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What to do if your application for a secured credit card is denied

Here's how you can work toward approval for a secured credit card.

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Your application for a secured credit card may have been denied for a handful of reasons. Instead of letting the rejection get you down, it’s best to identify why you were denied in the first place. This way, you can work toward improving the situation before you submit your next credit card application.

Why your secured credit card application might have been denied

While there are many reasons why your application could have been denied, here are a few of the most common causes:

  • Poor credit score. Credit card providers often set a minimum credit score to verify your ability to pay your bills.
  • History of missed payments. If your credit score shows a history of missed payments, the provider may be skeptical that your bills will be paid on time.
  • A credit card balance that is unpaid for six months or longer. If you have a history of unpaid balances, credit card providers may be unwilling to risk losing money if it were to happen again.
  • Outstanding loans. Outstanding loans may be a sign that you are unable to pay off your debts.
  • Inadequate income. Providers want to make sure that you are able to pay your bill. If you have inadequate or an unsteady flow of income, they may doubt that ability.
  • Spotty employment history. Just like inadequate income, a spotty employment history may be a sign that you might not be able to pay your bill.
  • Error on your application. This could be as minor as a spelling error or a wrong phone number. Always check to make sure all of your information is correct before submitting your application.
  • Error on your credit report. Your application may also be rejected due to errors on your credit report. These can be resolved by contacting the credit bureaus. Always contact both Equifax and TransUnion in case the error is on both of your credit reports.
  • Too many applications or inquiries. Too many credit card applications or inquiries in a short period of time can decrease your credit score or indicate that you are relying too heavily on credit.
  • Bankruptcy. Many providers see bankruptcy as a sign that you are unable to pay your bills and they could be unwilling to take the risk and approve you for a credit card.
  • Don’t meet eligibility criteria. If you don’t meet the age or residency requirements, you will be rejected for a credit card.

How to find out why your application was denied

Sometimes you will know almost immediately if you’ve been rejected for a credit card, while other times you may have to wait a week or two for the provider to assess your application further and then send you a rejection letter.

Some rejection letters may explain the reasoning behind your denial. If so, this letter is the key to understanding exactly why you were denied, as you can use it to make changes that will increase your chances of approval. Whether your credit score was too low or you simply made an error on your application, the information in this letter is the first step toward improving your chances of success with your next application.

If your letter doesn’t explain why you were rejected, reach out to the provider and simply ask.

Your next step is to check your credit reports with TransUnion and Equifax to see where you stand – and to make sure your reports have no errors on them. You can request your credit report from each bureau online. If you request to view your credit reports online immediately, you’ll likely have to pay, whereas requesting paper copies in the mail usually come free of charge. Once you’ve received your credit reports, take your time to examine them for any errors that may have caused your application to be rejected. If you see an error on any of these reports, you can dispute the issue with each credit bureau.

How to improve your credit before reapplying for a card

Building a positive credit score is an ongoing, long term commitment – but that doesn’t mean you can’t make an impact right now. There are a number of ways you can start building your credit score, including:

  • Pay your bills on time. This includes secured credit cards, utility bills, phone bills, mortgage payments and any other bills.
  • Take your time between credit card applications. Applying for too many cards at once can damage your credit score. If your application gets rejected, take a moment to understand why, then spend a few months improving your credit score before applying for other forms of credit.
  • Budget. Creating a monthly budget can help you understand where your money is going and help ensure your bills are paid on time. It can also decrease your debt-to-income ratio and reduce outstanding debts.
  • Pay off outstanding debts. Outstanding loans and other debts can decrease your credit score. Paying off outstanding debts or bills can help you gradually build your credit score over time.
  • Get a secured credit card. Secured credit cards are designed for those with poor or nonexistent credit and require a deposit. Responsible use and paying bills on time will allow you to build your credit score.
  • Avoid too many credit inquiries. Applying for credit cards, mortgages, loans or other similar financial products can temporarily reduce your credit score. While your score will likely return to where it once was after a few months, spacing out credit inquiries can prevent it from noticeably dropping in the first place.
  • Maintain low balances. If you already have a credit card, try to maintain a low balance. Doing so can make it easier to pay bills and indicate that you’re a responsible borrower. A DTI of 30% or lower is ideal, so try to keep your balance as close to or below that number as possible.
  • Avoid closing unused accounts. Having only newer accounts on your credit report can result in a lower score. Lenders and credit card providers like to see a long history of credit in your report.
  • Consolidate your debt. Consolidating several loans into one can streamline your repayments and help you save money on interest charges.
  • Manage your credit report. For a fee, you can sign up to receive notifications when there’s a change to your credit report. In addition, you typically get monthly access to your report. This service could be helpful in staying on top of your overall financial well-being.

Secured credit card comparison

Name Product Required Deposit Purchase Interest Rate Cash Advance Rate Annual Fee Reward
Refresh Financial Secured Card
$200 - $10,000
17.99%
N/A
$12.95
The Refresh Secured Card has no credit check, a low annual fee and guaranteed approval once you secure your card with anywhere from $200 - $10,000.
Take advantage of a low annual fee, with no credit check and guaranteed approval once you secure your card with some funds.
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How long should you wait before reapplying for a secured credit card?

Most credit card providers suggest waiting about six months to reapply after being denied for a credit card application. Instead of rushing to fill out another application, take your time to build your credit score over the next few months. Doing so can increase your chances at getting the best secured credit card possible.

That said, there is no definite timeline. The six-month rule is just a suggestion, as the ideal time frame may vary depending on your current credit score, the required score for the new card you want and a handful of other factors unique to your financial situation. If you have a low credit score, you may need to wait longer, as it could take a while to build enough credit to be approved. On the other hand, if your credit score wasn’t too far below the required minimum, you might be able to get approved within three months.

Other options if you need money now

If you’re in a pinch and need a way to cover expenses, secured credit cards aren’t your only option. Here are two other methods you may want to consider:

  • Prepaid credit and debit cards: Prepaid credit and debit cards will require payment up front, but they provide a flexible and secure payment method for a low cost. You can use the card for purchases at any retailer, service provider or even online. These cards, however, won’t impact your credit score whatsoever.
  • Loans: If you need money right now, you could consider applying for a personal loan through a bank, credit union or online provider. You’ll likely need to provide collateral in the form of assets or equity, but personal loans can provide quick access to funds. If you make your repayments on time, you can also increase your credit score.

Bottom line

At the end of the day, getting denied for a secured credit might sting – but it’s not the end of the world. Applications are rejected all the time, and it’s possible that you just haven’t found the right card yet. There are a number of ways you can move forward from here, and whether that includes improving your credit score or finding a card that works for you, it all starts with understanding your reasons for rejection.

Use this rejection as an opportunity to find out what went wrong and address the issues that may be holding you back. As you work to boost your credit score over the next few months, your chances of approval may increase as well. Once you’re ready to apply again, explore the secured credit cards out there to find the product that’s right for you.

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