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  • Credit Card Approval Requires More Than Good Credit

    Even a great credit score isnít enough to guarantee your credit card application will be approved. Itís true, you can be denied a credit card even if you have excellent credit. Thatís because your credit score isnít the only factor credit card issuers consider when they decide whether to extend credit to you.

    Your Income/Ability to Repay

    Up until last year, you could get a credit card even without having your own income as long as your household income was high enough to meet the credit card issuerís requirements. Now, you must have your own personal income to get a credit card. Unfortunately, this places credit cards out of reach for many young adults whose parents pay their expenses and parents who stay at home rather than work outside the home.

    When you complete a credit card application, you might notice that it asks for your monthly rent or mortgage payment. Creditors often compare this number to your income to judge whether you have enough money leftover to repay a credit card balance. You may get turned down if your mortgage/rent limits your ability to repay.

    Number of Other Credit Cards

    There is such a thing as having too many credit cards. Unfortunately, we donít know the magic number that credit card issuers consider to be ďtoo manyĒ and itís likely that each of the issuers have their own criteria. Being denied for a credit card because you have too many is probably a good thing. Another credit card might cause debt problems or allow you to ignore the problems you already have.

    Your Age

    Credit card issuers are prohibited from discriminating against applicants because of their age, but you do need to be old enough to sign a contract, which is age 18 in most states. If youíre under age 18, you probably wonít be able to get a credit card in your name alone. However, you can be an authorized user or joint account holder on someone elseís credit card.

    Amount of Debt

    Too much debt can lead to a denied credit card application, even if the debt isnít affecting your credit score. A large amount of debt, especially high credit card balances, puts you at risk of defaulting on a new credit card balance. Many credit card issuers arenít willing to take the risk.

    What Happens If Youíre Denied

    Credit card issuers are required to send a written notice telling you why your credit card application was denied, even if your credit was not a factor in the decision. If your credit score was a factor in the decision to deny your application, then youíll get a free copy of the credit score that was used. You also have the right to a free credit report if something in your report was the reason you were denied. This free ďadverse actionĒ credit report wonít be sent automatically. Instead, youíll have to order it directly from the credit bureau that provided the report to the credit card issuer.

    Sources: FederalReserve.gov, FTC.gov
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