Why Was My Credit Card Denied?

The credit card application you received in the mail said, "You had been pre-approved," but you just received a rejection letter. What happened?

Many of these offers say you're pre-approved. They don't really mean for the credit card. What they're really saying is, you've been approved to apply for your card, not to actually receive one. This is misleading, but your final approval depends on several different factors. Any of which can result in a denial of a credit card.

It's easy and natural to believe that the application process is simply a formality, but it isn't. Here are some of the reasons applications get rejected and what, if anything, you can do about it.

Why Are Cards Rejected?

Most likely you were rejected because of your credit score. Several things are taken into consideration, such as your salary or how long you've been on your job. The primary deciding factor, however, is your credit score.

The catch is that your credit history doesn't even have to be bad. If it's non-existent that will work against you as much as a bad score will. Because the credit card companies have no reference point to see just how you will handle a credit account, having no credit is almost as tough as having bad credit.

If you have a history of paying your bills or making loan payments late, that will work against you. Credit card companies need to know that you are a low-risk applicant, before they will issue you a card.

Other issues also come into play. If a new employer has just hired you, creditors usually want to wait until they're certain that you keep the new job.

These are all factors that will be considered when your credit history is spotty, but it's not a total loss.

What Can I Do Now?

Start cleaning up your credit history! This is the absolute best action you can take towards improving your chances for getting credit cards and loan approvals in the future.

Creditors are usually required to tell you why you've been rejected and which credit bureau they used to access your report. If the data contained in it was used to deny your application, you may even be entitled to a free copy of your credit report. Check with the credit bureau to find out.

If your credit rating is poor, start taking action now. Begin paying your bills on time. Consider consolidating your bills so you can better afford the monthly payment. Eliminate extra and unnecessary spending and use the extra money towards paying off your outstanding debts. This will take some time, but well worth it in the long run.

After you've cleaned up your credit pattern or established some simple credit, wait awhile. Then apply for the card again. When the creditor sees how hard you have been working to improve your credit report, they may reward you for the hard work.

Be careful, cautious and prudent, though. Don't go overboard with your new purchasing power and dig yourself into an interest-laden financial black hole!