Home > Investment Guide > Financial Guide

What To Do If You Are Rejected For a Credit Card

Almost everyone has been rejected for credit at some point in their lives. Nevertheless when you receive the rejection it's hard not to take it personally. Your mind turns to thoughts of what you've done wrong to put off potential creditors. In many cases your credit history will have simply failed to jump through one of the hoops of criteria the lender uses. But if you've had more than one rejection recently, especially if you've been applying for credit cards, it could be the sign of something else.

Multiple credit card rejections is typically a sign that there's something on your credit file that is putting off lenders. This could be many things, for instance: you've already got too much debt for your current earnings; you've previously had a bad debt or CCJ; you've applied for far too many finance products at once. Whatever the reason, the result is the same: creditors don't currently trust you to take out more credit.

You need to take action to repair your credit worthiness. Having a good credit score is essential for everything from getting a mobile phone on contract to taking out a mortgage. First you should check your credit file. There's a free way to do this which can provide your score instantly - you can take out a free credit report trial and better still you can typically get a small amount of cash back for doing so with free cash back websites. Remember to cancel after saving your report though, as you don't want to be charged the monthly fee. The main thing you are checking for is if there's any incorrectly recorded debt defaults or other reasons why lenders are rejecting you. 

If you've checked your credit file and there's nothing incorrect then you'll have to think about rebuilding your credit score by increasing lenders confidence in you. One way of doing this is to a take out a credit card designed for those with bad credit ratings. These have super high interest rates compared with normal credit cards - often double or more - so you need to remember to pay these off each and every month without fail. These cards typically don't reject many people, and if you pay them off in full each month show good credit history allowing you eventually to upgrade to a better card. You could also use a short term lending company like Readies.com - borrow the minimum amount possible and you will end up with the debt marked as fully paid on your credit profile.

Rebuilding a credit score can take a long time, and any slip-ups can make the whole process last much longer. Set up a direct debit for monthly repayments, ideally for the full amount especially on new balances, so you never default on a debt. Eventually your credit report will only focus on your recent credit history and if you've been paying on time every month it will start to repair itself.

If you were applying for a new credit card to do a balance transfer to reduce your existing debts, all is not lost as long as you've got more than one credit card currently. Most credit card companies will be happy to do balance transfers from your other cards and offer you interest free or low interest periods. Often the best way of doing this is simple giving them a call and asking what balance transfer offers they have available. 

If you are unable to access any credit card at all then the last resort is a prepaid credit card. Not only do you have to pay for the balance up front, but you'll also have to pay a set-up fee and a monthly charge, typically about £5. This isn't a cheap card to get, and it's essential that you always pay the monthly fee, but it will help you rebuild your credit history.

Gary Jones

comments powered by Disqus