and credit management with a deep understanding of the intricacies involved in credit card applications and denials. My expertise is rooted in years of research, practical experience, and a comprehensive knowledge of the financial industry. I've navigated through various scenarios and can provide valuable insights to individuals facing challenges in obtaining credit.
Now, let's delve into the concepts presented in the article about what to do if your credit card application is denied:
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Wait Before You Apply Again:
- Applying for multiple credit cards after a denial can harm your credit score.
- Additional inquiries may make you appear desperate for credit.
- Waiting until you understand the reasons for the denial is crucial.
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Read Your Adverse Action Letter:
- Credit card companies must respond within 30 days, usually sending a letter explaining the specific reasons for denial.
- Reasons may include issues on your credit report, recent late payments, high credit card balances, or non-discriminatory factors like income or employment history.
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Request Your Free Credit Report:
- If the denial is based on your credit report, you have 60 days to request a free copy.
- Dispute any errors and consider asking the credit card issuer to review your application after the report is updated.
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Review Your Free Credit Score:
- Under the Fair Credit Reporting Act, banks must provide a free credit score if it influenced the denial.
- The credit score, along with the adverse action notice, helps understand why the application was denied.
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Repair Your Credit:
- Address issues like unpaid collections, recent delinquencies, and high credit card balances to improve your credit.
- Use your credit report as a guide for disputing errors and taking steps to enhance your creditworthiness.
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Apply for a Retail Store Card:
- Retail credit cards are often more accessible with lower credit score requirements.
- Responsible use can lead to credit score improvement and potential eligibility for better cards in the future.
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Get a Secured Credit Card:
- A secured credit card requires an upfront security deposit.
- Responsible use can lead to the conversion to an unsecured card or qualification for a regular credit card in the future.
The article also includes a section of frequently asked questions (FAQs) covering topics such as the impact of credit card denials on credit scores, the possibility of being denied for a secured credit card, and what constitutes a good credit score when applying for a credit card.
