Credit Card Applications

Your application may get approved when you apply for a credit card, or the bank may deny it. The acceptance or refusal of your application is subject to your creditworthiness and other factors. For example, credit history, a track record of regular repayments, no penalties, etc., all portray your image as a reliable borrower. Your bank usually sees these factors to deduce any future possibilities of loan default. However, your application lies at the discretion of the bank. Today, credit cards have become a must-have in the age of digital shopping, and everyone wants to have them. But what should you do if you are denied a credit card? 

How long does the process for a credit card application usually take? 

Selecting the right one after making a thorough credit card comparison is how the process starts. Then, you contact your bank, and the bank evaluates your stance as a borrower. The application process is online, and if approved, your card usually gets delivered within 15 business days. Your application may be denied based on wrong credentials, poor credit history, missed payments, etc. 

What should you do if your card application is denied? 

The best option is to wait; waiting before reapplying can be a smart move. Different banks suggest different waiting periods between two credit card applications. The ideal waiting period is six months, and you can consider reapplying for a credit card after this. There can be an exception to this waiting period if one has a pre-existing healthy credit history.

Why the wait? 

As said earlier, a six-month gap between two applications is essential because:

  • Every time you make a credit inquiry, your credit scores are affected. Recent credit inquiries cause a 5 to 10 point drop in your FICO scores. Making additional inquiries can spoil your credit scores.
  • Banks perceive multiple credit card applications as a sign of financial instability. This will dilute your credibility as a borrower and deteriorate your creditworthiness. If this happens, it may create problems when you apply for emergency loans or home loans.
  • Some card issuers do not allow you to apply for new credit cards after a specific upper limit within a period.

One must keep these factors in mind and be cautious. Applications made in haste may take a toll in the long run.

When should you be extra careful with credit card applications?

Greater diligence is needed in some instances if you wish to apply for a credit card. For example, applying for a credit card might be counterproductive in circumstances where:

  • You want to increase your credit score:

 A hard inquiry when applying for a new credit card can wreak havoc on your credit scores. If you consider building a healthy credit score, you might want to be careful with credit card applications. Some ways that will help your credit score are: 

  • Make regular payments, avoiding penalties and interests.
  • Keep your credit utilization ratio, ideally, around 30%.
  • Make a credit card comparison instead of applying for multiple credit cards. This precaution will help you in avoiding the ‘credit hungry’ zone. 
  • Develop a healthy credit mix.

If you have a bad credit score in the 500 to 600 range, you should avoid making continuous applications. Also, make sure you apply for a credit card tailored to suit your credit score. This measure will add to your chances of being accepted by the card issuer.

  • When you are seeking a loan: 

Loan approvals depend largely upon credit scores. So, if you are to seek a home loan or a personal loan in the future, avoid making card inquiries. The same is also applicable if you are about to apply for a mortgage. A slight dip in credit scores can make a huge long-term difference in the rate of interest.

  • There has been a recent rejection of your application:

 Patience is the key here. You shouldn’t rush to make a new application immediately after being rejected. You can ask the issuer to explain the reasons for rejection and make amends accordingly. 

Receiving a denial when you apply for a credit card can be a blessing in disguise. You can use the six months to improve your credit score and make a credit card comparison. This will help you make better choices and get you the best credit card as per your need.

By Adam

One thought on “Waiting For Credit Card Applications And Why It’s Needed”
  1. Wow, superb blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your website is great, as well as the content!

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