There are those who have been denied for credit cards or another type of loan, despite having a good credit score. The people who are most upset is the ones who have a friend else who was approved for the same loan but had an less scores on credit. Why is that? What makes the credit card company refuse to approve a person who has better credit, and then approve one with less credit?Denied for Credit Card
There are three possibilities (or at least three we think are to be the most probable):
1. Too Much Debt
It’s entirely possible to earn an excellent credit score without building up debt. If you make your payments on time but spend more than you can pay back then you’ll be slipping deeper and deeper into debt and gain various goodwill benefits for timely payments. Since credit history is the number 1 factor in determining your credit score. So when you only make the minimal payments, your score will likely to increase as time passes.
But, if your debt is at the point of a certain amount and you want to apply for an extension of credit credit card issuer might take a look at your credit and tell you “No way.” Sure your credit score is excellent however to the credit card company, your debt can make you look like a bomb that’s about to explode. They’d prefer not to be among the people to suffer when your financial situation collapses.
2. Too Much Credit or Too Much Recent Credit
There is a way to accumulate huge amounts of credit over time, and have an excellent credit score and be approved every time for credit. However, sometimes the sheer amount of credit can cause you to appear risky. The red flags are usually to the credit card companies if one of the following applies:
- You’ve had a track record of opening a new credit card only to earn signup bonus points and then not using the credit card for the next time.
- You build up a large amount of credit all at one time.
In the first instance the experience of “churning” through credit cards could come back to bite you. The credit card industry is searching for loyal customers, not those who are able to enjoy benefits and then abandon. If you’re likely to be a non-profitable customer that leaves when the opportunity arises do not be surprised if you and your outstanding credit score is declined.
In the second scenario when you have accumulated a lot of credit in one go could suggest that you have either a serious financial issue and require credit to draw on or you’re criminally in the process of to rack up the credit cards and then disappear and never be ever seen again. In either scenario the credit card company is concerned that you is likely to cost them money regardless of whether your credit score indicates otherwise.
3. Not Enough Income
Even the credit score you have is excellent, you may not earn enough to qualify to qualify for certain credit cards. Nothing is “wrong” with you or your credit score, however certain issuers might be looking for a specific kind of client, particularly for credit cards that are high-end and offer numerous advantages. If your earnings do not match the amount they are searching for, or in the event that you have a record of low-volume transactions with credit cards You could be denied. Credit card companies earn money not just through interest charges to their customers, but also from charges that merchants make each time a card is utilized. If you’re earning a small amount and/or a lack of usage they may see you as unattractive even with a high credit score.
Things Can Change
What the credit card company is looking for from its customers can vary from one period to the following. If the general economy is positive and the issuer is performing well it will have more customers accepted. If the economy isn’t as strong and/or the issuer’s profits aren’t as good the issuer could lower their standards and not approve more customers. You are not in control of the situation.
Credit Card Companies Want Money
In the end, credit card companies want to make money. If your track record suggests that you aren’t able to make that profit due to too much debt, numerous cards or low of an income, they could and will deny your application, no matter the good credit score yours is.
Credit Scores Are Still Important
This article does not change the fact that maintaining the score of your credit at a good standard should be your aim. This is just to point out that a credit score of high by itself isn’t an promise of any kind of thing. If all other factors are equal having a better score is always more beneficial than having lower scores.