You think you are ready for a credit card, you have already got an idea of what you want to spend your new found wealth on, not to mention all of your friends have them, then you get a letter in the mail, thanking you for your application, but denying you all the same.
If you have been denied, there may be a range of reasons, some of which you need to address before getting too far ahead of yourself. In addition, there many steps financially that you need to put in place, before jumping off the cliff into a world of the credit card.
Here are the first four things to do, if that rejection letter comes to you:
In many instances, you are looking forward to – in some cases expecting – a credit card, so when you open the letter, you see the word REJECTED or DECLINED and you move straight towards the bin to throw the letter out in disgust. STOP, read the letter in detail and get a better understand of ‘why’ the bank declined you. If there is not enough information, contact your institution and find out what you can or you may need more information from your credit report.
Experian, TransUnion, and Equifax or Annual Credit Report are all free services that can provide you with a credit report. Maybe you have an unpaid phone bill from 3 houses ago you missed, maybe you have an unpaid fine that has put a ‘black mark’ on your credit rating. You may know about, you may not, but the key is you need to understand what the issue is that the bank has flagged as the reason they have declined you and move on. There may be ways to clear up the bank ranking, but if there is nothing there that stands out, you may need to look another way.
Sometimes, one institution may not want clients with your financial background, you may not have any credit history or enough money in the bank, but the fact is there is always more than one bank. You may need to look at larger institutions and requesting a lower limit if this is your first time around the credit card merry-go-round.
When the rejection letter comes in the mail, we are very quick to blame the bank, blame errors on the form or even lack of credit history, but sometimes it’s because we have bad habits. Lack of spending, late payments, loads of debt all go against you in the long run.
So once you have your credit report in your hand, look at where the issues are, then go about fixing them. Start small, and pay back as much debt, pay off all outstanding fines and in the meantime, start a high interest savings account with a new financial institution so you can get some ‘real’ savings history and apply again when you have a better financial situation.
Although you may be looking for a credit card for a way out or a way up, remember it is all borrowed money, it all has to be paid back and with interest. If you have been declined, maybe it is a blessing in disguise, just maybe.