Rejected by a Credit Card Company

Posted by: Henry B. | Apr 21,2008


Nobody likes rejection.  Here’s an interesting article – it’s out of Britain but the rule still applies to the U.S., as U.S. and U.K. consumers are facing similar problems with both attaining credit and paying it off.  If you thought the credit crisis was an America-centric problem, you’re wrong.  It’s something that affects all markets.  

The news is that credit card companies are denying 18,000 credit card applications a day.  I have to say I found this surprising.  It doesn’t entirely make sense for a credit card company to reject a credit card application outright – unless the applicant has proven to default on credit cards time and again.  And by default I mean neglect to pay them off at all.  A recent survey shows that 1 in 14 people have their credit card applications rejected.  

The normal application process goes like this: an applicant tries for one card and then the issuer says, You don’t qualify for this card, but here’s one with a 19% APR.  It’s how credit card issuers lure people in with attractive credit card offers with the caveat “For those who qualify” which often means you’ll eventually be offered an entirely different type of card.  One of the reasons that you should never try and elevate your numbers – credit rating, income, etc. – on a credit card application is that this can lead to you being offered a card with worse terms than if you were honest.  

Because credit card companies can offer you whatever card they deem appropriate, it’s surprising that they’d deny so many applications.  It shows how deep an affect the credit crisis is having that a credit issuer would rather not issue a card with a high APR than not issue a card at all.  The financial losses from defaults on both credit cards or even mortgages are having that deep of an impact.  

What this means, of course, is that it’s harder now to secure credit – and normally a credit card is the easiest type of loan to secure.  However, if you’re rejected by one credit card issuer, this doesn’t mean you’re out of luck.  You could just apply to a different credit card issuer and be offered a card.  However, applying for one credit card after another is bad for your credit rating so it’s not advisable.  

One of the better ways to bypass this process is with an instant approval service, which will narrow down your options based on your financial standings, ensuring that you’ll be offered some type of card.  If not that, then you could go for a prepaid debit card to get your credit rating back in shape, if you’re being rejected due to a poor credit standing.  

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