Credit card rejection can come as a nasty surprise - you thought your credit rating was fine, the application form was filled out properly, so why has the company turned you down? The sense of rejection, especially from companies that practically guaranteed approval, can leave a bitter taste in the mouth. But there is hope. Just because you've been turned down doesn't necessarily mean you have a poor credit rating; it could be a simple mistake such as an error on your report or a mistake regarding your address. And mistakes can be easily rectified.
Lenders are legally required to send rejected applicants a letter explaining the reasons for turning down a credit card application. Sometimes these letters can be vague, only covering the bare minimum requirements. So the first thing to do is follow it up and make sure that the company has denied your request for legitimate reasons. Although rare, mistakes can and do happen. The lender is also legally required to send you documentation stating which credit agency they used to obtain your credit history (although some lenders now use all three of the primary agencies). If your cross-referencing throws up obvious mistakes, you can contact the agency involved and have the mistake corrected. That simple error could be affecting your finances far more than you think.
For a small fee, all UK credit agencies will send you a complete report of your credit history. This includes details on your address, occupation and income as well as financial history and credit background. The agencies are required by law to correct any mistakes highlighted by consumers, making sure that details are accurate and up to date. Once you have rectified any errors you can reapply to the original credit card lender or even appeal against the initial rejection, although these cases rarely succeed. It may be wiser to wait a little while and then resubmit an application.
Credit ratings or 'scores' as they are commonly mislabelled, are mysterious tomes, usually the preserve of banks and 'the System'. However, every consumer has the right to access their records from any of the credit agencies holding details on their financial activities. Your credit rating is affected by your previous financial history over a number of years, including loans, repayments and how you have run your financial affairs. 'Black data' (details of late payments, defaults, CCJs or other failings in your credit track record) is shared between financial lenders and can impact on your eligibility for future credit. Increasingly, 'White data' is also being exchanged as well. White data tells lenders about your financial management skills and how attractive a borrower you may be. Surprisingly, it doesn't always work in your favour. Someone who always clears their monthly credit card balance isn't going to incur any interest charges and as such is not as attractive a proposition to lenders, who depend on those interest charges to make a profit.
Something as simple as forgetting to register on the Electoral Role can damage your credit rating. The Electoral Role is the primary source for lenders to confirm your address so if you're missing, the lenders have to assume that your address is unconfirmed. Bang goes any chance of getting a credit card or other loan, just through a simple mistake on your part. If you are registered then you can amend this information with the credit agencies and you're back in business. If you are turned down by several companies there may be a deeper problem, and one that requires more attention and effort on your part to rectify. Don't just hope the problem will sort itself out - you need to be proactive when it comes to managing your finances. Pay your bills on time, meet your repayments on outstanding debts and build your credit rating back up to more attractive levels.
If you have been rejected for a credit card, don't reapply straight away. Give yourself a cooling-off period of about 90 days to get your financial house back in order. Check your credit history for any errors and prove to the lenders that you aren't a credit risk by rectifying any problems that led to the initial rejection. Avoid multiple applications in the hope that one of the companies will let you slip through the net. A plethora of rejections on your credit history will do more damage, meaning you have to wait even longer to get back into the lender's good books. The only ways to improve your chances are through good financial management, an eye for detail and a willingness to take back control of your financial affairs. - 18193
Lenders are legally required to send rejected applicants a letter explaining the reasons for turning down a credit card application. Sometimes these letters can be vague, only covering the bare minimum requirements. So the first thing to do is follow it up and make sure that the company has denied your request for legitimate reasons. Although rare, mistakes can and do happen. The lender is also legally required to send you documentation stating which credit agency they used to obtain your credit history (although some lenders now use all three of the primary agencies). If your cross-referencing throws up obvious mistakes, you can contact the agency involved and have the mistake corrected. That simple error could be affecting your finances far more than you think.
For a small fee, all UK credit agencies will send you a complete report of your credit history. This includes details on your address, occupation and income as well as financial history and credit background. The agencies are required by law to correct any mistakes highlighted by consumers, making sure that details are accurate and up to date. Once you have rectified any errors you can reapply to the original credit card lender or even appeal against the initial rejection, although these cases rarely succeed. It may be wiser to wait a little while and then resubmit an application.
Credit ratings or 'scores' as they are commonly mislabelled, are mysterious tomes, usually the preserve of banks and 'the System'. However, every consumer has the right to access their records from any of the credit agencies holding details on their financial activities. Your credit rating is affected by your previous financial history over a number of years, including loans, repayments and how you have run your financial affairs. 'Black data' (details of late payments, defaults, CCJs or other failings in your credit track record) is shared between financial lenders and can impact on your eligibility for future credit. Increasingly, 'White data' is also being exchanged as well. White data tells lenders about your financial management skills and how attractive a borrower you may be. Surprisingly, it doesn't always work in your favour. Someone who always clears their monthly credit card balance isn't going to incur any interest charges and as such is not as attractive a proposition to lenders, who depend on those interest charges to make a profit.
Something as simple as forgetting to register on the Electoral Role can damage your credit rating. The Electoral Role is the primary source for lenders to confirm your address so if you're missing, the lenders have to assume that your address is unconfirmed. Bang goes any chance of getting a credit card or other loan, just through a simple mistake on your part. If you are registered then you can amend this information with the credit agencies and you're back in business. If you are turned down by several companies there may be a deeper problem, and one that requires more attention and effort on your part to rectify. Don't just hope the problem will sort itself out - you need to be proactive when it comes to managing your finances. Pay your bills on time, meet your repayments on outstanding debts and build your credit rating back up to more attractive levels.
If you have been rejected for a credit card, don't reapply straight away. Give yourself a cooling-off period of about 90 days to get your financial house back in order. Check your credit history for any errors and prove to the lenders that you aren't a credit risk by rectifying any problems that led to the initial rejection. Avoid multiple applications in the hope that one of the companies will let you slip through the net. A plethora of rejections on your credit history will do more damage, meaning you have to wait even longer to get back into the lender's good books. The only ways to improve your chances are through good financial management, an eye for detail and a willingness to take back control of your financial affairs. - 18193
About the Author:
James Baker is an experienced financial writer that likes to simplify the financial jargon for the public. Find out more information on the credit card application here.
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