Why was I turned down for a credit card?

When you apply for a credit card and are then turned down, it can be incredibly frustrating – particularly if you’re not told why.

Often, the lender you applied to will simply say you have been unsuccessful, but provide no further clues into the reason why this was the case. However, it’s likely that you missed out for one of two reasons: you didn’t meet the criteria your lender was looking for or your credit history let you down.

Lender’s criteria:

The trouble is, as we mentioned earlier, every lender is looking for something different. It may simply be that, right now, you do not fit into the category of customer they are after. For example, the card you applied for may have been designed for a homeowner with earnings of more than £40,000 a year. If this isn’t you, you won’t be accepted.

To avoid this happening again, it’s worth taking a look at the different credit cards on the market and seeing if you can work out the type of customer they’re aimed at. Chances are, the people the cards are designed for are probably the ones who are most likely to be accepted. For example, if a credit card comes with a low interest rate and lots of rewards, the lender is likely to be looking for a customer with a long history of responsible borrowing so they have a greater assurance that the money they lend will be repaid.

If you find a card that appears to be aimed at someone just like you and with your needs, you may be more confident of being accepted. There are tools, like one offered by confused.com, which allow you to work out what credit cards you’re most likely to be accepted for.

Credit history:

Applying for the wrong credit card is not the only reason you may have been turned down; your credit rating may have acted against you. This is a record of your borrowing for the last six years and lists all the lines of credit you have available to you and how you’ve been using them.

If your credit report shows a history of responsible borrowing – meaning you have paid your balance in full or close to that every month and have never missed a repayment – you probably don’t have to worry about it standing against you. However, if your credit report shows a difficult history of borrowing – perhaps you have defaulted on repayments in the past, made multiple applications for credit within a short space of time, taken on a debt solution like a debt management plan, been declared insolvent, or even been the subject of legal action by your lenders – the lender you apply to is likely to be extra cautious about you borrowing from them.

On the other hand, if you have no credit history to speak of because until now you’ve avoided borrowing, this may also stand against you. It’s important to many lenders that they can see evidence that you’re able to borrow money and pay it back again on time and if you’ve never done this it makes it harder to prove you can be responsible – regardless of whether or not you will be.

It’s not all doom and gloom though, and there are ways to give yourself the best chance possible of being accepted.

How can I improve my chances of being accepted for a credit card?

First thing’s first; you need to take a look at your credit report. This is very important as it lets you see what your lenders see, and it can provide you with important clues as to whether or not you’ll be accepted.

You can apply to one of the credit reference agencies like Experian or Equifax to see your report. You will then be supplied with a detailed look at your credit history over the past six years.

Start off by making sure that all the information contained within your report is correct. You should pay particular attention to the current address you’re listed as living at, as this is used by lenders to verify you are who you say you are. If your address is listed incorrectly or if you’re still down as living at an old address, you should get this information corrected by contacting the credit reference agency. Sometimes, your address is wrong because you’re not listed on the electoral roll. You can rectify that by registering here.

Lenders often look to see how many lines of credit you have available to you, as one of their criteria may be that customers are not burdened by too much borrowing. If you have old accounts on your credit report that you have paid off and no longer use, but that are still listed as active, consider closing them.

Another tip is to avoid making too many applications for credit too close together. A lender seeing this may worry that you are in difficulty with your finances and acting in desperation by applying for whatever credit you can get your hands on. Try to space out your applications and avoid applying for any credit other than the type you want within a period of a few months.

It’s not just credit you need to keep on top of in order to impress your lenders. Take care to avoid being hit with any banking fees if you’re thinking of applying for credit. This may mean staying well away from the bottom of your overdraft limit so you don’t get charged for going into an unauthorised overdraft, and ensuring you have enough money in your account to cover any standing orders you have going out, including but not limited to household bills.

Perhaps the best way to give yourself as much of a chance of being accepted as possible is to be a responsible borrower. It sounds so simple, but if you’re able to clearly show that you can borrow money and repay it on time, you’ll give yourself a better chance of being accepted.

Help! I have a poor credit rating – or no credit history at all

It might transpire, when you come to see your credit report, that the reason you were probably turned down is because your report shows evidence of irresponsible borrowing.

If you think this is a mistake, get in touch with the credit reference agency at the earliest opportunity so you can get the ball rolling on getting this information corrected.

However, if this information is correct, it’s not always the end of the world. There are bad credit, credit cards available from lenders such as Ocean, who will lend to people with a poor credit score, but you should expect to pay more interest and enjoy a lower credit limit. It’s unlikely that you’ll be accepted for the best deals on the market. But remember that once six years has passed since you missed a repayment or defaulted on your loan or credit card, the mention of this should be removed from your report, which could make it easier for you to apply to lenders – providing your credit history has been spotless since then.

If you don’t actually have any history of borrowing because it’s something you’ve avoided, this can also put lenders off as they have no way of telling whether you’re a responsible borrower. Again, this isn’t necessarily the end of the road and there are credit-builder credit cards available that are aimed at people in your situation. You can use these to build up a credit history and provide future lenders with evidence that you’re able to manage your credit correctly.

Providing you maintain your minimum payment on time and stay within your credit limit. Not doing so could harm your credit rating.

So, to give yourself the best chance of being accepted for a credit card, it pays to do your research and be prepared. By knowing exactly what your lenders can see, the decision they make should come as less of a surprise.