Top Reasons Credit Card Applications are Denied

app denied

When people put in an application to receive a credit card, they do it for multiple reasons. Some of these people are just trying to establish credit while others hope to improve their credit status or expand accessibility to credit. No matter what the reason, rejection of a credit card application is not an expected outcome nor is it an easy pill to swallow. To improve your chances of being approved you should have a full understanding of what goes into the decision making process. Not every lender has the same criteria when offering credit to the consumer. For that reason, consumers need to conduct their own research prior to putting in the application or they should only try to obtain credit cards that are easy to be approved such as secured credit cards. Below are some of the top reasons why credit card applications are denied.

Insufficient Credit

Lenders look at your financial track record before granting credit. If you have no credit file, then it is going to be hard for the lender to figure out if you are going to be a good payer or not. This is especially true when the lender is conservative. If you want to be considered credit worthy by lenders, start by getting a secured credit card or become an authorized user on someone else’s card.

Poor Payment History

If your payment history is poor, it raises a red flag to the lender. If you have late payments or have missed payments on your credit card, then you may have a problem. It is best to get a copy of your credit report and check for any issues before applying for a credit card. Then begin making payments on all past due account to restore your credit.

Maxed Out Credit Lines

If your credit line has been exhausted or maxed out, your creditors will view that as financial irresponsibility. This waves a red flag that you are relying too much on credit to survive. You should first try to pay down the debt that you currently have before applying for a new card.

Total Debt Too High

If your debt to income ratio is too high, no creditor will want to grant you credit. Remember, the creditor also looks at other expenses that you carry each month. So, you can either increase your income or reduce your debt to qualify.

Multiple Inquiries

If you have been shopping for credit cards or an auto loan, for example, the creditor sees the multiple inquiries as desperation to acquire credit, therefore making it hard to get an approval. You should limit the number of times that you allow other creditors to pull your credit or you may be declined when you need it the most. It is best to wait for a few months before you reapply after a rejection.

Not Enough Income

If your income is not up to the requirements set by the lender, your credit card application will be denied. You can do research to see lender income requirements or get a second job to qualify. You could also get a cosigner.