We regret to inform you, we are unable to approve your recent credit card application.
Our decision was based in whole or partially on the following factors…
Blah blah blah. You know the rest.
So, I got my first denial a few weeks ago.
But don’t worry, please, hold back your tears. It’s no big deal, and I wanted to write this for those of you out there that are really scared of getting denied. In reality, a couple of denials won’t destroy you or your credit.
I mean, it’s not like you serve jail time for just asking about a new credit card…
Why did I get denied?
Most denial letters will have some details on the reasons you got denied. This is important if you’re planning on travel hacking more, since it can help you plan your strategy. Common (and easily fixed) issues:
- Too many recent inquiries. Easy fix, just wait a bit longer before applying for other cards. The magic rule seems to be 91 days, but only apply when you feel comfortable
- Your credit score is too low. Tougher to fix, but still not the end of the world. A low credit score just means you look risky to the lender. With a little hard work and some discipline, you can increase your credit score over time. One of the fastes things to fix here is your utilization ratio. If you credit utilization is high, start making payments on your credit! Make it a priority, and your credit score will rise in no time. (You also won’t be as stressed out by all that debt!)
If you find you’re denied and still not quite sure why, get a copy of your credit report from one of the three major bureaus! Armed with this information, you can your whole credit picture, and work on your creditworthiness.
If you’re me, you call the reconsideration line. I’d recommend doing this probably 9 times out of 10. Of course, your individual situation will vary, so please do what you think is best at the end of the day. If ripping up the denial and never applying for another credit card again helps you sleep at night, do it! At the end of the day, always remember that you need to make the decision that’s best for your particular situation.
That being said, calling reconsideration may be worth it. They’ve already dinged your credit score, so you might as well make it worthwhile, right? Plus, you have the ability to make your case. Say you have a long history with the bank, or other large credit lines you could move to a new card. All these things can help you out! just avoid saying you want the card only for the sign-up bonus, they don’t usually like that…
“Listen, I’ve been using XXX bank for years now, and really like your online interface. It’s easy to use, and this card will help my since I [fly with that airline a lot, want to put some other expenses on the card, etc.]”
Please do exercise caution with this though, as some banks can get antsy with new credit card applications. People have even had existing accounts shut down or suspended as a result of calling in for a new account. I don’t tell you this to scare you, but to provide you with a realistic expectation of what could happen.
The bottom line is this: only ask for what you can manage.
If you have debt, and are forgetting to pay your bills on time, or not making it a priority, you may want to reconsider applying for that new card, even if you would get approved. But if you’re not approved, and are still managing everything very well, don’t worry about it! Wait a few months, and try again. Credit cards are on awesome tool, but they’re also capable of a great deal of damage if not managed correctly. When I think of credit cards, I often tell people that they fall in line with the common saying: