When your credit card application is denied, it can be frustrating, but it can also be a sign of some issues with your finances. If you know some of the factors that can go into a credit card approval or rejection, you can work to improve your financial situation so you can reapply in the future.

What Creditors Look For in an Application

Credit card companies look at a number of things when considering your application:

  • Credit Score: If your credit score is low, start by checking your credit report for errors that might be affecting your score (which you can do for free). If your low score isn’t because of an error, you may be able to increase it over time by paying your bills on time and in full, and paying down any debts on a regular basis.1
  • Credit Card Utilization: Your credit utilization ratio compares the amount of credit you use to the amount of credit you have. Using too much of your available credit can negatively affect your credit score.2
  • Credit History: A long credit history, especially one that shows you’ve paid your bills on time, will make you a stronger candidate for a new credit card. Having no credit history at all means that creditors won’t see a trend of responsible credit usage. In your case, a secured credit card might be your best bet. You put down a deposit that will equal your credit limit, and use the card as you would any credit card. If you’re responsible about paying your bill on time, you’ll begin building a credit history and may be approved for regular credit cards in the future.

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  • History of Late Payments: If you pay your bills late on a regular basis, you’re less likely to be approved for a new credit card. Get into the habit of paying on time.3
  • Hard Credit Inquiries: When you apply for a credit card or loan, the creditor investigates your credit, and that investigation will appear on your credit report. Avoid applying for too many credit cards in a short amount of time.3

Resources:

1. http://www.myfico.com/crediteducation/improveyourscore.aspx

2. http://www.nerdwallet.com/blog/credit-cards/apply-for-a-credit-card/

3. http://www.creditkarma.com/article/credit_card_approval_insights

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. 

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