Refused a Credit Card? You May Need to Improve Your Credit Rating
For some people, having an application for a credit card turned down can come as a shock. Even if you have no serious problems in your credit history, such as defaults or court judgments, you can still find your application is refused even though you thought you fitted the criteria the issuer was setting for the card.
When this happens, you can do one of two things: look for a less well-featured and less desirable credit card to apply for, in the hope that it will prove easier to get; or find out why your application was likely to have been refused and rectify the problem.
Examine Your Credit File
The first thing to do is to get hold of a copy of your credit file from one of the credit reference agencies (Experian and Equifax being perhaps the most well known). Look through the entries to see if there is anything in there that might surprise you.
Are there any debts listed as being unpaid? If so, do you recognise the company involved? It can easily happen that incorrect entries end up on your file, and if you see something that you disagree with, and can prove that you weren’t responsible for, you can insist that this entry is removed from your file.
Examples of this happening are bills which you’ve paid late, but have indeed settled, and this is not reflected on your file.
Do You Own the Entries?
Also make sure that you aren’t being confused with anyone else who may have lived at the same address. It’s possible that your own credit record could be affected by the deeds of a previous occupant, although this shouldn’t happen unless you have some sort of financial connection.
If you suspect you are being tarred with someone else’s brush, then you can serve a notice of disassociation to the credit reference agencies, and they must then unlink your records if there is no reason in real life to have them connected.
Similarly, if there are entries on your file that you simply can’t explain, then consider the possibility that you may have been a victim of identity theft and act accordingly.
Pay Off Unsatisfied Debts
You may, on checking your file, discover small debts which you haven’t cleared. Examples include money owed to book clubs or other mail order purchases – it’s easy to forget about telling these companies when moving house, and so not realise that you owe money to them as they can’t contact you to let you know. Because these debts are usually small, recovery efforts won’t usually be very strenuous, so they might simply end up as adverse information on your file that you didn’t know about.
If anything like this shows up, often labeled as a Termination Notice, then try to settle the debt and make sure that this fact is reflected in your file.
Get Some Positive History
A bad history isn’t the only reason you could be refused for a credit card. Having a lack of positive history can also count against you, as the card issuers have little information on which to make their decision.
If you’ve never had a credit card before, and little in the way of other financial dealings, then you’re going to find it harder to get a credit card than someone with a history of careful card use but an otherwise identical set of circumstances.
The way to rectify this is to take out a less attractive card with a high approval rating, such as the Capital One Classic card, and use it for a few months repaying your balance in full each month. The interest rate for this kind of card is sky high, but don’t let this put you off: by clearing your balance in full each month, you’ll avoid paying any of it.
The aim of using this card is just show demonstrate that you can be trusted to use a card responsibly, and to develop some positives on your credit file. Over time, this will improve your credit rating to the point where you can step up to a better card with more valuable features and a much lower interest rate.