When used responsibly, credit cards can give people in Tennessee a financial boost. Credit cards help consumers establish a credit history that in turn helps those people qualify for bigger loans such as home mortgages and auto loans. However, if a person applies for a credit card but gets rejected, he or she may be left wondering why. There are a few common factors that often lead to a rejected application for credit.
According to U.S. News and World Report, the credit card company or bank may not always give a clear cut reason for why a person was not approved for credit. While they are required to provide a reason why the application was rejected, they are not obligated to go into detail or disclose how something factored into their decision.
When analyzing a credit application, the company is general looking a few things. First, the lender wants to make sure that the applicant has enough income to be able to make payments. Second, they will examine person’s existing debt. If the ratio of how much the person owes to how much money he or she earns is too high, or if the person already has credit cards that are close to being maxed out, the application may be rejected. In addition, credit card companies will look at the person’s history of applying for credit and if there are too many recent inquiries, it may not look good from the lender’s perspective.
What type of credit card the person is applying for is also important, according to Credit.com. High-end cards with large limits are not for everybody. To increase the chances of a credit application being approved, consumers should be sure to only apply for ones that they think they can reasonably qualify for.