Have you been denied a credit card by an issuer?
Like many other people you will have piles of junk mail coming through your letterbox and claiming something like 'you have peen pre-approved' for such and such credit card. It's only natural that a statement such as this would lead us to believe that the application process is little more than a formality. In reality, what most of these 'pre-approval' notices mean is simply that you've been approved to apply for the card rather than being approved to actually receive one. You still have to fill-in the form and go through the approval process and your application may be rejected for one of several reasons.
Why Were you Rejected?
By far the most likely explanation for a credit card applicatoin being denied is a poor credit rating. Although several other factors such as salary, time in current home and time in current job are taken into consideration your credit rating is by far the largest component of your overall credit score. The catch here is that your credit history doesn't even have to be bad, it can be blank and that will work against you just as much as a bad score will. As far as lenders are concerned having no credit history can be as bad as having a bad credit history as credit companies have no benchmark against which to judge your credit-worthiness.
Other elements which come into play involve 'stability' it looks good if you have been in a given job or lived in a given place for a long time (usually a period of two years or more). So, if you have just moved job and home it probably isn't a good time to apply for a credit card. Also, if you have a history of making late payments on bills and other loans this will also work against you. Each of these points makes you look more and more like a bad credit risk.
What to Do
Though by no means easy the best way of ataining a credit card, even if you've been refused one, is to clean-up your credit history. You can determine whether this is the case fairly easily as most creditors are required to tell you both why you were rejected and which particular credit bureau they used to access your report. You may be entitled to a free copy of your credit report if the data contained on it was used to deny your application. Check with the credit bureau to see.
If your credit rating is poor now is the time to take action to improve it. First and foremost starty paying all of your bills on time. Next attempt to control your debt. In general lenders want to ensure that you're not living beyond your means and exprets estimate that non-mortgage credit payments each month should not exceed more than 15 percent of your after tax income.
The next thing is to imporve your various signs of responisbility and stability. If you have a respected professoin and you've been at your current home and in your current job for more than two years then this will improve your overall credit rating. You may also have the opportunity to re-age your cedit histroy. Through re-aging, your credit history is re-written and you are given a fresh start on that particular account; obviously this can drastically imorove your overall credit score.
Restrict or eliminate the number of credit enquiries you make. Each applicaton for a loan or a credit card is logged against your credit rating and a large number of these in a short time will lower your overall credit rating.
The next point may sound counter-intuitive, but it is true nonetheless. Keep the cards that you're not using! Although it is generally believed that having too many credit cards can have an adverse affect on your credit score, closing lines of credit can not improve your score and may even hurt it. This is because the credit rating formula ooks at the difference between the amount of credit you have and the amount you're using, so reducing your total credit can make the balance you carry seem larger and take points off your score.
Conclusion
If you've taken the steps above to clean-up your credit you will need to let some time pass, then apply for the card again. If it is obvious that you have made an effort to get your credit report and your credit rating up to par you may well be rewarded by being approved for a credit card.