Why Am I Having a Hard Time Getting a Credit Card?

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If you’ve been applying for credit cards, but issuers repeatedly are declining you, it may be time to examine exactly why you are getting dinged. It certainly doesn’t have to do with your personality. More than likely, you aren’t getting approved because you either haven’t established a credit history or you’ve got a poor credit history.

Find out your credit score

When it comes to credit approval, everything is dependent on your credit score. Getting your credit score from a place like myfico.com is the first step in your investigation. Your credit score consists of five elements: payment history (35%), the amount owed (30%), length of credit history (15%), new credit (10%), and type of credit (10%).

All of these factors are what determines the level of risk you present to a creditor. They have no idea who you are. They are taking a risk on you. All they have to go on is your credit history, and you have to prove you are a good credit risk.

Build your credit history

Let’s say you do not have much of credit history. Then you’ll need to establish one. There are many ways to do this. The best way to begin is to obtain a secured credit card. With a secured card, you deposit a certain amount of money with the credit card company that it will use to pay off anything you charge if you default. Now you have a card you can use, and if you pay off your balance on time every time, you will establish a powerful baseline. The secured credit card will report your good behavior to the credit bureaus.

Another approach is to get utility services, like gas or electric or cable TV. Credit bureaus consider your on-time, in-full payment of these services to be of value in risk management because you receive services before you pay. But you must check to see if your utility company reports those payments. Most will, but only if you’re delinquent.

You can also see if your landlord is a member of, or would consider joining, WilliamPaid. This service reports your rent payments to Experian RentBureau. If you can also get a loan to buy a new or a used car, and make those payments in a timely manner, that will help. So will a mortgage or a personal line of credit, providing you make those payments on time every time.

Once you start down this path, go back to those five elements of your credit score. Pay on time every time. Try not to use too much of your available credit. Establish new credit as often as possible. Vary the kinds of credit you have.

Identify what’s holding you back

If you have a credit history, but can’t get a card, then chances are one or more of those same five elements are holding you back. You need to pay on time every time. If you are using up too much of your available credit, remember that issuers analyze your debt-to-income ratio. The higher that ratio is, the harder it is to get new credit. These are the two biggest obstacles you’ll face. Applying for a secured card will also help.