Apply for a credit card and a mark will be placed on your credit file. Crucially, this applies regardless of whether or not you're accepted.
In this article, we we're going to highlight some ways to protect your credit score when you apply for a credit card. Plus, we explore why getting rejected for a credit card isn't necessarily a disaster for your future creditworthiness.
What happens to your credit file when you apply for a credit card?
When you apply for a credit card you'll undergo a 'hard' credit search. This leaves a mark on your credit file meaning other lenders can see you applied for credit on a particular date.
Because of this, you may be hesitant to apply for a credit card in the first place. After all, your credit file — along with your wider credit score (which your credit file is part of) — is used by providers to make lending decisions. As a result, you may conclude that risking a credit card rejection could lead to your credit score taking a hit.
Yet in reality, things aren't quite as straightforward as this....
Is getting rejected for a credit card bad for your credit score?
Your credit file forms part of your overall credit score, and contains information such as your repayment history, loans in your name, existing credit limits, plus any recent credit applications you have made.
While having a decent credit score is important, contrary to popular belief there isn't really such a thing as a 'perfect' score. That's because different lenders use different credit rating agencies. So you may have a great credit score with one credit reference agency, but an average score with another. This is why, when it comes to making an application for credit, your chances of acceptance may depend on which credit rating agency the lender decides to use.
Also, the decision on whether to lend to you ultimately lies with the lender, and a lender can completely disregard your credit score if it wishes!
As mentioned above, when you apply for credit, such as a credit card, a mark is recorded on your file. However, getting rejected for a credit card isn't necessarily bad for your credit score.
This is because the mark placed on your file doesn't tell lenders whether you were accepted or rejected for a card. It just states that you made an application for credit on a set date — that's it!
Another reason why a credit card rejection isn't always the end of the world is because hard credit searches only remain visible on your file for a year. So, if the last time you applied for a credit card was over 12 months ago, lenders wouldn't know about it.
Can you apply for another credit card if you're rejected?
While you shouldn't overly worry about the impact on your credit score if you're rejected for a credit card, applying for every card under the sun is a big no-no.
You see, just because your credit file doesn't explicitly tell lenders you were rejected for a card, multiple applications in quick succession may give the impression you're desperate for credit. This is why multiple credit card applications following a rejection could make you less likely to be accepted for other cards in the future.
So, rather than making multiple applications, if you're rejected for a credit card it's often wise to wait a month or two before applying for another card.
Unclear why you were rejected? You can write to a lender and ask why you've been rejected for a card. However, this this may not be worth the pen and paper. That's because many lender's will issue a generic response saying you simply didn't fulfill their lending criteria. Yes... 'lending criteria' is all a bit mysterious!
3 tips to boost your chances of acceptance for credit
While we've explored why getting rejected for a credit card isn't always a disaster, missing out on a competitive deal can be disappointing to say the least. Thankfully, however, there are ways to max your chances of getting accepted for the best cards. Let's take a look...
1. Consider a card offering pre-approval.
You may have seen that a handful of credit card providers offer something called 'pre-approval'. When you apply for a card offering pre-approval you must enter your details on the lender's website. The lender will then conduct a 'soft search' to see if they'd be happy to take you on as a customer. Importantly, soft searches aren't visible to lenders, so have no impact on your credit score.
If, after undertaking a soft search, the lender is happy, you'll be 'pre-approved'. This means you'll definitely get the advertised card if you then go on to apply.
Cards offering pre-approval make it possible to check your eligibility for a particular card without having to first risk a 'hard' credit check. This can be very useful if you're interested in a credit card deal but aren't entirely confident you'd be accepted.
2. Use a credit card eligibility checker.
A credit card eligibility checker lets you to input your personal details into a calculator to discover your chances of acceptance for multiple cards in the market. Eligibility checkers use soft searches, so using one won't impact your credit score.
Depending on the eligibility checker you use, you'll typically see your chances of acceptance for a particular card displayed on a scale of 1 to 10, or as a percentage. For example, if you're given a 80% chance of acceptance, 8 out of 10 people in your position applying for that card will get it. If you get a 100% chance of being accepted for a card this means you're essentially pre-approved.
Like pre-approval, eligibility checkers can be an excellent way of assessing your financial attractiveness while avoiding a hard credit search.
3. Explore ways to boost your credit score.
Arguably the most effective way to improve your chances of getting accepted for the best credit card deals is to boost your credit score. While your past repayment behaviour has a big impact on your score did you know that there are some other, less obvious ways to give your creditworthiness a leg up?
From unlinking to financial associates, checking your file for errors, to ensuring you're registered to vote, take a look at our comprehensive article that explains how to improve your credit score.