http://feedproxy.google.com - So you’ve applied for a credit card, and you’ve been denied. There are several reasons for credit card declined applications. After a few simple fixes, you might be able to improve your odds of approval within a short amount of time. Credit card companies are pushing the promos because they want to approve you. But there’s a certain risk tolerance that every credit card company uses to determine approval and denial of applications. I’ll share the basics of what they’re looking for so you can increase your odds of being approved for a credit card application, and at the end of the post, I’ll share 10 credit cards that have a higher approval rating for folks with a less-than-stellar FICO score or high debt to income ratios. At the end of this article, you can grab a copy of my free debt snowball spreadsheet. Reasons for Credit Card Declined Applications 1. Chase Bank’s 5/24 Rule Chase Bank offers an automatic decline if you’re a card churner. Credit card churning is when you open and close several credit card accounts for the purpose of stacking sign up or bonus points for your benefit. If you’ve opened 5 new credit cards with Chase in the past 24 months, you’ll automatically be declined on the sixth application. This is obviously a very high-risk practice, and I don’t recommend it to 99% of the population. Some have been able to use the points accrued from credit card churning to take lavish vacations on a dime. Related Articles if You’re Interested in Reasons for Credit Card Declined Applications How to Build Credit Without a Credit Card Credit Utilization: What is it and How Can it Improve my Score? How to Sell an Upside Down Car When You Have Negative Equity 2. Restricting Sign Up Bonuses Some banks and financial institutions will limit the amount of sign up bonuses one can take advantage of in a period of time. For instance, if you’ve already received 50,000 bonus points for signing up for the Chase Sapphire Preferred Card, you won’t be eligible for the bonus points from a new card for 24 months from the date of opening the account. 3. High Debt to Income Ratio Debt to income ratio is simply the amount of your monthly minimum payments divided by your gross monthly income. I go into detail about DTI ratio in this post, but basically, the higher your monthly payments are in relation to your income, the more reasons for credit card declined applications. Credit cards can get you into a world of hurt if you aren’t careful. I don’t recommend using them to “game the system”. It can be hard enough to manage a household budget without the pressure of keeping up with a bunch of credit cards. 4. High Credit Utilization Credit utilization is the percentage of usage of your credit cards. To increase your credit score, you’ll want to keep your balances below 30% if at all possible. The lower the utilization (balance), the better. I’m not a fan of lingering debt, so obviously make sure you’re keeping your balances low low low or paid off. 5. Too Many Credit Cards Already When I was a banker, I once had an elderly client with a near perfect credit score show me his credit card collection. The man had hundreds of cards in a shoe box, and he had opened them for the rewards and paid them off every single month. Some he only opened for the rewards and closed, but he saved all of the physical cards in this shoebox. If you’ve got a ton of credit card accounts already open (with balances charged on many), that might be one of many reasons for credit card denied applications. 6. Insufficient Income The Credit Card Accountability, Responsibility and Disclosure Act of 2009 prohibits credit card companies from extending credit without assessing a consumer’s ability to pay. In other words, if you don’t have sufficient income, you won’t be approved. If you’re living on social security or disability or child support from your ex, you don’t need a credit card. You need a budget and a plan. Stay away from credit cards if this is you. I can’t stress that enough! 7. Bankruptcy Blues If you’ve filed bankruptcy, that might be one of the best reasons for credit card declined apps. Bankruptcy is a wakeup call to those who were poor money managers in the past. If things got so bad that you had to file, why would you ever want to go back to that place again? For any and all of the reasons above, you may have been denied credit. By lowering your credit utilization and DTI, increasing your income, and avoiding credit card churning, you can be on the path to credit card approval in the future. Just make sure you’re prepared and responsible enough to not use them if you can’t pay them off within 2 months. How to Fix Your Credit After You’ve Been Denied See where you stand. Get a copy of your credit report and assess the situation. You can’t fix what you don’t know. Create a written budget you can actually follow. You don’t need an expensive planner. This inexpensive planner from Amazon has been my trusty go-to planner for the past three years. A notebook and pen work just as well, too! The key is just to start budgeting! Contact delinquent creditors or charge-offs. Call or email creditors who are affecting your credit report negatively and set up payment arrangements. If you have the cash to negotiate a settlement, do it. Just make sure you obtain in writing the agreement to settle the debt before paying it in full. Also, never ever give your account information to a debt collector. Find out where you can mail payments to, and be sure to pay a couple of bucks for certified mail, return receipt. You want proof that they received payment. Save this record of receipt for 10 years. You never know when you’ll need to prove you’ve made payment. If your credit is in horrible standing, applying for new credit cards is not a great idea. Focus on paying back current creditors, building an emergency fund, and stay away from payday loans. With a written budget, you shouldn’t need to visit those predators anyway! Pay down existing credit cards to 30% of the credit line. Keeping your credit utilization low will improve your credit score. So now that you know the reasons for credit card declined applications, you can try to avoid debt disaster. The most important thing is that you’re not charging debt that you can’t pay off. Of course, if you consider risk, the best plan is to just budget and pay cash for all of your needs and wants. If you’re already in debt and interested in learning how long it would take you to become debt free using the debt snowball method, enter your email below and I’ll send you my debt snowball spreadsheet for free!