Turned down for a credit card? Here’s what you need to do to get one
CREDIT is one of the many things you need to get a car loan or a house mortgage.
Being rejected for a credit card can hurt, but if you’re rejected, there are a number of things you can do to get approved next time.
Credit cards can provide immediate cash for purchases, but should be used responsibly.
If you have ever had financial difficulties or have no credit history, you may find that you are not able to be accepted for credit.
Below we summarize what you should do if this happens to you.
Find out why you were denied – and fix mistakes
The first step to take is to understand why your credit card application was declined in the first place, which could be for a number of reasons.
The first is that there may have been a reporting error on your credit file.
If you think this was the case, you will want to request a copy of the credit report from the credit reporting agency and review it for any errors.
In case you find an error on the credit report, then you can request a reconsideration from the credit card provider.
Another reason you may have been denied a credit card is that you don’t make enough money to have a credit card.
the Credit Cards Act 2009 requires credit card companies to verify that you earn enough income to afford a line of credit.
Missing or regularly paying late bills can also result in the application being denied, as it will hurt your credit score.
Build your credit
If you have no credit history, you are unlikely to be immediately accepted for a credit card.
Fortunately, there are a number of things you can do to start building a credit history.
This includes reporting lease payments and phone plans to credit bureaus.
You can suggest certain services to your landlord to help them report your payments, but be aware that some require payment.
Another way to build credit without opening your own credit card is to pay off student loans and become an authorized user.
By becoming an Authorized User, you can use the primary cardholder’s credit card and overlay their credit card activity.
Increase your credit score
If you have a good credit history but a bad score, the most obvious way to improve your chances of getting a credit card is to increase it.
Paying your bills on time is one of the biggest contributors to a good credit score.
In fact, payment history is the most weighted factor in your FICO score, accounting for 35%.
One missed or late payment can seriously damage your score and stay on your report for up to seven years.
Paying bills on time may not be easy for someone who procrastinates or is regularly late.
However, using organizational tools (i.e. calendars and phone reminders) will help you pay your bills on time and reach your goal of getting a credit card application approved.
Consider getting a secured credit card
Another alternative is to get a secured credit card.
This requires an initial deposit, but is an option if you cannot be approved for a traditional card.
Although the credit limit is usually equal to your deposit, this type of card can help you rebuild your credit.
A money expert recently revealed the number one mistake to avoid with credit cards every month.
Plus, we explain what will happen to your credit card and debt if the Fed raises interest rates this year.
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