It could be a very embarrassing experience to try to apply for a credit card only to be told that your application had been denied. You may be left wondering what factors are included in determining your eligibility to get a new credit card. Do not be too alarmed because you are not the only one who has been a victim of credit application denial. In fact, a reported 7% of United States citizens have had their credit application denied in the past year. And, according to the trend, that percentage will continue to increase each year. But still, you may be wondering why you were denied. Keep reading for the 10 most common reasons for credit card denial.
1. Did you complete your application?
It may be a silly question to ask, but a lot of individuals get denied a credit card because their application was not completed. If this is the reason for credit card denial, you will typically receive a notice of it being incomplete or a notice that further action must be taken. Until then, the application will be denied.
2. How many credit cards do you already have?
You may be thinking that it is no one’s business how many credit cards you have. It you are thinking that, you are wrong. If a credit card company sees that you have more than one card, they could think twice about approving you for their card. Just put yourself in their shoes—if a person already owes other people money, how likely are you to let them borrow your money too? This reason for credit card denial is the same reason you may be quick to deny someone the ability to borrow money from you if he or she already owe others.
3. Do you have steady employment?
Having a steady job is a huge factor in determining your eligibility to getting a credit card. So, another reason for credit card denial is because you do not have a steady job or have never had a steady job. No credit card company is going to issue you a line of credit if you have no means to pay it back. You must have a job as proof of the ability to make payments when they are due.
4. Do you have proof of employment?
Saying that you have a job is not enough to get approved for a credit card. Another reason for credit card denial is because of the lack of proof that you have income. Proof of income can come in the form of a check stub or tax documentation. Sometimes, credit card companies allow you just to tell them if you are working or not. Others need proof of income. Your application will specify what documentation is needed to complete the application.
5. Are you old enough?
Like everything else in the world, there is a certain age you must be before applying for your own credit card. Typically, it is required that you be at least 18 years of age when applying. So, another reason for credit card denial could be because you were not old enough to apply for one. In order for a minor to get a credit card, a parent or guardian must place the minor on the card as an authorized user.
6. Have your creditors given up on you?
Another reason for credit card denial is because your credit report has one or more charge-offs on it. A charge-off is when the lender has stopped expecting you to make a payment on the account. This stays on your credit for many years and has a negative impact on your credit score.
7. How good is your public record?
If you public record has bankruptcies, taxes that are unpaid, or court orders to pay money, this could be another reason for credit card denial. Public records are full of information that can affect your credit, in turn affecting the ability to get a credit card.
8. How much is your income?
Another reason for credit card denial is your low income or lack of income. If you do not have enough funds coming in to manage credit card payments, you will be denied very quickly.
9. What is your credit utilization ratio?
If you credit utilization ratio is higher than 30%, this could be another reason for credit card denial. For a good ratio, pay down your previous debts.
10. How many applications have you completed?
If creditors see that you are constantly applying for cards, this could be another reason for credit card denial. It is especially bad if every one of your applications is denied.
It may be an aggravating thing to get your credit card application denied, but the reality is that it happens, and it tends to happen more often than you may think. However, knowing the 10 common reasons for credit card denial will give you an understanding of what can be done to avoid any further denials. Do what is necessary to get your credit back in good standings so that when you apply for your next credit card, instead of being denied, you will be approved.