Credit Card Application Denials: How They Can Happen to You |
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Many people falsely believe that the only people who are denied after a credit card application, are those who do not pay their bills. This is a falsehood maintained by those who have never had the unfortunate displeasure of dealing with a credit card application rejection. What they don't know is that it can happen to them. One day they may walk into a store, be offered an extension of credit by the cashier, and leave red-faced and embarrassed when that credit card application is denied. What can cause this to happen? There are many factors that go into determining who is or is not a credit risk during the review of a credit card application -- and these factors include more than just severely delinquent accounts. Anyone, good credit or not, can have their credit card application denied for any of the following reasons.
Credit Card Application Rejection Due to Late Payments Just one "30+ days" late payment, especially if it has been reported within the last 2 years, can be the only reason a creditor needs to deny your credit card application. Many creditors view recent late payments as a declining ability to pay back your debt -- even if the late payment was cleared up the next month with a double payment. Bottom line -- one small mistake, such as forgetting to take your mail to the post office, can haunt you for 2 years in the form of credit card application denials. Credit Card Application Rejection Due to Requests for Your Credit History Requests for your credit history show up on your credit report whenever someone with "permissible purpose" pulls your report -- too many can result in a credit card application denial. "Permissible purpose" is when someone has the right to pull your report because they either A) have your permission or B) own an account that belongs to you. Part B even extents to old debts that are not even yours, but the creditor or collection agency has reason to believe that an account they hold may belong to you. Even after the account is proven to not be yours and removed from your report, these request entries will likely stay put. This is bad for you because many creditors, especially "prime" creditors, will deny your credit card application due to the number of requests for your credit history. ALL requests (no matter who they are from) stay on your report for 2 full years. This is another way that you can all of the sudden become a credit risk, resulting in credit card application denials, even if you have a flawless credit history. Credit Card Application Rejection Due to Recently Opened Accounts Opening new credit accounts can be a double-edged sword because, when you go to apply for another credit account, your credit card application may be denied due to these newly acquired accounts. What is "recently opened" and how many is "too many"? It actually depends on the creditor's point of view. They may feel that 15 accounts in 3 months is excessive enough to deny your credit card application or they may feel that 5 accounts in 2 years is excessive enough to deny your credit card application. Very often, an account is considered "new" until it is at least one year old. The moral here? Anyone can have their credit card application denied, and is not always just because they are a "deadbeat". To save yourself shock and embarrassment on your next trip to the store because of a credit card application denial, always be aware of your credit situation by checking your reports regularly. |
