In a NutshellIf you’ve had a credit card application denied, it can help to take your time and do some research before applying again.
It can be frustrating to apply for a credit card and get rejected.
Not only did you not get the card you had your eye on, but now you have a hard inquiry on your credit.
This may be disappointing, but it’s already time to start thinking about the next move. Before you reapply, you may need to improve your credit health or make other changes to increase your odds of nabbing that credit card the second time around. You want to put your best foot forward the next time you apply.
Read on to learn some actionable tips to consider before reapplying after a credit card denial.
- Wait to reapply
- Learn why your application was denied
- Improve your personal finances
- Check your Credit Karma Approval Odds
- Apply for the right card
How long you should wait to reapply for a credit card after an application is denied varies with each person’s situation, so there’s no hard-and-fast timeline to follow. The typical recommendation is that you should wait six months between credit card applications.
Beverly Harzog, former CPA turned consumer advocate, explains that the amount of time you should wait in between credit applications depends on what else is in your credit.
If you were rejected because of too many hard inquires, Harzog recommends you wait at least four to six months before applying, or possibly longer. If you don’t have stellar credit, you may want to wait longer to reapply than someone who has excellent credit.
On the other hand, if you were rejected because your credit scores were too low to get the card you wanted, you might need time to improve your credit. How long this takes can depend on your personal situation.
The Fair Credit Reporting Act stipulates that card issuers (and anyone who uses credit reports to make decisions on whether or not to issue lines of credit) must notify you after denying your application. This is known as an adverse action notice, and it can be delivered to you in person or by letter or email.
If the card issuer used a credit report to come to a decision about your card application, the adverse action notice should tell you which credit bureau provided the credit report as well as what score the issuer used.
Although this notice may feel discouraging, don’t throw it away in disgust. “That is your blueprint on how to proceed,” Harzog says. “Before you apply for another credit card, catch your breath first.”
Knowing why you were rejected is half the battle. You can use this knowledge to make changes before you apply again. The fixes you need to make will depend on your specific situation.
While there are no quick fixes to your finances, one way to improve your credit is by actively managing your money and your credit profile. Know your credit and how you need to improve it. Payment history and credit utilization are both usually major components of your credit scores.
According to Harzog, “The best thing to do is to pay all your bills on time.” Don’t overlook paying your monthly phone bill, utilities or loans.
Another way to create a healthier financial outlook for yourself is to resolve past issues or errors on your credit reports. For example, you may be able to strike a late payment off the books by writing a goodwill adjustment letter to a creditor to explain the situation and politely ask them to remove the lateness from your reports.
Also, you can challenge errors on your TransUnion credit report using Credit Karma’s Direct Dispute™ tool. This can help you remove inaccurate derogatory marks from your credit reports.
Depending on your situation, there may be more you can do to improve your credit profile. For instance, if you have credit card debt or other loans that are increasing your credit utilization ratio, you should make a plan to pay down your debts.
Your path to improving your financial health will be unique to you, but it is good practice to tidy your finances before applying for another credit card.
Research the scores you need to get a particular card, and make sure it falls within your credit range, says Harzog.
“As you go down the hierarchy of great scores high to low, your options are going to be a lot more limited,” Harzog says. “Just be sure in the first place you are not trying to apply for cards you cannot possibly be approved for at this time.”
Credit Karma offers a tool to help you understand this better. Credit Karma Approval Odds serve as guidelines regarding the likelihood you’ll be approved for a credit card based on your credit profile. While this measurement isn’t a guarantee, it will give you an idea of whether you qualify for a particular card.
Credit Karma compares your credit profile to the profiles of other members who were approved for a card to assess the likelihood that you’ll be approved too. Though it is based on member data, it’s not a guarantee that you’ll be approved. However, it can be a helpful tool to help you understand if you’re more or less likely to qualify for a particular card.
Also, check what kinds of credit card offers you are getting in the mail. If you’re getting offers for cards with high APRs, then you should steer clear of cards designed for people in the top credit ranges, says Harzog. “You can tell a lot by the type of mail you get from credit card companies,” she adds.
If you’re rebuilding your finances or establishing credit, secured credit cards might be a good option. It can be easier for you to get approved and may allow you to get back on your feet while minimizing risk to the financial institution. In some cases, you can get upgraded to a traditional credit card after 12 months.
“It’s not a lifetime sentence,” Harzog says. “The secured cards look like other cards. There is no stigma attached to that.”
If you have credit card debt, balance transfer cards are another type of card that might help. These cards typically have a 0% APR introductory period for balance transfers, so you can work on paying down your debts with no interest for a set period of time.
Charting your course through the world of personal finance can certainly be a challenge. Credit cards are a big part of finances, and having your credit card application rejected is rough.
Remember, being denied is not the end of the world. Harzog says, “This is not a personal statement of your self-value.”
In fact, it could very well be the start of journey. It’s an opportunity to learn how to improve your financial health and make choices based on your credit profile. Once you do this, you may find there are far more options than you were initially aware of.