Many people follow the advice to obtain a secured credit card to build, repair or establish their credit. Yet thousands of people every week get turned for a secured credit card. While a secured credit card may seem like little risk for a bank or lender since the applicant secures the credit limit with a deposit, yet the lender needs to look at the risk versus reward involved with issuing you a secured credit card. Credit card companies are for profit businesses, and secured credit cards offer little in the way of reward often for the credit companies, especially if you have had recent past credit trouble or outstanding debts. Added to that, secured credit cards tend to carry low credit limits, usually around $500. If you are deemed risky in any way it may not be worth the creditors time to even open an account for you, trapping you into a catch 22 situation of needing credit to build credit.
If you are turned down, even multiple times, do not despair. Every bank and lender has their own policies in effect to determine which customers suit the banks needs and which consumers will turn into good customers for the bank. Some companies for example only deal with people with no credit history versus people who are trying to rebuild their credit after some lapses in good credit behavior. For the lender it is all about building a long term relationship with a certain type of customer that fits a certain set of criteria. If you are turned down, they are turning down everyone in your current financial situation, it is not a personal matter but one of business. Rest assured that there is a secured card that is right for you out on the market, the key is finding the right offer for you.
Other reasons for denial include defaulting with the bank before, if you’ve had credit with that bank before, even if you repaid the debt when it entered collections, the bank may not want to ever deal with you again when it comes to credit or loans. If you have current collection accounts you also may very well be denied for new credit, even if it is a secured credit card. If you have filed a bankruptcy recently, or have any active judgements placed upon you that is also a reason you could be denied a secured credit card with some lenders. Carefully reading the application can reveal any of the lenders red flags, as can using review sites to find an offer more suited to your credit needs.
If you do get turned down for a secured credit card, look in the mail for the denial letter. It will tell you by law exactly why you were denied, although it may bypass the spirit of the law by being overly vague. If the denial letter is to vague as to why you were denied call or write the lender back asking for more information. The information on why you were denied can be used as a guide on what to fix.
If you are rebuilding your credit, focus on offers for secured cards that list bad credit as qualifying. New users of credit can apply for no credit secured cards. Applying only for the cards which offer secured cards to people like yourself with your credit standing is your best bet to securing your new credit card. Some lenders even offer no credit check cards, but these cards still report to all three major credit bureaus, however these are a very expensive option to go with due to the high interest rates and fees. Community development credit unions are a great place to try and obtain a secured credit card, as is the bank you do business with, provided you have not defaulted on a loan or other credit card with them in the past. Avoid prepaid debit cards as these do not help your credit what so ever. Remember some secured cards are designed with consumers with poor credit history in mind and cater to that market. The US Bank Harley Davidson Secured Card for example is open to those with poor credit, and carries no annual fee.