Can You Be Turned Down for a Credit Card Because of Excellent Credit?
Why You’re Turned Down for a Credit Card Might Surprise You
Recently someone wrote in telling us about how they were turned down for a credit card because they didn’t “fit the profile” that the store had established for their credit card account holders. It’s important to understand that this decision had nothing to do with credit ratings because the person in question has excellent question and pay their credit card balances in full each month. Why then, were they turned down for a credit card when they could obviously afford to pay the balance each month? The answers may surprise you.
A Simple Matter of Greed
To understand why a customer with excellent credit would be turned down for a credit card, we first need to look at the situation from the store’s point of view. This customer pays their balances in full each month. Because of this, they’re not paying any interest to their credit card companies. The store that turned them down for the credit card probably did so because they weren’t going to make a dime of interest off of these good people.
It’s much easier for the store to tell this customer that he or she “doesn’t fit the profile” rather than come right out and admit they just don’t want to waste time giving someone a card if they’re not going to profit from it. Doesn’t sound fair, but it may be a fact.
A More Innocent Scenario
Okay, the above scenario is sure to get anyone’s blood boiling -- but before we jump to any conclusions there is another reason someone who pays their credit cards off each and every month would be turned down for a credit card.
When your credit card reports your credit card balance to the credit bureaus, they do so at the end of the billing cycle, not after you make your payment. If you’re running up a balance on your credit card each and every month, your credit report is going to show that you’re carrying a balance on that card even if that balance is being paid off in full each time the bill comes in.
For example, if your credit limit is $5,000 and you are charging $4,000 each month, your credit report is going to show that you’re carrying a balance of $4,000 on that credit card even if you’re paying the $4,000 each and every month to pay that balance off. Because of this, your credit report may make it look like you’re very close to your credit limit, even though you’re really not.
That being said, I think if the revolving balance scenario was the reason these people had been turned down for a credit card, the reason they were given would have been “too much outstanding debt” or something similar to that. Not that they just didn’t fit the profile.
Comments
I recently was turned down for a credit card because the issuing company said, "there was not enough information on my credit report." My credit score is 710 and I pay my one credit card in full each month.
Posted by: Annette Bigler | August 22, 2006 8:55 AM