Application denied – why the credit card company turned you down

Everyone feels slighted if their application for a credit card is denied, especially as so many cards seem to offer almost guaranteed approval. There are a plethora of possible reasons for rejection, so the first thing to do is not to panic. A credit card rejection does not necessarily mean that you have a poor credit rating. It could be just a simple mistake, a problem with your address or a clerical error. Even the slightest thing can tarnish an otherwise impeccable record. But there are things you can do to polish up your credit rating and get your finances moving again.

Credit companies are required by law to tell applicants exactly why they have been rejected for a credit card application, although these letters are often standard templates and can be lacking in real detail. The first course of action is to determine the exact reason why the company has turned your application down. Although mistakes are rare, they do happen – the system is not infallible. The lender is also compelled to send you a document providing details of the credit agency they used to obtain your credit history – although bear in mind that currently lenders are using two or even all three of the UK agencies to obtain information. If checking the details supplied by the agencies throws up any mistakes then you have the right as a consumer to contact the agency and rectify the error. A simple clerical mistake could seriously affect your financial health.

A credit report can be requested and (for a small fee) the credit agency will supply you with full details of your credit history. Any mistakes can be corrected and the credit agency will amend its own records accordingly. You could then go back to the original credit card company and appeal the decision to reject your initial application; however, this process has a relatively low success rate. The best course of action may be to wait a short while and then submit a fresh application.

Credit ratings or ‘scores’ as they are commonly mislabelled, are mysterious tomes, usually the preserve of banks and ‘the System’. However, every consumer has the right to access their records from any of the credit agencies holding details on their financial activities. Your credit rating is affected by your previous financial history over a number of years, including loans, repayments and how you have run your financial affairs. ‘Black data’ (details of late payments, defaults, CCJs or other failings in your credit track record) is shared between financial lenders and can impact on your eligibility for future credit. Increasingly, ‘White data’ is also being exchanged as well. White data tells lenders about your financial management skills and how attractive a borrower you may be. Surprisingly, it doesn’t always work in your favour. Someone who always clears their monthly credit card balance isn’t going to incur any interest charges and as such is not as attractive a proposition to lenders, who depend on those interest charges to make a profit.

Something as simple as forgetting to complete your electoral registration can cause your application for a credit card to be turned down. Lenders use the Electoral Role as proof of a person’s address, so if your name isn’t on the list, you’re a risky investment. It could be a clerical error, meaning the agency’s details haven’t been updated, but it is easily solved if you have insured that all your affairs are in order, not just your finances. Checking and double-checking before applying for a card can considerably improve your chances of being accepted. If, however, several credit card companies have turned you down it could indicate a more fundamental problem with your credit history. This isn’t the time to ignore it and hope the problem will just ‘go away’. Spend a few months restoring your good reputation and boosting your credit rating, and then reapply.

Before reapplying for credit cards, giving yourself a 90-day period to get your house in order can raise your chances of being accepted the second time around. Get your bills paid, catch up with any arrears and show the credit card companies that you’re a good investment. Avoid multiple applications – they can do your credit rating more harm by having a cluster of rejections on your record. A pragmatic approach to financial management and a little patience are the best ways to turn you into an attractive proposition for credit card companies.

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