Why was my credit card application rejected?

I've recently been rejected for a credit card, how can I find out why this happened?

Being turned down by a lender is far from unusual: some credit cards reject as many as seven in ten applicants.

But the ubiquity of rejection shouldn't suggest that it's not serious. As we'll see, failing to take action after a credit card rejection is highly likely to result in continuing to make the same mistakes or, worse, just compounding an existing problem.

Right to information

Under the Consumer Credit Directive, which came into force in February 2011, lenders must tell applicants if information from a credit reference agency influenced the outcome of their application and, if so, which agency was used.

Applicants can then get in touch with the agency for a copy of their credit report.

The two big agencies Experian and Equifax offer a free full access trial of 30 days (more on accessing your report). Statutory reports from any agency are £2.

Armed with the report applicants can check for incorrect information which may have damaged their application and ask for it to be changed. They can also check on the status of un-fixable issues.

This right applies whether you apply online for an instant decision, by post or over the phone, or even in person at your bank's branch.

Reasons for credit card rejection

Lenders aren't obligated to accept applicants so, sometimes, rejections are unavoidable: good applicants simply happened to be lost in a sea of better applications or the provider saw a stable application as unprofitable.

Even so, those rejected for a credit card shouldn't assume that they were just unlucky. More often than not, checking the following points turns up a possible problem.

Application criteria

One of the most common problems credit card applicants face is that they've simply applied for a deal that isn't suitable for their needs and circumstances.

Some credit card providers (American Express is a good example) go out of their way to specify what they're looking for in an applicant. Many others just specify the bare minimum they expect - usually a minimum income and age - even though they could be looking for much more than that.

As a rule of thumb, the more high-profile the credit card deal, the longer the 0% introductory offer or better the rate of cash back say, the more experience and the fewer problems a credit card provider is likely to be expecting.

That counts even when they don't say so specifically.

Credit problems

Large debts, a history of missed payments and/or having a large number of open lines of credit can all pose problems for credit card applicants.

For a more exhaustive list of problems see our repair your credit rating guide.

Stability problems

Stability, or lack of it, can also be a problem.

Applicants who are not an the electoral roll, who move often or who had recently moved house at the time of their application look less stable and that is less attractive to potential lenders.

Incorrect information

Finally, rejections can sometimes occur simply because credit reference agencies hold incorrect information.

Fixing credit report problems

Some of the problems above can't be fixed per se. Credit report issues such as missed repayments will stay on file for several years, building a better history can help but won't mask them entirely; the only thing that will fix a recent move, on the other hand, is enough time to make it less recent.

However, some issues, such as incorrect information, can be fixed more easily.

Wait 3 months before reapplying

It's tempting for those rejected for a credit card to pick themselves up and apply again.

However, it's advisable to wait for 3 months before making another application since a full credit search leaves a 'footprint' on a file which is unattractive to potential lenders.

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