Why Could My Credit Card Application Be Refused?
By Jon Francis
Many people have questions when they apply for a card - which is the best for me? How do they decide to give me a card? Why do they need to know all these things about me? What does it mean to be pre-approved? What could make the card company decide not to give me a card?
It's not all that mysterious a process. Companies make their decisions based on your score, which is derived from your report and other information that they may have about you. Your record is maintained by reporting bureaus - the Big Three are Equifax, Experian and CallCredit. Each maintains a separate history, and as a general rule, they don't share information with each other. Your file may contain may details like:
-People on the electoral register at your address
-Details of late payments or defaults on any loans
-CCJs and bankruptcy orders against you
-All your applications for credit
-Other people who share your address
The reference agency does no more than supply the information on your history. When you apply for a card, the company that will issue that card takes your report and feeds the information in it into a set of algorithms - mathematical equations - that compare your information with the information about a fictitious 'ideal customer'. That customer has certain traits - a particular wage, a certain number of cards, a particular marital status, own a home or rent one, be living there for a certain number of years. The closer your own traits are to that ideal, the higher your rating or score will be. The higher your rating, the more card companies would be pleased to have you as a customer.
Before you apply, it's to your benefit to shop around for the best card for you. It is NOT to your benefit to just apply willy-nilly to any card offer that strikes your fancy. It's really not true that 'the worst that can happen is they'll say no.' There's another, not-so-obvious consequence to card rejections. You might have noticed that one of the things that appears in your report is a list of your applications for credit. If that list is too long, it will be a negative mark in your score, making it harder for you to get the card you want. That's why it's important to shop around before applying - and the best is one that is almost certain to approve your application.
Some reasons your application may be turned down:
-You've applied for a card that targets people with higher scores.
Most companies that issue cards have a variety of them - they call them 'credit products' - each aimed at a different market. A reward card, for instance, often targets those with the best scores. At a card comparison site you can check each card offer to see if it is aimed at those with excellent, good, fair, poor or bad credit, and apply for the one that best applies to you.
-You don't have any history.
Believe it or not, never having borrowed money before can work against you when you apply for a card. If you have no history of having paid bills, then the company has no way of judging whether or not you'll pay their account.
-You've not been in your current job or residence long enough.
One of the pieces of your score puzzle is how stable you are, and that's judged by how long you've been
in your current residence or position. If it's less than two years, it will be a negative, even if there's a good reason for it.
-You've applied for too many other cards and loans.
This is one reason to be sure you only apply for the best card - the one that you're most likely to be approved for. If you've applied for many cards in a six to twelve month period, the card companies may see it as a sign that you may be in financial trouble.
Article Source: http://www.articles-galore.com
Jon Francis has been involved with finance for many years! With an in-depth knowledge of the credit card UK market help helps others get the best from a credit card.
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