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How to Recover After a Credit Card Application Rejection

A credit card application rejection can feel painful, but there are many ways to bounce back from defeat. Instead of taking things personally, consider these ways to recover after a credit card application rejection:

What to Do After a Credit Card Application Rejection

So, what should you do after you get rejected for a credit card?

Don’t Immediately Apply for Another 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 approved 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 as it may be a sign that you depend on credit cards too much and maybe a lending risk.

Related Article: What Credit Cards Can I Get with Bad Credit?

Learn Why Your Application Was Rejected

With credit card issuers, you don’t have to guess what they are thinking. They will tell you. All you must 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 posted within ten business days. It includes the specific reasons 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.

Closely Examine Your 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. Still, 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 indicate 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.

Related Article: How Bad Credit Can Cause Problems in Everyday Life

Review Your Application and Plead Your Case

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 essential to have as much information about your case as possible beforehand and to remain calm.

It is unlikely that the person on the other end of the line was the one that categorically 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 higher 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. Still, you won’t be able to find that out quickly with the help of a representative if you’re demeaning to them.

Improve Your Credit

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, once 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 secured credit card account. 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.

Using a secured card in conjunction with sound financial techniques is essential for quickly fixing your credit and moving on to an unsecured credit card. These practices include:

  • Reducing your overall credit use to less than 30%
  • Paying your credit card bill every month
  • Removing late payments from your credit report

Related Article: What’s the Fastest Way to Repair Bad Credit?

Conclusion

Credit card rejections happen for several reasons. While getting a rejection letter from a bank is upsetting, it isn’t the end of the world.

Carefully read the reasons for the rejection and what the lender recommends. Use credit monitoring services and check your credit report for more information. If you find mistakes or errors on your credit report, contest them.

Related Article: How to Choose a Secured Credit Card

About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident rewards expert, covering all facets of the points game – especially travel, hotels, and airlines. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.