Why have I been refused a credit card?

If you’ve ever been rejected for a credit card and wondered why, the first thing you should know is that there is no one-size-fits-all reason for a declined credit card application. There are different reasons why an application for a credit card might not be successful. This article will list some key factors that could affect your eligibility for a credit card and how an unsuccessful application can affect your credit rating. It’ll also look at some ways to help improve your chances for a successful application.

Reasons why my credit card application was declined

Some of the reasons why a credit card application was declined can include the following:

• You’re not on the electoral roll
  Lenders typically use the electoral roll to verify your identity. Being on the electoral register helps them to do this.
• Already made a lot of credit applications
  When you apply for a credit card, a lender will perform a ‘hard’ search on your credit history. This leaves a footprint on your record. A number of recorded credit applications in a short space of time may indicate to a lender that you’re financially overstretched, so they may not want to lend to you.
• Your credit report shows late or missed payments
  This may indicate to lenders that you’re struggling to repay debt.
• Your credit report shows County Court Judgments (CCJs), bankruptcy, Individual Voluntary Agreements (IVAs) or Debt Management Plans (DMPs)
  These show lenders that you’ve been unable to repay debt, either partly or fully.
• No credit history
  If you don’t have any borrowing history, lenders may find it more difficult to assess how responsible you are when it comes to repaying credit.
• Mistakes on your credit file
  There could be mistakes on your borrowing record that could reflect poorly on you in a lender’s eyes.
• You’re financially linked to someone with poor credit history
  If you’ve applied for credit with someone else – for example, a joint credit card or mortgage – or have a previous joint credit agreement with them, you may have a financial association recorded on your credit report. Even if you’re applying for new credit on your own, a lender may still view your financial associate’s credit history when assessing your application. If they’ve got poor credit history, it could affect your application for credit.

How will my credit rating be affected?

Your credit rating helps a lender to decide how creditworthy you may be – that is, how likely it is that you’ll make your repayments promptly. If you’re applying for a credit card, this will be recorded on your history, whether as a ‘soft’ search (for example, when you’re asking for a price quotation) or a ‘hard’ search (for example, when you make an application). Credit reports don’t record if you were rejected for a credit card, but they do list how many times you’ve applied for credit, so too many applications could affect your credit rating.

Can I improve my credit card eligibility?

There may be steps that you can take to improve your credit history. These include:

• Getting on the electoral register
• Correcting any mistakes on your credit report
• Restricting the number of applications in a short space of time. Making sure you’ve got a healthy credit history. This includes making payments on time.

Removing financial associations where they no longer apply. In some cases, it may still be possible to get a credit card with bad credit history, or with no credit history.

If you’ve applied unsuccessfully for a credit card, you may want to check your Equifax Credit Report & Score. Free for the first 30 days then £14.95 monthly, the report lets you view your borrowing history, while the score gives you an indication of how creditworthy a lender may find you.