Credit Advice

Choosing the right card and what happens to credit scores if you are declined

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Credit Advice

Choosing the right card and what happens to credit scores if you are declined

Dear Experian,

I am in the process of cleaning up my bad debt and paying all my student loans and late credit card bills. I am now starting to receive credit card offers from multiple companies. I understand that getting a credit card application declined or denied is very bad for your credit. How do you know when it is safe to apply for a new card and begin restoring your credit with good debt?

- MSH

Dear MSH,

The fact that you are receiving credit card offers is a good sign that you are doing the right things. Credit card companies are now viewing you as a good credit risk and want you as a customer.

You are in control of your debt and have the ability to choose which credit is right for you. Be selective with regard to which offers you decide to accept. Only select the one or two cards that offer the terms and incentives that you most want or need.

There are many things to consider in a card offer. Low interest rates typically top the list, but that is only significant if you “revolve’’ or pay less than the full amount that you charge each month. I strongly recommend against that. If you do not revolve a balance each month, annual fees, high limits and special incentives such as airline miles, cash back offers or insurance might be even more significant in your decision.

Your credit report does not show whether an application has been approved or declined, so a declined application will not hurt your credit history or credit scores.

When you apply for credit, the lender will request a copy of your credit report. That request causes an inquiry to be added to your credit history. The inquiry doesn’t show whether the application was approved or declined. It is simply a record that someone has accessed your credit report because you have applied for credit.

If you are approved, a new account will appear in your credit history. If no new account appears, that doesn’t necessarily mean your application was declined. People often change their mind and choose not to accept the account for any number of reasons.

Keep in mind that you don’t have to get a new card right away, or at all. That is your decision.

Continue to do what you have been doing to improve your creditworthiness and the offers will get better and better. You might wait quite a while to find the perfect offer for you. Be patient.

Thanks for asking.

- The "Ask Experian" team

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