Applying for credit can be one of the most frustrating parts of owning your own business. You have to wait days or weeks to hear back from banks, and even when you do get approved, the terms are often not as good as you would like them to be. Refused credit? What you should know and what to do next explains why it happens, what you can do about it, and how you can still succeed despite these setbacks.
Understand why your credit was denied
Before you begin your quest for a secured credit card, it’s important to understand why your application was denied.
- Was it because of late payments or collection accounts?
- A low FICO score?
- Was there some other issue at play?
Figuring out what led to your rejection will help you make an informed decision about how best to proceed. Some people mistakenly think they can easily get approved with one more try; in reality, lenders tend to view multiple denials as a red flag. If you think your situation is unique and feel confident that you can still qualify for the credit, check with a consumer advocate or attorney first before trying again.
Otherwise, consider applying for secured credit cards—where there’s collateral involved—before proceeding further. With some research and preparation beforehand, you’ll be able to secure your line of credit quickly when it comes time to apply.
Check all information
Before you apply for a credit card, you must check all of your financial details. You’ll want to make sure there are no errors on your credit report, including everything from addresses and account numbers to balances and payment history. Any mistakes here will only delay—or prevent—your application. In some cases, an error can result in getting turned down for a credit card altogether. Keep in mind that banks must give applicants with erroneous information 60 days’ notice to fix any mistakes before denying them; checking now could save you serious headaches down the road. If any errors or issues arise, take care of them immediately.
Remember: Your bank is under no obligation to approve your application if you don’t have a solid report in front of them!
Get advice from an expert
If you’ve been denied credit, contact an experienced credit advisor at one of these financial institutions and ask for help. They can work with you to determine why your application was rejected and help you rework your budget so that you can start building up your credit. Remember, with a little work on your part, there’s no reason why a bankruptcy or prior debt should stand in between you and the life you want. Your future is waiting—start planning today!
A resourceful person would do better than them all.
Don’t give up!
Getting declined for credit doesn’t mean you can’t get a loan. It simply means that, at least in your current financial state, you aren’t approved. Understand what your options are and contact a lender who will be able to help you find funding. As long as there is no negative information on your credit report, it is possible to get approved for a loan despite being declined before—don’t give up!
Just because you’ve been denied once, doesn’t mean that it will happen again; oftentimes they only check your history once per year. You have plenty of time to work on correcting issues with any potential creditors and then try again next year or perhaps even sooner if the situation turns around quickly. Also, consider consulting a professional accountant or lawyer before applying for another loan; their services may be worth more than their cost during times like these when getting money quickly is so important.
If you can, shop around
you a better deal. Whether that’s a lower interest rate, waived fees, or better customer service (which has been shown in some studies to have as much influence on borrowing habits as interest rates), it never hurts to shop around. It also helps to know how long it will take before you qualify for an increase in credit limits at your current institution; if they won’t raise them soon, then consider moving somewhere else where they will.
