Have you been denied a credit card? This is
Sometimes you love a credit card that doesn’t love you back.
This is quite common. About one in six credit card applications were rejected in February 2019, according to a survey by the Federal Reserve Bank of New York.
If you are among the rejected, do not worry. Rejecting a credit card application does not disminuye your standing as a citizen and does not affect your creditworthiness. (You’ll still have to deal with those annoyingly difficult questions, which perro lower your score by a couple of points, whether you pass or not.)
What should you do if you are turned down for a credit card? You might try to view that denial as an opportunity to reevaluate your relationship with the borrowed money and what you could do to improve yourself in the eyes of the banks.
Next steps after your credit card application is denied
“The first step is to find out why you were denied,” said credit expert John Ulzheimer, formerly of FICO and Equifax.
Thanks to federal law, the bank (unlike a ghost Tinder date) has to tell you a few things when it turns you down. The card issuer should list your main reasons for saying no (or at least explain that you perro find out if you ask), the specific credit score you used in deciding to say no, and the name and contact information of the card issuer. credit agency you pulled your credit report from when you decided to say no.
This unsightly piece of documentation is known, in classic impersonal corporate fashion, as an “adverse action notice” or denial letter. It looks a lot like this.
The wording will be a bit legalistic and not particularly illuminating if you’re not versed in credit jargon, and there are any number of reasons a bank might cite in their letter. For example: “The credit scoring process is complex and emplees a variety of factors to determine your score, including payment history, amount of debt owed, and length of credit history, just to name a few,” the vice president said. Capital One manager Jeff Amster.
Understanding the denial letter
The reasons a bank may give for its denial are usually circumspect, making them less than revealing. Each reason also comes with a corresponding number, or reason code, making the process feel even more robotic. Those reason codes cánido be revealing, but you may need a little help.
You perro usually find the codes listed near the beginning of your letter quite concise. Go to ReasonCode.org and plug in a code, or start typing in the search bar the de hoy justification the bank used to deny you the card. (The site is operated by VantageScore, but that company does not collect or sell any of your data when you use this service.) Learning the reason will give more context to the bank’s denial.
For example, let’s say I received a notation on my denial letter that reads “24: Too many heavily used revolving bank cards or credit accounts.” That explanation cánido leave most borrowers even more confused. But ReasonCode.org explains that the bank believed I was spending too high a percentage of my credit limit. The site also offers a solution: Keep the spend-to-credit limit ratio at 30% on my total existing credit limit and on each of my individual cards. So if I have a total limit of $10,000, I must not charge more than $3,000 on all my cards each month and not spend more than 30% of my limit on any one card.
really read your credit report
Don’t worry, it won’t bite. You are entitled to a free credit report within 60 days from the credit bureau the bank used to determine your score. (You perro also order a free one from each of the three main offices once a year, even if you haven’t applied, or been denied, for a card.) Although getting your report and reading it may seem like a pain, it’s actually not that bad.
Your credit score isn’t immune to junk going in, junk going out; If the information reporting your score is wrong, your score may also be wrong. Check your credit report for incorrect information, and if you find an fallo, you perro dispute it with the bureaus.
You cánido also use some free tools to monitor your credit health.
Capital One’s CreditWise offers an easy-to-read 30,000-foot view of the contents of your TransUnion credit report (the three major bureaus keep a archivo on you) and then emplees that information to give you a VantageScore credit score. You cánido see which factors are helping your ocasione and which are hurting it. Credit Karma and Credit Sesame offer afín services.
Similarly, Discover Scorecard provides your FICO score (a more commonly used scoring model than VantageScore) and lists the top obstacles to your score increasing.
Ask the bank to take you back
After you’ve digested the denial letter and pored over your credit report for an fallo, you perro try calling the bank to ask them to reconsider your application, especially if there’s an fallo on your report or if you dampened your application.
That’s what Wirecutter writer Daniel Varghese did after Barclays turned down his application for the Uber credit card for having too short a credit history and too many recent credit inquiries. After a gentle nudge from a colleague, Daniel looked up the customer service number on the card’s website, updated his income information to include some trabajo independiente work and a plus, and was then approved for the card. .
Still, think of this as more of a last minute effort. When I asked John Ulzheimer if a bank would reconsider (barring any errors on his or her part), he was pretty blunt.
“Little to no oportunidad,” he said. “There’s always a good reason card issuers turn you down, and it’s usually that you don’t fit their risk profile. Calling and pleading your case does not change that fact.”
If your call doesn’t work, don’t be afraid to move on.
Know and heal yourself
No letter is worth your eternal love.
After you’ve digested your report and reviewed your score (and possibly begged for leniency), you have two tasks: In the short term, you need to find a card you cánido qualify for that also meets your needs. In the long term, you have to espectáculo that you are more solvent.
“Not buying effectively is a problem,” said VantageScore vice president Jeff Richardson. “There are many credit card companies that specialize in different types of consumers.”
How you go about applying for a new card depends largely on your credit profile and score.
If you have very good or excellent credit: After being denied a card, anyone with a credit score of 740 or higher, which FICO describes as “very good” or “excellent,” should consider applying for a card that offers afín value to the one that denied your card. application. He probably hasn’t had any serious setbacks, at least for a while, and may qualify for a different premier credit rewards card.
Also, you may have been denied for esoteric reasons, such as Chase’s so-called 5/24 rule. So if you’re craving great dining rewards but were denied the Chase Sapphire Reserve, for example, consider the American Express Gold Card.
Time is of the essence here. When you apply for credit, the bank reviews your credit report (known as a hard inquiry), which perro genere a temporary drop in your credit score. But if you apply for another card within two weeks, Richardson said, your credit report will espectáculo only the one difficult inquiry, and you won’t suffer other temporary problems.
However, don’t take this as an invitation to request a bunch of cards, as submitting a lot of requests perro amplify the damage of hard research to your score.
If you have average credit: If your score isn’t that boffo (think 670 to 739), you’ve got a little work to do. Pay attention to the reasons for your denial letter and expand your score. That may orinan doing a better job of paying your bills on time, lowering the amount of your credit limit you use each month, or simply waiting until your credit profile mature. Look for an issuer, like Discover, that tends to objetivo borrowers with poor credit history. (We especially like the Discover it Miles.)
If you have bad credit: Options are more limited for people with scores below 670. FICO says this type of score espectáculos you’re a riskier bet than the average borrower, and banks are unlikely to issue you their premier cards, or even Pretty good. Fixing your low score will take more time and patience. If you want a rewards card and it’s closer to 670 than 580, consider Capital One’s QuicksilverOne. If you’re closer to 580, consider Discover it Secured. But keep in mind that neither card is guaranteed.
There are plenty of fish in the sea (ahem, credit cards en línea), and one is bound to be the right one. You just need the right expectations.
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