What to do when your credit card application is declined

By UK CreditCards.com

Were you recently denied for a new credit card? Rejection hurts; but it can also be a learning opportunity. Rather than panic that your application for a new credit card was rejected, you are better off finding out why it happened in the first place.


You can't solve the problem until you know what it is, so put on your investigation hat and find out what you can do to make sure it doesn't happen again. Here are the first four steps you should take. 

1. Check your credit card application.
You're human, and you make errors just like everyone else. So double-check your original credit card application form to make sure all the information is correct. If there is an error on your form, this could lead to your application being declined because the information you have provided is different from the information lenders already have. 

2. Check your credit report.
If you have gone over your application and everything is correct, the next step is to check your credit report. Your credit report will contain a lot of valuable information, such as your address history, any county court judgments against you, credit agreements and so on. When you review your credit report, you can see what lenders see, and this could give you an idea of how to rectify the problem. It is also possible that the report contains errors that are denting your credit score.

3. Look at whether the card that you applied for is intended for consumers with fair, good or excellent credit.
When you compare credit cards on card comparison websites, you will often see that there is a little information box giving an indication of who should apply for these types of credit cards. Some credit cards provide their customers with excellent rewards, very low interest rates and other goodies. However, in order to qualify for these perks, you have to first prove to the lender that you are an excellent credit risk. 

If you only have a fair or good credit rating, applying for a credit card that requires an excellent rating is only going to lead to an automatic rejection. That's why it's essential that you check whether you have a chance of being accepted before you apply.

4. Fix the problems that you discovered in your investigation.
Once you know why your credit card application has been rejected, you can start to fix the problem. If it is an error on your application or on your credit report, you will need to ensure that these are amended as soon as possible. If you applied for a credit card that is particularly difficult to qualify for, you might understand why you were declined, and you can apply for a different type of credit card in a few months.

However, sometimes you will find out that you have been rejected because you have a bad credit rating due to defaulted payments. If this is the case, you have already hit one milestone on your road to recovery because you know what the problem is. The next job is to start rebuilding your credit rating.

If you currently have bad credit, try and open up a credit builder credit card account and make purchases that use up to approximately 60% of your credit limit. Then pay them off immediately. If you do this continuously over several months, you should see your credit rating start to improve. It is absolutely essential, however, that you use this card in the right way or you could cause more harm than good. 

See related: Study: Many Brits lack key knowledge of credit scores; How to get your credit report, score

Published: 24 August 2011