When applying for a credit card it seems fairly obvious that you cannot get approved with a poor credit history. However often times, consumers with a good credit score are denied for a variety of other reasons. Here are seven of the top reasons credit card companies may deny your application.
Low Credit Score
The first and most obvious reason for denial is a low credit score. Credit card companies require a certain credit score or FICO Score for approval. If you do not meet that requirement, then it is usually automatic grounds for a denial. Most lenders do however consider more factors than just your score.
Limited Credit History
Second, credit card companies will usually reject you if you have a limited credit history. If you have very few accounts and have not been in the financial world for a long time, a lender will not approve you because they do not have enough of your financial information to establish whether you will be a responsible paying customer.
High Credit Card Balances
Third, if you carry high balances on your additional accounts a lender is likely to deny your credit card application. High balances on your accounts is a sign to lenders that you are not able to make your payments and can usually lead to financial instability.
Fourth, current delinquent accounts on your report can hinder your chances of approval for a credit card. While your overall credit score is an important factor, if you have negative information on your report, including late payments, high balances, collection accounts, charge-offs, etc., a lender is more than likely going to deny your credit application.
Fifth, lenders often look to your income to make a decision on whether or not you are a credit risk. Your income level can help lenders determine whether or not to approve your application for a card. Your income is also used to determine the credit limit a credit card company is willing to offer you. The higher and more stable your income the higher your credit limit can be.
The sixth reason you may be having difficulty getting a credit card is your age. Unfortunately, this is a reason you cannot do anything about. Lenders don’t like to extend credit to minors so you may want to consider becoming an authorized user on a card with a parent. This will help establish good credit and when the time is right, you will be able to get approval for a card of your own.
Multiple Credit Card Applications
The seventh and final reason that a lender may deny your credit application is because you have been shopping around for credit. Lenders don’t like to approve consumers with multiple credit applications. Multiple applications or pulls on your report may be a red flag that other lenders were unwilling to extend you credit and may mean that you are a credit risk.
The Right To Know Why You Were Denied
Under the Fair Credit Reporting Act (“FCRA”) if you have been denied for a credit application you have the right to know why. After you have been denied the lender must provide you with a denial letter in writing explaining why your application was denied. They also must disclose what credit reporting agency it used to obtain your information. You are entitled to a free report from the agency so you can review what is reported on your credit file. Use the credit denial as a guide to see what you need to improve upon.
If you believe your rights have been violated under the FCRA and you would like the advice or assistance of counsel, contact SmithMarco P.C. for a complete free case review.