Why would I be refused for a secured credit card? Answered

The only significant difference between secured and regular credit cards is that a deposit is required to apply for one. For those with no credit history, Secured cards are provided for people with poor credit histories or low credit scores. They are frequently regarded as a surefire method of improving credit. They are designed to be easily accessible and accept deposits starting at $49 (for the Capital One Platinum Secured Credit Card).

That does not, however, imply that you will be granted a protected card. A card issuer may only accept your application if you meet the underwriting requirements. I will discuss “why would I be refused a secured credit card” below, along with advice on what to do if you’ve recently been turned down. 

Possible Reasons to be Refused For Credit Card:

Most of the time, the credit card company runs a credit check. You can be rejected if you have a bankruptcy, a history of missing payments, insufficient income, or other warning signs. But you must make sure of the following things I have shared below to not to get refused.

Can you be denied a secured credit card?

Finding the money for the refundable deposit that will serve as collateral if you don’t pay your bill is typically the largest challenge in obtaining a secured credit card.

The average deposit is roughly $200; you’ll need to deposit more if you want a greater credit limit.

For instance, First Tech Federal Credit Union’s Platinum Secured Mastercard® allows cardholders to deposit up to $25,000 in exchange for an equivalent line of credit.

But even if you have the money for a deposit, you might only get a secured card if a lender thinks your credit history is safe. Each lender, or card issuer, has certain requirements for the ideal borrower.

This includes your income, credit score, and past and present obligations. A potential lender may be less willing to take a chance on you if you have a long history of missed or late payments, delinquent accounts, and bankruptcy.

If the lender declines, you might have to use alternative methods to establish your credit history.

What to do if you don’t qualify for a secured credit card?

If you’ve been turned down for a secured credit card, the company issuing the card or the lender should have sent you a written notice outlining why.

If you have any questions, read the letter and contact the issuer. Additionally, you ought to check your credit report for accuracy.

According to a 2012 FTC research, one in four Americans needs an accurate credit report. (Learn more about challenging a mistake on your credit report.)

Next, think about additional credit-building options. These might consist of:

• Loans used to build credit You can only get your money from these “loans” after making regular contributions into a savings account.
• You can improve your credit score and develop positive habits by doing this, but you should exercise caution as many demand additional fees. 
• Become an authorized user: By connecting your credit report to someone else’s, you can “piggyback” off their positive credit score.
• As your actions will affect the other person’s credit score, you should only select this option if you and the primary cardholder are comfortable sharing financial responsibility.  
• Use *Experian BoostTM to report your on-time utility, rent payments, and payments for services like internet, cable, cell phones, and utilities.
• Register with a premium or free credit monitoring service: You can track what’s going on behind the scenes as you establish or enhance your credit by monitoring your score.
• he greatest free service, according to Select, is Capital One’s CreditWise®, while the best premium service is IdentityForce®.

Improve your credit scores before reapplying

Don’t panic if your application for a secured credit card is denied. Fortunately, credit ratings can change over time, even though being rejected for a credit card may lower them initially.

Additionally, there are strategies to raise your credit score through prudent credit use.

To eventually reapply for a secured credit card, here are some suggestions to help you build your credit:

Pay bills on time:

One of the easiest methods to establish a solid credit history and raise your credit ratings is to pay your payments on time.

Try using reminders or automated payments if you’re struggling with your bills. Make sure you have funds in your account when the payment is due.

Apply only for the credit you need:

If you use numerous credit cards and loans quickly, lenders can think your financial situation has worsened.

Become an authorized user:

If your reliable friend or relative has strong credit, they could be ready to add you to their credit card account. You receive a card for purchases and other transactions as an authorized user.

Some issuers, including Capital One, offer eligible approved customers online access. 

Responsible credit practices may also aid in credit building, provided the card issuer reports authorized user account activity to the credit agencies.

Just be aware that bad behaviour, such as missed payments, could impact both the principal cardholder and the authorized user.

Consider a credit-builder loan:

Loans designed to build credit function slightly differently than other loan types. The lender doesn’t give you money up front; instead, they deposit it into a savings account on your behalf.

The lender informs the credit bureaus of your account activity as you make monthly payments. Making timely payments might help you develop or restore your credit.

You will also have access to the funds in the savings account once you have made all of the payments on schedule.

Remember that a credit-builder loan can have costs attached. Additionally, you must complete or pay on time on a credit-builder loan to improve your credit.

Your lender will notify the credit bureaus if you pay late or skip a payment entirely. As a result, your credit ratings can be affected. 

Conclusion:

Did you learned why would I be refused a secured credit card? If you haven’t already been authorized for a secured credit card, double-check your application to see if you could have answered some questions incorrectly before resubmitting.

If you want to lower your probability of being turned down this time, apply for a secured card like Azpire that doesn’t run a credit check.

You must still meet the requirements; your credit history won’t be a factor. You can easily apply for an credit card with no recurring fees and a 0% annual interest rate to help you build credit.

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