Denied a Credit Card
Credit Card Application Refused?
Credit cards can be a very convenient way of paying for a wide range of products and services but it is important to note that a credit card is still a form of loan and as such there are certain eligibility requirements that an individual will need to fulfil before a credit card application is accepted. If you are considering applying for a credit card, or you have recently had a credit card application declined, you may want to consider the following reasons why your application maybe declined. By being aware of these reasons you could help to prevent them from affecting your suitability for credit card acceptance.
Why was my credit card application declined?
To be able to grant a customer a credit card, the credit card provider will need to credit check the applicant and the credit rating of the applicant should be high enough to fulfil the eligibility requirements.
Different types of credit cards will have different eligibility requirements so it is important that a person chooses a type of credit card that fits both their own needs and they have a good chance of being accepted for because the most common reason for being declined a credit card is failing the credit check.
For detailed information about credit ratings and credit scores please read our dedicated credit section.
A quick summary of reasons why you might have a credit card application declined:
- Credit score that is not high enough to satisfy the credit card provider i.e. bad credit
- Access to too much credit already e.g. multiple loans or existing credit cards
- A lack of previous credit history
- You are not listed on the electoral roll
- There has been an error on your credit report that has led to the decline
- There have been too many applications for credit within too narrow a timeframe
- You have been recently subject to identity fraud
- There have been previous financial problems that are still showing in the credit report such as CCJs
- Address details are inconsistent, you have just moved home or you have moved home frequently in a short time frame.
- Your eligibility does not fit with the lenders eligibility requirements
- The credit card application was completed incorrectly
- Your income is deemed to be low by the credit card provider
- You are too young to apply
All of the reasons above (along with the more comprehensive details in the denied credit section) can go towards an applicant being declined a credit card.
Different types of credit cards
Before applying for a credit card you need to decide what you want to use the credit card for as there are a wide range of different credit cards on the market each with particular strengths and weaknesses. You need to decide what you will be using the card for and opt for the best deal for you in that credit card category.
Types of credit cards include:
0% balance transfer credit cards – Balance transfer credit cards allow you to transfer the balance from one credit card onto another card. Typically most balance transfer cards have an introductory 0% rate for a set period of time. In other words from the time that you move the balance from one credit card to the new card you will have e.g. 20 months at which you will be charged 0% interest provided that you pay the minimum monthly repayment rate. Balance transfer cards will include a balance transfer fee which usually amounts to 1% – 4% of the total cost of the balance to be transferred.
0% purchase credit cards – A purchase credit card is a card that gives you a special rate for spending, usually there is a 0% introductory interest rate on purchases made for a particular period of time. This means that there is the potential to not pay interest on the credit card balance of the duration of the introduction period which can be 18 months or more provided that the minimum monthly payment is made by the deadline each month.
Balance transfers and purchases cards – There are a range of credit cards that are tailored towards people that will need to use a combination of transferring a balance and spending. These are essentially two cards in one and can be more convenient than having two separate cards – one for “balance transfers” and another for “purchases”.
Cashback credit cards – Cashback credit cards give you cashback for spending on the card. Usually the cashback will be a small percentage of the spend that will be credited back onto the card, or some providers will issue a cheque for the amount. Different cashback cards will offer varying amounts of cashback and often the cashback amount will vary based upon where the card is being used to spend so carefully check exactly what cashback each card type will give you.
Credit Building credit cards – A credit builder card will be used by a person that currently has a low credit rating that wishes to improve their credit score. By using a credit builder credit card sensibly over time it should be possible to help repair a poor credit rating. Due to these types of cards being targeted to people with poor credit, it is easier to obtain one of these cards. The downside is that the interest rates tend to be higher than on standard credit cards so it is important to ensure that balances are paid in full so as to avoid any high interest payments on the balance.
Low rate APR credit cards – Low rate APR credit cards are cards that don’t have introductory rates on spending such as 0% for fixed periods, they typically have a lower rate of APR over the full lifetime of the credit card. These types of cards can sometimes be used by people as an alternative to getting a personal loan. They are similar in the sense that the APR will be at a fixed level so repayments will be constant throughout the repayment period.
Reward and points credit cards – These type of credit cards give you rewards or points for qualifying expenditure on the card. Common examples include getting cashback in supermarkets or petrol stations when paying for shopping or fuel or getting Airmiles now known as Avios points which can be accumulated to help pay towards flights.
Overseas spending credit cards – An overseas spending credit card is a specialist credit card that can be used when paying for goods or services abroad. Usually, if a standard credit card is used abroad there will be additional transaction fees added, but with dedicated travel credit cards the fees are reduced so it is worth considering applying for this type of card if you are a frequent traveller or holidaymaker that would want to use a credit card abroad.
What to do if a credit card application is declined
If you have had a credit card application declined it is not the end of the world because different credit card providers have different scoring methods to determine whether to offer a credit card to an applicant or not so it is possible that whilst one lender might decline you, another might accept you.
However, do not rush into making another credit card application if you have just had one application fail. Bear in mind the following points before you consider making another application for a credit card.
Don’t make another card application until you have more of an idea as to why you were declined originally. Your credit card company should give you an idea why the denied your application – a letter or phone call to the card provider is a reasonable approach. After obtaining the reasoning you can then take steps to stop future rejections.
Check your credit report. Credit card applications are often denied due to a poor credit rating. You will be able to ascertain whether you have a poor credit rating by checking your credit report and find any weaknesses in your credit rating by checking your report. Read more about credit reports in our dedicated credit section.
After having checked your credit report if you see weaknesses make sure you take steps to improve your credit score before applying again.
Making multiple applications for credit cards will be noted in your credit report and this can affect your credit rating negatively – particularly if they are declines. So take your time, check the card eligibility requirements thoroughly and if you are confident of application success space applications for credit cards out over a period of months.
Applying for a credit card
After having decided what type of credit card it is that you want to apply for you now need to find the best deal available for that type of card. There are so many different types of card available at any one time and the offers change frequently so it would be wise to check the comparison tables on a specialist website that compares current credit card deals.
Bear in mind that if you make credit card applications yourself direct on the lenders website, you will be leaving a “footprint” on your credit report. If you were to be declined by the credit card company then that decline will be recorded on your credit file and this may hamper your attempts to get a credit card at a different company so you should consider using the Moneysupermarket Credit Card Smart Search. This is a free tool that will match the best credit card deals applicable to your situation and importantly NO CREDIT CHECK WILL BE MADE. In other words there will be no potentially detrimental footprint left on your credit file.