If you’ve ever had your credit card application declined, you might be wondering if it’s going to have a negative impact on your credit score.
It’s a feeling no one wants to experience when they can’t obtain credit. However, the loss of one denial will not have a significant impact on your credit score. Furthermore, there are methods to avoid having your score lowered when applying for new bank cards.
What is a credit score?
Your credit score is an indication of your financial reputation, and showcases to credit card issuers how reliable you are with your finances. As a credit card can be misused to accrue debt, card issuers want to ensure they’re not giving cards to customers who will misuse them and get into bad financial positions.
Although neither credit denials or approvals have a direct effect on your credit score, any applications will be documented on your credit report– and it’s these continual enquiries that can influence your credit score and potentially have a negative impact.
What about credit checks?
A credit check is usually done when you apply for new credit. This will almost certainly include a hard enquiry into your credit history, in which the lender obtains your credit report from one of the three major reporting agencies Equifax, Experian, and Illion.
Multiple credit applications at once may raise a red flag for lenders, making them less likely to accept your application. Having several credit requests rejected can harm your credit score and prospects of future purchases.
Reasons for a denied credit card application.
There are many factors that may result in a lender rejecting an application for credit. A few examples include the applicant’s age, citizenship, income and spending habits, occupation, assets, insolvency status and credit score.
To improve your credit score, make sure to repay any debts on time. This will positively impact your repayment history, which is a significant factor in determining your credit score. For example, not making payments on time or maxing out credit cards can lead to a sharp decrease in your credit score.
Paying off your outstanding loans and keeping your credit card balances low will help to improve your credit score. Making fewer applications for credit, whether successful or not, can also be beneficial in maintaining a good score.
Reviewing your credit history to ensure that there are no mistakes, such as a family member’s information being incorrectly added to your file, is also beneficial. You may be shocked to learn what matters have been recorded in your record that you were not aware of, such as a late payment for a utilities bill shared with a partner.
If your credit card application has been declined due to bad credit or a low credit score, then you can contact a credit repair company like the team here at Clear Credit Solutions, to discuss what can be done to help you.
