What to Do If You Have Been Denied Credit

Applying for a credit card and being denied never feels good. Your application for a credit card can be denied for several reasons. This doesn’t have a direct impact on your credit score, although multiple credit inquiries can, so take a break and consider why you have been denied. Then you can take the appropriate steps to address the situation.

Read the Adverse Action Notice

If your credit card application has been denied, you’ll receive an adverse action letter within seven to 10 business days. Federal law requires lenders to inform you of any information in your credit report that led to their decision. The letter will explain the reasons for denial and provide the credit report and name of the bureau it was obtained from.

The notice will also list reasons for rejection, such as having a limited credit history, late payments, collection accounts, not enough income, or too many hard inquiries on your credit reports. If you have too much debt or your credit score is very low, this will be listed as well. Other factors that may be listed include high credit utilization ratio, bankruptcy, or having a high amount of available credit with that specific lender.

Ask the Creditor to Reconsider

There’s no harm in calling and speaking to someone who can explain the decision to you. Credit card applications are often evaluated by a computer. While it doesn’t guarantee a change of mind, speaking to a person may allow you to plead your case. Perhaps a minor error led to the rejection. Just be polite and practical; the person on the other end may be sympathetic to your needs. And, even if you don’t succeed the first time, try calling back and speaking with someone else.

Check Your Credit Report

You have 60 days to get a free copy of your credit report after your application is denied. Check for any negative information that can either be improved or disputed. If there’s an error on your credit report, it must be disputed before you submit another credit card application. In some cases, the credit bureau can resolve the dispute and resend the credit report to the credit card issuer you applied with.

Review Your Application

Everyone makes mistakes. Double check your credit card application to see if you made an error when entering your annual income or monthly rent. Reporting your income can be tricky, as it’s not always specified what type of income to include. Some applicants can report a partner’s income to qualify, as it is money they have access to.

Apply for a Different Credit Card

Earlier, we said it’s best not to apply just after being denied. However, if you have bad credit or no credit, a secured credit card can help you improve your credit score, if you are responsible. If you have good credit, apply with a different issuer; you may still end up with more credit and can benefit by managing your account responsibly.

Improve Your Credit

A low credit score or high balance can be addressed by taking steps to improve your credit. Delinquencies and unpaid collections can be fixed, and eventually, you may get approved for a credit card. If negative marks are found on your credit report and you believe they are errors, American Credit can help. The dispute letter process is often ineffective. We employ a more effective pre-litigation process to achieve the desired results. Contact us at 855-465-0923 today for a free credit consultation.