Finding out that your credit card application is denied can feel painful, but there are many ways to bounce back from defeat. Instead of taking things personally, consider these 6 ways to recover after a credit card application rejection:
What to Do After a Credit Card Rejection
1. Do not immediately apply for a new credit card
Your gut reaction after getting a credit card rejection may be to go fill out multiple credit applications and hope that one will accept you but doing so will actually make it more difficult for you to be accepted by an issuer in the future. Credit card companies examining your credit history may be less likely to grant you a card if they see too many inquiries on your credit in a short period of time as it may be a sign that you depend on credit cards too much and may be a lending risk.
2. Figure out why your application was declined
With credit card issuers, you don’t have to guess what they are thinking. They will tell you. All you have to do is examine your adverse action notice. You may not know what an adverse reaction notice even is, but this simple letter solves many of the frustrations felt after you’ve applied for a credit card only to be shot down. The Fair Credit Reporting Act of 1970 grants insight into the credit card approval process as it requires a credit card issuer to send you an adverse action notice when you are denied credit. This notification is generally sent within 10 business days and includes the specific reason(s) that you were denied credit, information about the credit bureau that supplied the credit report used to make this decision, and how to obtain that report. Guessing that your bad credit score or high credit utilization ratio is the reason that financial institutions declined you isn’t nearly as helpful as actually knowing why, and this notification is how you find out.
3. Examine your personal finances
If you didn’t already get one before applying for a new credit card, you should get a copy of your credit report and check your credit history. The adverse action notice sent to you by the issuer as mentioned above will give instructions on how to get one, but you can contact any of the three credit bureaus- TransUnion, Equifax, and Experian- to get a copy yourself. With your credit report in hand, you will be able to identify how your spending habits are affecting your credit score. It may be because your credit card balances and auto loan balances are too high, or your credit scores are too low. Your credit history may show numerous credit cards in your name, or it may show that you have a limited credit history (known as having a thin file) which can also be a reason that your application was declined. It’s tricky in that regard.
4. Review your application
The reason that your credit card application was rejected may be even easier to determine that reading through your credit report line by line, even if that’s what you absolutely should do anyway. You may have been declined, simply enough, because you made a mistake on your credit card application. Is that a ridiculous reason to be declined for a credit card? Yes. Is it a very viable reason to be declined for a credit card? Also, yes. Credit card fraud is a very serious crime that may be caught early on because of a mistake on an application, though that mistake may also have come about because you were filling out the application in a hurry or without all the information as provided in your credit report and listed in your adverse action notice.
5. Calmly plead your informed case to the issuer
If after you have carefully read your adverse action notice, credit report, and application you are still unable to figure out why your recent credit card application was rejected, it may be time to contact the issuer directly. Nowadays, this can commonly be done via email, live online chat, or phone. In any of those situations, it is important to have as much information about your situation as possible beforehand and to remain calm. It is unlikely that the person on the other end of the line was the one that specifically rejected your application, so contacting them in any way other than politely isn’t a solution. Slinging obscenities and demanding to speak with a manager has a greater chance of ending up with you on hold until you come to your senses instead of triggering an immediate resolution, so please keep that in mind. Your credit card application may have been declined because of a simple clerical or computing error on the issuer’s end that can be corrected instantly, but you won’t be able to find that out quickly with the help of a representative if you’re being demeaning to them.
6. Improve your credit, then try again
While the knee-jerk reaction of applying for a dozen other credit cards after your credit card rejection is frowned upon, it doesn’t mean that you are forever unable to apply for a credit card. On the contrary. Now that you are better informed about your creditworthiness, you will be able to improve your credit score and, in turn, improve your chances of being accepted the next time that you apply for a credit card. One easy way to build credit is to open a student credit card or a secured credit card. Though the limit for these cards is generally lower than an unsecured credit card, the important part is that your behavior will be reported to the three credit bureaus. Showing responsible spending habits over time will make you less risky issuers and more likely to be accepted the next time that you apply for a credit card. All we need is just a little patience and information to recover after a credit card application rejection. Take the time to examine where you stand and what you can do to personally improve your creditworthiness, and the odds will be in your favor the next time around.