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Application Denied? It May Not Be Bad Credit


Posted on April 29, 2011

 

If you have credit card or loan application denied, don’t assume it’s because you have bad credit. Even people with excellent credit scores get denied for credit from time to time. That’s because banks consider more than just your credit score when they’re deciding to approve you for a credit card or loan. Here are some other reasons your application could be denied.

You’re not old enough to have credit. Generally, you have to be at least 18 years old to be approved for a credit card or a loan. New changes to the credit card law require that credit card applicants under age 21 have their own source of income or have a co-signer to be approved for a credit card.

You don’t have enough income. Credit card companies are now prohibited from giving a credit card to anyone who doesn’t have sufficient income to pay back the credit card balance. On top of that, they have to ask only for your individual income, not your household income as they’ve done in the past. Credit card applications don’t state the monthly income requirements to qualify for a credit card. So when you write in your income, you don’t know whether it’s enough to get the credit card or not.

You have too much debt. The amount of debt you have is another factor that banks take into account for your credit card or loan application. Even if the amount of debt you have isn’t taking a toll on your credit score, it could still keep you from being approved. If the bank thinks your current balances would make it hard for you to pay back a new credit card or loan, they’ll deny your credit card application.

You don’t have a credit score. Having no credit is not the same as having bad credit. While there are some credit card issuers who’ll approve applications who don’t have a credit history yet, there are others who require you to have some positive credit history before they will give you an account.

Your work history is too short. Some credit card applications will ask how long you’ve been at your current job. They’re looking to see if you have a steady employment history since job instability has an impact on your ability to repay your credit card balance. If your employment history is short, your credit card application could be denied.

You Learn the Reason Later

If you’re applying for a credit card over the phone or through the mail, you won’t get an instant reason why your application is denied. You may not even find out that you’re denied until you get a letter in the mail several days later. The letter will tell you the specific reason that you were denied and you may be surprised to learn that it wasn’t because of your credit. In fact, the bank may not have checked your credit at all. But, if you were denied because of something in your credit report, you’ll get a chance to order a copy of your credit report for free. On top of that, new changes to credit laws also let you get a free credit score, too, if your credit was a factor in the decision.

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