There are many reasons why you might want to apply for a credit card. Perhaps you need to make an unexpected but essential purchase. Or maybe you want the extra protection from fraud that credit cards provide.
If you’ve been turned down for credit, it’s understandable to feel frustrated. But it is important to remember that credit cards aren’t for everyone.
If your credit card application has been rejected, it’s likely there’s a good reason for it. In this article, we’ll take you through what this might be and suggest some changes you can make to improve your chance of future applications being approved.
We’ll also give you some alternatives to credit cards if you still don’t qualify or you’ve decided a credit card isn’t the right choice after all. Continue reading to find out more.
Why can’t I get a credit card?
When making the decision to lend money, each credit provider has its own criteria, but some of the most common reasons for being denied credit include
- Being under age
- Having a limited or poor credit rating
- Earning a low income
- Not being on the electoral roll
- Making too many applications for credit
- Being linked to someone with bad credit
- Already borrowing too much
- Making late payments
- Errors on your credit file or application form
- Bankruptcies or County Court Judgements (CCJs)
How can I improve my chances of getting a credit card?
If you’ve been rejected for a credit card, there are some things you can do to improve your chances of future applications being approved:
1. Improve your credit score
When you apply for a credit card, the lender will check your credit history. If you have a poor or limited credit history, you will need to build your credit score to prove to lenders that you are a trustworthy borrower. You can check your credit report on a website like ClearScore or Credit Karma to see what your score is and whether the information creditors have from the credit reference agencies is up-to-date and accurate. You may also see suggestions for changes you can make to help improve your credit score. Here are some ways you may be able to make improvements:
- Make sure you are listed on the electoral roll — Credit bureaus use the electoral roll to verify your name and address and confirm your identity. Registering to vote at your current address could mean an improvement to your credit score within eight weeks.
- Check for errors on your credit file — As well as ensuring your personal details, like your address, are up to date, it is important to check that everything else is correct too. A wrongly recorded missed payment or a settled account that’s still showing a balance can negatively affect your credit score. Report any mistakes to the three major credit bureaus (Experian, Equifax and TransUnion) to have the inaccurate information updated, corrected or removed within 28 days.
- Build up your credit file — If you have less than five credit accounts, your credit file will be viewed as ‘thin’, which means you will be invisible to the financial system and won’t have a credit score. This means lenders won’t be able to make a judgement about your borrowing history and will be more likely to reject your application. You can build up your credit file by taking out a phone contract or applying for an overdraft on your bank account, for example. After six months of having enough accounts that require credit, a credit score will be generated for you.
- Cancel unused store cards — Cancel store cards and overdrafts you no longer use, as having lots of available credit can harm your credit rating.
- Use multiple credit options — You can build your credit rating by borrowing from a range of sources, such as personal loans and student loans, to prove you can manage different types of borrowing. Just ensure you are responsible with your borrowing, as being close to your credit limit or missing payments can harm your credit score rather than help it.
- Become an authorised user — You can benefit from someone else’s good credit rating by becoming an authorised user on their credit card and spending responsibly.
2. Address your financial issues
You may also be able to increase your likelihood of being approved for a credit card by evaluating any of the following financial issues you may have and taking steps to fix them:
- Bad credit utilisation — If you are constantly close to your existing credit limits, lenders will believe you are already borrowing too much and may assume that you are unable to afford their repayments. So, spend less, stay within your credit limit and keep your credit utilisation low. It is recommended that you keep your credit balances below 30 per cent so lenders can see you are effectively managing your money and that you are not relying on credit.
- Late or missed bill payments — Late or missed payments can leave you in a worse financial situation because you will be charged a late payment fee on top of the repayment amount. Plus, even one late payment can show up on your credit report and indicate to lenders that you’re struggling to manage your finances. Some notable payments to make sure you stay on top of include existing credit cards, loans, mortgage and overdraft repayments, utility bills, mobile phone contracts, car finance, store cards and TV subscriptions.
- Ties to someone with poor credit — Remove all financial links to people with bad credit (such as current or ex-partners and flatmates). This is because lenders will also access their credit reports when deciding whether or not to approve your application. So, cancel or remove yourself from joint bank accounts, credit cards, loans and mortgages if the person you share them with has a poor credit history.
- Low income — When you apply for credit, lenders will ask you about your income and employment history. If you have an unstable work history or you are earning below their threshold, they may see you as a higher risk and reject your application. Before applying for a credit card, check that your earnings exceed their minimum requirement and, if you’ve just started a new job, wait a while longer to prove you have a regular income.
- Bankruptcies or CCJs— If you have ever been declared bankrupt or had a CCJ against you, it is best to wait until this information has expired from your file.
Addressing your financial issues should not only put you in a better position when filling out your application for credit but taking some of the above measures may also have a positive impact on your credit score.
3. Wait a while before applying again
If you are rejected for a credit card, it won’t show up on your credit report. However, every time you apply for credit, whether you are rejected or not, it leaves a footprint on your file for a year. This means lenders will be able to see if you’ve made multiple applications over a short space of time. If so, they will be more likely to reject your application as they will think you are desperate for credit and financially unstable.
So, if you’ve been turned down for a credit card, it is best to wait three to six months before applying for another one. You might also find it useful to know that all credit applications are removed from your credit report after two years. While you are waiting to reapply, it is a good idea to take some measures to improve your creditworthiness to increase your chances of being accepted.
When enough time has passed to apply for a credit card again, it is worth noting that mistakes on your application form can lead to automatic rejection. Even tiny errors — such as a typo in your address — can be enough for a credit card issuer to turn you down, so check your application thoroughly before you submit it.
Alternatives to credit cards
If, after following the suggestions in this article, you are still rejected for a credit card, it could be for the best — even though it might not feel like it at the time.
One of the most common reasons an application for credit is rejected is that the lender doesn’t believe you will be able to make the repayments. If you can’t afford to repay the money you owe, getting a credit card is just a short-term fix, and it is likely that you will find yourself in a much worse position in the future.
People spend more with credit cards. This is because there’s the temptation to spend money you don’t have. So, it may be better in the long run to find an alternative to borrowing on a credit card while you get your finances in order.
The following are much better options if you want to budget and spend more responsibly:
- Cash — Cash is better for budgeting as you can only spend what you take out with you. However, you can’t use cash to pay for things online, and many shops and restaurants now only accept card payments. You also risk losing everything if your purse or wallet is lost or stolen.
- PayPal — You can use PayPal to pay for things online, and it is safer than cash, but it is not accepted everywhere, so your options are limited.
- Prepaid card — With a prepaid card, you can only spend what you’ve loaded onto it, so it is ideal for budgeting. Getsby prepaid MasterCard cards are accepted in most places, plus you get similar levels of protection as you get with a credit or debit card.
If you’ve been rejected for a credit card, there are several things you can do to improve your chances of approval in the future.
Sometimes, though, a credit card isn’t the best option. With a credit card, you’re spending money you don’t have, and you risk not being able to make the repayments. A better option could be to apply for a prepaid card instead. With a Getsby prepaid card, you load money onto it and can use it instead of a credit card anywhere you see the Mastercard symbol. The best thing is you can’t spend money you don’t have, so there’s no risk of getting into debt.
Further reading: Unable to open a bank account? We provide advice and suggest alternatives.