Application denied - why the credit card company turned you down
You can't understand it. All the details were filled in correctly, you haven't missed any payments but still the credit card company has rejected your application. For a business that almost seems to guarantee acceptance, the sting of rejection can be a bitter pill to swallow. But before you give way to righteous indignation there are plenty of reasons why you may have been turned down, and not all of them are the fault of the credit card company. A credit card rejection does not necessarily mean you have a bad credit rating. It could be just a simple mistake.
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 histories are believed to be the preserve of the banks and agencies, with many people unaware that they have every right to access the information held on them. Your credit 'score' is calculated by your past financial history, detailing loans, repayments, bank history and how you have run your financial affairs. So-called 'Black data' (including details on late payments, defaults or other problems you may have had over the past six years) is included on these records, but 'White data' is also shared between financial organisations and credit lenders. White data tells lenders about the less troublesome aspects of your financial management, such as customers who invariably pay their credit card repayments in full every month and are adept at taking advantage of 'card jumping' to benefit from 0% interest offers. Surprisingly, white data such as this can actually count against you. Lenders make their money in interest charges, so a customer who is astute enough to avoid these charges is not a profitable option. However, the other white data can count in your favour, and it's this that you need to focus on.
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.
If you have been rejected for a credit card, don't reapply straight away. Give yourself a cooling-off period of about 90 days to get your financial house back in order. Check your credit history for any errors and prove to the lenders that you aren't a credit risk by rectifying any problems that led to the initial rejection. Avoid multiple applications in the hope that one of the companies will let you slip through the net. A plethora of rejections on your credit history will do more damage, meaning you have to wait even longer to get back into the lender's good books. The only ways to improve your chances are through good financial management, an eye for detail and a willingness to take back control of your financial affairs.
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 histories are believed to be the preserve of the banks and agencies, with many people unaware that they have every right to access the information held on them. Your credit 'score' is calculated by your past financial history, detailing loans, repayments, bank history and how you have run your financial affairs. So-called 'Black data' (including details on late payments, defaults or other problems you may have had over the past six years) is included on these records, but 'White data' is also shared between financial organisations and credit lenders. White data tells lenders about the less troublesome aspects of your financial management, such as customers who invariably pay their credit card repayments in full every month and are adept at taking advantage of 'card jumping' to benefit from 0% interest offers. Surprisingly, white data such as this can actually count against you. Lenders make their money in interest charges, so a customer who is astute enough to avoid these charges is not a profitable option. However, the other white data can count in your favour, and it's this that you need to focus on.
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.
If you have been rejected for a credit card, don't reapply straight away. Give yourself a cooling-off period of about 90 days to get your financial house back in order. Check your credit history for any errors and prove to the lenders that you aren't a credit risk by rectifying any problems that led to the initial rejection. Avoid multiple applications in the hope that one of the companies will let you slip through the net. A plethora of rejections on your credit history will do more damage, meaning you have to wait even longer to get back into the lender's good books. The only ways to improve your chances are through good financial management, an eye for detail and a willingness to take back control of your financial affairs.
About the Author:
James Baker is an experienced financial writer that likes to simplify the financial jargon for the public. Find out more information on the credit card application here.
posted by Credit Counseling at
7:01 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home