Sometimes I’m introduced as “the woman who literally wrote the book about credit scoring.” (It’s called “Your Credit Score,” and you can find it on Amazon and wherever else fine books are sold.) My FICO scores are typically in the high 700s to low 800s. My credit record is so clean it sparkles.
And yet I’ve known the sting of being turned down for a credit card.
Beverly Blair Herzog has written a nice two-part piece for Credit.com (it starts HERE) about what you should do if you get that dreaded rejection notice. She focuses on the most likely reason you’ll get denied, which is that your credit scores aren’t up to the issuer’s standards. For example, if you have decent but not great scores, you may not be able to win some of cards that have the richest rewards programs. But you can still get a number of other good cards available to people with your scores.
Less often, an issuer’s policies will cut you off from the card you want. In my case, I’d applied for, and received, a British Airways card from Chase. When I applied for an Amtrak rewards card from the same company several months later, I didn’t think twice about it–but Chase sure did. The rejection letter I got, roughly translated, said “We’ve granted you enough credit right now, lady. These are risky times and we’re not sticking our neck out.”
Other issuers handle the risk proposition differently. For example: I’ve had an Optima card from American Express for years, but no longer use it. When I applied for another American Express card, the company gave it to me–with a nice big credit line–but chopped the credit available on my Optima card to $500. Since then I’ve applied for and gotten several other Amex cards without damage to my available credit lines, so the company must have decided I’m okay.
Card issuers aren’t going to spell out all their policies and lending criteria in advance–the card market is competitive and ever-changing. The issuer’s policies can change too. Witness card companies that were slashing credit lines during the recession. Now they’re stepping up their direct mail offers and introducing splashy new rewards cards.
The good news is that you don’t suffer “extra” credit score damage from getting turned down. The damage, usually five points or less, happens when you apply. Still, you don’t want to apply for cards if you won’t get them–the fewer hits on your credit, the better.
If your scores are less than sterling, you can reduce the possibility of rejection by researching which issuers are interested in your business, based on your scores. (Conveniently, that’s how Credit.com and other credit card sites help you search for card offers.) If your scores are really bad, you’ll likely need to start with a secured card.
But you can’t really know in advance when you’re going to stumble over an issuer’s hidden policy trip wire. So that brings us back to one of the Big Rules of Credit Score Improvement: “Apply for credit sparingly.” If you don’t ask, after all, they can’t turn you down.