Rejected for a credit card? You may be able to change the mind of the creditor after the fact. Here's how.
Have you ever applied for a credit card on the spot in order to take advantage of a great promotional offer?
You think you’ve been preapproved, but that’s one of the common myths about these offers that come in the mail. What happens when your application is denied or held up for further review? Are you just out of luck?
Note: The scenario I just described is a prime example of why I encourage consumers to carefully research credit cards and their qualification criteria prior to applying to decrease the chances of denial and avoid the ding an application can have on your credit scores. The denial won’t affect your credit scores, but the hard pull on your credit report when you apply for a new credit card will.
Fortunately, the initial denial can be appealed by taking a few simple steps.
Potential reasons for denial
Before I get to the process, it’s essential that we cover the potential reasons for the rejection of your application. Time is of the essence, so start by requesting a copy of the credit report they used to make the decision, along with a thorough explanation of why they turned you down.
In some instances, you may have a credit report or application error that can be reversed rapidly through an appeal, or perhaps a computer glitch generated a false rejection.
Here are some other reasons your application could have gotten the ax.
- Too many late payments. If you can’t make timely payments to other creditors, why should this company take a risk on you? In most cases, there is a grace period of 30 or 60 days before the issuer reports the delinquency to the major credit bureaus, so late payments in your reports indicate that you are having a difficult time managing the outstanding debt you already have.
- High credit utilization ratio. Swiping away, but making, say, only minimum payments each month? This is another red flag to creditors, and demonstrates that you are biting off more debt than you can chew.
- Credit newbie. Too new to the credit card world? If you don’t have a track record by which the creditor can assess your creditworthiness, they may not be willing to take a chance on you. You can always try a secured card to help build your credit.
- Poor credit score. Credit card issuers typically set a minimum threshold for applicants.
- Limited income. A small paycheck could mean that you may be inclined to use your credit card without being able to pay it off in a timely manner. This obligation could quickly drop to the bottom of the list of monthly priorities if things get a little tight.
- Employment history. Are there gaps in your employment history? Or maybe you’ve held a large number of jobs in a brief period of time. Either way, potential creditors may perceive your fluctuating income as a major risk factor.
Assuming none of those reasons apply, the next step is for you to plead your case to the credit card issuer.
Step 1: Pick up the phone
By doing so, it may be possible to speak with a company representative who has the ability to reverse the decision. During the call, you want to do the following:
- Explain how their product will help you accomplish your objective. Maybe you are new to the credit world and you have decided to begin your journey with their product.
- Put your other relationships at the forefront. Having this brand-new shiny piece of magic plastic is a good fit because you already possess a number of their other products — a bank account and debit card, for instance.
- Be patient. They are doing you a favor, so a bad attitude can kill your chances.
- Stroke their ego. Emphasize that the features of the card best suit your needs.
Step 2: Mail the requested documentation promptly
If they aren’t willing to make a reversal via telephone, but have agreed to give the application another round of reviews, be sure to send all of the documents that will strengthen your case as quickly as possible.
Step 3: Write a letter
You can also try writing a letter. It should include the following:
- Introduction and reason for the letter.
- State your case and why you are a good candidate.
- Contact information and a statement reiterating your interest.
Still no luck? You can always search for another piece of magic plastic or work on building your credit profile until you meet the qualification criteria. Check out “10 Ways to Build Your Credit Score Fast.”
Have you ever appealed a credit decision? If so, what was the result? Let us know in the comments below or on our Facebook page.