If your application for a secured credit card is rejected, find out why you were denied (you have the right to know) and explore your options for building a better credit history.

Because while secured credit cards — which require a cash deposit as collateral for your account — are a great option for those who have bad or nonexistent credit, you’re not guaranteed approval. The lender might have concerns about your income or your ability to pay bills on time, or might ding you for filing for bankruptcy in the past.

  1. Find Out Why You Were Denied a Secured Credit Card
  2. Identify Other Ways to Build Credit History

1. Find Out Why You Were Denied a Secured Credit Card

You have the right to know if information in your credit report prevented you from being granted credit, insurance or employment. If you apply for a secured credit card (or any credit card) and are turned down, the credit card issuer will provide you with a letter explaining why your application was declined.

If something on your credit report led to a rejection, carefully look over your report for errors. You are entitled to one free credit report per year from each of the three major credit bureaus. If you see any incorrect information, dispute the errors.

2. Identify Other Ways to Build Credit History

Typically, a credit card company’s reasons for rejecting your application aren’t based in error — so you’ll need to find another way to build up your credit history. You have a few options.

Credit unions may offer several credit-building services. Share-secured loans function like secured credit cards (you deposit money into a savings account and borrow against that money), while credit-builder loans are small loans that you can pay back in timely installments. Both options may help build your credit history.

If your parent, spouse or partner is a responsible user of credit cards, they could help you build your own credit history. They can add you as an authorized user of one of their credit cards, and the creditor will report on you both to the credit bureaus.

The catch? Your actions will affect each other. If the cardholder pays late, maxes out her card or racks up debt, it makes you look bad. Likewise, if you do those things, it negatively affects the cardholder’s credit. And the cardholder (not you) is responsible for any debt accumulated. So be careful with this route. Poor credit management could ruin two people’s credit — and it could hurt your relationship.

All hope is not lost if your application for a secured credit card is rejected. Make sure your credit report is error-free, and explore the other options to boost your credit score. Over time, you could put yourself in a better position to re-apply for a secured credit card.

Published May 11, 2016

Updated January 12, 2021

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