This article contains links to products of our advertisers, and we may be compensated when you click on those links. Our recommendations and advice are binding on us and have not been reviewed by any of the listed issuers. The conditions apply to the offers listed on this page. Read our editorial standards.
Credit cards are an important financial tool for many reasons, but not everyone can apply for and be approved for a new card. If you’ve been denied a credit card and you want to improve your credit for the future, here’s what you need to know.
Why your credit card application was rejected
Your credit needs work
Most credit cards offer unsecured lines of credit to borrowers. This means that the bank cannot go after their house, car or other property if they stop paying. The bank lends on the belief that the user of the credit card will reimburse what he spends with the card as agreed.
Why would a bank lend to someone with little recourse, then? They have good credit. If someone has a strong history of on-time credit card repayments, they are likely to continue to do so in the future.
If you’ve never had a credit card, or have a history of late or missed payments, you may need to do a little homework to improve your credit score before you can get a regular credit card. But there are cards for people with no credit or bad credit and strategies you can follow to achieve a top credit score.
Each credit card company has its own criteria for approval. Some cards require you to have a “good” credit score, which is 670 or higher. “Very Good” scores start at 740. “Excellent” scores are those of 800 or higher on the credit score scale which runs from 300 to 850.
Restrictions on credit card applications
There is another reason why you could be rejected for a credit card that does not involve your credit score. Many banks have restrictions on the number of cards you can open with them. For example, Chase has the 5/24 rule, which states that you will not be approved for most Chase credit cards if you have opened five or more credit card accounts (with any bank) in the past. Last 24 months.
How to start getting approved for credit cards
1. Use a secure credit card
Without credit or bad credit, your best place to start may be a secured credit card. Secure cards require you to make a deposit equal to the line of credit. So if you stop paying the bank won’t lose money.
While there is money saved behind the scenes, using the card and paying it off like a regular credit card, or just keeping the card in a drawer and using it occasionally, can help boost your credit.
Adrian Nazari, CEO of credit reporting firm Credit Sesame, said, “A secured credit card is a great way to start creating credit while conserving your budget and avoiding early credit card spending. “.
There are many secure credit cards to choose from, but not all are created equal. Try to avoid secure cards with annual fees, unless you get really good rewards or buy protection in return.
Capital One Platinum Secure Credit Card: This guaranteed credit card with no annual fee is from one of the largest credit card issuers in the United States. Lines of credit start at $ 200 but can be larger with a larger initial deposit. Paying on time for the first six months can quickly lead to a higher credit limit.
Discover it® Secure Credit Card: The Discover it Secured Card allows you to earn 2% Cash Back at gas stations and restaurants on up to $ 1,000 in combined purchases each quarter, and unlimited 1% cash back everywhere else. It can be converted to an unsecured account after eight months of responsible use (automatic reviews start at 8 months to see if Discover can transfer you to an unsecured line of credit and return your deposit).
A credit card can be the best way for a person to build up credit. Just make sure you pay it off in full by the due date each month to avoid interest charges and get a positive payment added to your credit report.
2. Consider Tools That Can Increase Your Credit Score
Credit cards aren’t the only way to build credit. Here are some other tools and products you can use to improve your credit report and credit score without a credit card:
Experience boost: Experian Credit Bureau offers a free program that includes your utility bills, cell phone bills, and other bills in your credit score. This can instantly improve your credit score significantly. Just make sure you pay those bills on time each month to avoid a negative rating.
Self: Self offers credit builders loans, a loan where your monthly payment comes back to you at the end of the loan life as a lump sum payment. This is a real loan that bears interest, but you don’t need a specific credit history to get started.
3. Always pay on time
From that day forward, commit to making all credit related payments on time. Your payment history is the most important factor in your credit score. It takes seven years for late payments to disappear from your credit report, so don’t make a mistake that takes a good chunk of a decade to correct.
4. Keep your balances low
The second most important factor in your credit is your credit account balance. Keep revolving balances like credit cards and lines of credit low to get the highest possible credit score. Using more than 20% to 30% of your credit can seriously hurt your credit score.
5. Become an authorized user
If you have a parent or other family member with good to excellent credit, you may be able to get credit with their good credit. If they’re ready to add you as an authorized user to a credit account, the account will appear on your credit report. Because these accounts can hurt your credit as well, only follow this strategy with someone you really trust to always pay on time.
6. Correct mistakes on your credit report
“According to the Federal Trade Commission, one in five consumers has an error on at least one of their credit reports. Don’t let misinformation be the cause of bad credit when it’s relatively easy to correct. Check your credit regularly. Credit report and information is an essential first step in improving your score, ”says Nazari.
To track your credit score over time, consider a free credit scoring app like Credit Sesame or Credit Karma. Some banks and credit cards also give you free access to your credit report and credit score details.
Take control of your credit score
Your credit score is not only important for credit cards, it can also help you save a ton of money over the years. Watching your credit leads to big gains with mortgages, auto loans, and private student loans, among other loans.
“One of the main benefits of building good credit is the amount of money it can save you in the long run,” says Nazari. “For example, over the life of a 20-year mortgage, you could save over $ 50,000 by having good credit. Likewise, over 10 years, you could save over $ 15,000 on student loans with good credit versus no credit.