The key to getting the credit card you want first lies in understanding why your application might be turned down. We show you exactly what you need to know and do to make sure it's given the ok.
Being unable to get the credit card you want is incredibly frustrating. But aimlessly applying for different cards in the vain hope that one will say ‘yes’, will make you look desperate for credit and end up damage your credit rating. Instead, you need to work out why your application was turned down and do something proactive about it.
The first thing to understand is that credit card providers do want your business because your borrowing will earn them money. However, if they suspect there's a chance you won't be able, or inclined to repay what you borrow from them, they won't risk lending to you.
Here are the 4 key issues that will send a lender's warning lights flashing, and what you need to do to get around them:
Reason 1: You don’t fit the bill
Think of a credit card as a nightclub. Whether it’s ‘no trainers’ or age restrictions, nightclubs have application criteria to ensure that only the right kind of customer gets in. Credit card providers operate in exactly the same way and most cards will specify minimum requirements that you need to meet in order to get one.
These usually involve application criteria such as: minimum income, minimum age, UK residency, employment and homeowner status. Unfortunately, if you fail to meet the credit card provider’s minimum requirements then you will find your way barred by a couple of burly doormen!
The solution:
There’s nothing worse than travelling all the way into town only to discover that the nightclub you want to go to doesn’t let in people wearing trainers. In the same way that checking a nightclub’s dress code before you set off could save a wasted journey, checking a credit card’s application criteria before you apply could also prevent your application from being needlessly rejected.
It really is as simple as this – if you don’t meet a credit card’s application criteria then don’t apply.
You can use our Advanced Search to find credit cards that are suitable for your circumstances and check application criteria in our credit card comparison tables.
Reason 2: You have too much credit
Take a look through your wallet or purse. How many credit or store cards do you have? One or two is usually okay, but any more than that and it could mean you end up being turned down when you apply for a new card.
Whenever you apply for credit, a lender will use a combination of the information on your application form and the details on your credit report to compare your debt to income ratio. This is how they determine whether you can afford to take on more credit.
Remember those four or five unused credit cards tucked away in your pocket? If each one has a credit limit of £5,000, then that is upwards of £20,000 you could suddenly blow in one go should the fancy take you. Even if you’re not using all your cards the lender will still question your need for more credit if you have plenty available to you.
Before they give your application the OK they will want to be confident that if you were to suddenly to max out all your credit cards, you would still be able to repay them. So they will look at how much credit you have access to and how much you'd be able to pay back on your current income. If they think that there is a chance that you won’t be able to repay what you borrow, then they may well reject your application.
The solution:
Think about cancelling any of your unused cards. By reducing the amount of credit that you have access to, you can make yourself more attractive to a potential lender. Ideally, you should be looking at keeping your income to debt ratio below the 50% mark
However, think carefully before you begin cutting up your cards willy-nilly – you may end up cancelling a card that you might need in the future should your application prove unsuccessful.
Read more in our guide on Should You Cancel Your Old Credit Cards?.
Reason 3: Your application form doesn't match your credit report
Whenever you apply for credit, the decision on whether your application will be successful is based in part upon how you have handled credit in the past.
Data on your previous experience with credit is compiled by a credit reference agency and passed on to potential lenders in the form of a credit report. Lenders use this information to decide whether you're a suitable borrower for the card that you've applied for. They will also use your credit report to verify details like your current address, previous address and past financial connections.
For this reason, any inaccuracies on your credit report could have disastrous consequences when you apply for credit.
If the data within your credit report is incorrect or contradicts the information you have entered on the application form then it is unlikely that your application will be approved.
The solution:
When applying for credit it is safe to say that honesty is always the best policy. Even the whitest of lies could contradict the information contained in your credit report and result in your application being turned down.
You will always be asked for at least your current address or previous address if you have been at your current address less than two years. Not many of us are blessed with photographic memories so don’t ever be tempted to guess if you can’t remember your previous address.
Look back through old bank statements or a friend’s address book to ensure that you get all the details correct. If you don’t provide the lender with the correct details then they will think that you are hiding an unsavoury financial past and reject your application.
Of course your credit report is not held in some top-secret government vault along with the Ark of the Covenant and definitive proof that alien life exists. In reality, checking the accuracy of your credit report is a quite straight forward process, involving nothing more than applying online to one of the three main credit agencies. This will usually involve a small fee, but it is possible to make the most of a free trial in order to check the accuracy of your report for nothing.
Make sure to check your credit rating very carefully. Are your current and previous address details correct? Are you still financially connected to an ex-partner or housemate who you have previously taken out a financial product with? Has someone made a fraudulent application on your behalf?
Remember that the accuracy of your credit report could be vital to you gaining access to credit so you should make a point of checking sooner rather than later and inform the relative credit agencies immediately of any inaccuracies.
Reason 4: You have a less than perfect past
Most lenders will usually have a minimum credit rating requirement. Fall below this and it signifies to the lender that you could be too risky a person to consider approving for that particular card.
For this reason, those who have a history of poor credit management will usually find it difficult to get approved for the market-leading cards. This is because lenders tend to reserve these exclusively for borrowers with a clean financial past.
Having no credit history can be just as restrictive as having a tarnished past. After all, if you have no previous experience with borrowing then a lender won't know whether they can trust you with credit or not. As such they may be unwilling to offer you the most competitive deals.
The solution:
Even if you do have a tarnished credit history, it is always possible to improve it by showing that you can manage debt responsibly. So your first step should be to check the information in your credit report and make sure it accurately reflect your understanding of your previous borrowing. If things aren't as they should be then alarm bells should start ringing.
Check to see whether a debt you previously assumed had been paid is not still listed as outstanding. If you have a history of CCJs, but you believe that these have been settled, check to make sure that your credit report accurately reflects this and inform the relative credit agency of any inaccuracies. Likewise if you suspect that you have been the victim of fraud and borrowing has been taken out in your name without your knowledge.
There are also ways to build your credit history from scratch even without access to traditional forms of credit. Read our article to find other hints on how to improve your credit rating.
Other “do’s” and “don’ts”
Do – be selective about which cards you apply for.
Do – space out your credit card applications.
Do – take care to fill in any credit card application form correctly. Making typos could result in your application being turned down.
Do – register with the Electoral roll. It’s a simple way to improve your credit rating as this is how lenders verify your identity.
Don’t – apply for numerous credit cards in a short period of time. Every time you apply it registers on your credit history. It makes you look desperate for credit and a bad bet for lenders.
Don’t – apply for more than one card that is backed by the same bank without double checking they'll allow you to hold both.
