Four Reasons You May Be Denied Credit

Four Reasons You May Be Denied CreditIf you apply for credit and feel that you’ll be approved with no issue, a rejection can catch you completely off guard. Nobody likes rejections. But before you sound off and blame the credit card company for their strict requirements, seriously consider factors that can trigger a credit denial.

No prior credit history.

When applying for credit, the bank or lender will pull your credit report. If you don’t have a prior credit history, there’s no way to judge your credit habits. Some credit cards are only for people with excellent credit and a lengthy credit history. If you mistakenly apply for one of these credit cards, a rejection is imminent. A better approach: apply for credit cards that match your credit situation. For example, if you’re applying for your first credit card, start with a secured credit card or an unsecured credit card for people with no credit history.

Don’t meet the general requirements.

When applying for any type of credit, you’re only approved if you meet the general requirements. These requirements vary by bank. Typically, your income must meet the bank’s minimum, as well as your credit score. Additionally, you must be at least 18 years old and have a stable work history. If you’re under the age of 18 or have a history of job hopping, the bank will likely deny your request for credit.

Credit problems.

A history of bad credit is the fastest way to be rejected for new credit. Bad credit may consist of habitual late payments, collection accounts, judgments, a bankruptcy and other delinquencies. Not to say you can’t get new credit with a poor credit history. But your choices are limited and you have to apply with the right banks. Improve your credit first, and then apply for new credit. Tips to fix a bad credit score include always paying your bills on time, and if you have old delinquent accounts, make plans to settle these balances.

High credit card balances.

Paying your current accounts on time every month isn’t enough to qualify for new credit. Too much debt and overextending yourself financially can stop future credit approvals. A high debt to income ratio looks bad on applications. And people with high debts have a higher risk of default. Develop a strategy to lower your balances and improve your score. For example, stop using credit cards, pay more than the minimum or consider debt consolidation.

If you are denied credit, your rejection letter will include information on how to receive a free copy of your credit report. You’re eligible for a free report up to 60 days after a rejection.

Filed in: Credit Help

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One Response to "Four Reasons You May Be Denied Credit"

  1. I cannot believe all the trouble a person must go through when applying for a “fast” payday loan! Even when they reach ALL the requirements, income, age, bank account, etc.,” They still have to go from one application to another, over and over again! I even had one that I signed the electronic signature but never go the loan!!! WHY IS THIS! If a person is so desperate to need a fast loan, why all the applications!? This only makes more desperate!

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