Strangely enough, one of the first reasons why you were denied is also the reason why you may have been turned down for a job application, or why you got poor grades on an exam, or didn’t win some contest: You failed to follow directions.
Applicants must follow directions and fill in every blank.
The next reason is a catch-22. You may have been rejected because you don’t have a credit history. Since approval hinges on your credit score, and since credit scores reflect your credit history, no history means no score.
So how can you establish credit? Try making application for a store charge or a gas card. Go to your local bank and ask for a small loan. Or, ask a family member with credit to co-sign for your first card.
Having a co-signer can also help if you’re rejected for the next three reasons: You’re too young, you don’t have enough income, or you don’t have enough time on your current job.
Again, youth and lack of history are strikes against you.
Under the CARD Act, credit card issuers cannot issue you a sole ownership credit card if you’re under 18 – or under 21 without income.
You’re also likely to be rejected if you’re young and just entering the job market, or if you’ve done a lot of job-hopping. Unfortunately, you’re not face to face with a person who can understand that your job changes have each been a step up, or that you were laid off because the whole company went under.
Even if you have been on the job for a couple of years, if your income is too low, some credit card issuers will deny your application. If this is the case, try for a low-limit card whose payments you can make easily on your current income. Then use it wisely to build a history.
And of course, your past credit use comes into the picture.
You may be asking for too much – You already carry a pocketful of credit cards, the balances on your current credit cards and loans may be too high, or you may have made recent application for too many cards or other sources of credit.
If you’re maxed out on your current cards, you will more than likely be denied. This not only lowers your credit scores, but tells credit card issuers that you’ll probably do the same with their card. And of course, that makes you a high risk.
So pay down some of your outstanding balances before you make application. Whatever you do, don’t keep trying a different company in hopes that one will accept you. Multiple inquiries on your credit file tell creditors that you’re desperately seeking funds…and that’s a red flag in their eyes.
You may have mis-used credit in the recent past.
Recent collections and delinquencies tell credit card issuers that you’re a poor risk. You either don’t have enough money to pay minimum balances, or you’re spending it elsewhere.
Once those delinquencies and collections are 7 years old, they should fall off your credit report. Meanwhile, the older they are, the less damage they do to your credit scores and your chance of getting new credit.
A charge-off is even worse. This tells the creditor that you’re willing to walk away from your obligations. If you really want a new credit card, consider paying back any balances that were charged off in the past.
If you really need to carry a credit card…
As a last resort, apply for one of the cards designed for consumers with poor credit histories. You’ll pay an annual fee and the interest rate will be higher, but you’ll have a card in your pocket for emergencies. And, if you use it sparingly and pay off the balance each month, you’ll begin to build a positive credit history.
Author: Mike Clover
CreditScoreQuick.com
