Why Was My Credit Card Application Denied?
It is a must that you know the reasons why your credit card application was denied. This is to ensure that you don’t apply for more cards only for your application to be refused all over again.
Below are some of the most common reasons behind declined applications for credit cards:
Your Income is Way Too Low or Your Work History is Unstable
Credit card providers tend to favor applicants with stable job history because your application can be denied or accepted on whether or not the lender has full confidence that you will be able to keep up with your payments every month.
Your application might also get rejected if you have an extremely low income and providers are unsure that the repayments are within your means. But, with the increase of self-employment and flexible working contracts, lenders are now starting to update their policies to cater to these changes.
You Have an Extremely High Outstanding Credit Balance
If you got several existing outstanding loans and credit card balances, you might end up penalized if you have high balances or you max out your credit even if you are making on-time repayments. It is because the consumers might be put at risk when the extended is over extended.
Credit card providers would like to see that you are effective enough in managing your credit and this involves using just a part of your available credit.
It is a must that you try reducing your outstanding credit prior to applying for additional credit cards. If not, credit card provides may see it as a sign that you are having a hard time in managing your money.
Your Credit History is Limited
For your credit application to be accepted, you need to show that you could effectively manage this, something that might be easier said than done if you got a limited credit history. You should have a minimum of one account requiring credit that is open for 6 months for you to generate a credit score.
To show the credit lenders your effectiveness in managing credit through proper management of your payments on utility bills, a phone contract, or an overdraft. After building your credit file, there is a higher chance for your credit card application to be accepted in the future.
You Got Late Payment Charges
Your score can be negatively affected by late payments. If you made a payment within a period of 90 days following the due date at any given time for the past 6 months, this can increase the chance that your application will be rejected because it signals the lender that it is less likely for you to pay right on time down the road.
You Have a Lot of Credit Applications
Finally, your credit card application might also be rejected because you have a lot of credit applications or the so-called inquiries on your credit file. Other credit card issuers will see this and can imply that you are having a hard time in effectively managing your finances.
