Getting turned down when applying for a secured credit card could come as a surprise. After all, you are paying a security deposit to protect the security issuer in case you miss your payments. But What to do if you are denied a secure credit card? After all, approval should be guaranteed, right?
Not at all, applying for a secured credit card does not necessarily guarantee that you will receive it. In most cases, the card issuer will continue to check your credit. You may be denied if you have any bankruptcies on your record, a history of late payments, insufficient income, or other red flags.
Keep reading: Best credit cards for credit score below 599
- 1 What to do if you are denied a secure credit card?
- 2 Find out why you were denied a secured credit card
- 3 Go to your own bank or a credit union
- 4 What to do if you’re denied a secure credit card: Take a different approach
What to do if you are denied a secure credit card?
Do not give up. You can improve bad credit and get approved for a credit card. Here we explain everything you need to do.
Find out why you were denied a secured credit card
If you are denied credit, you have a legal right to know why. The card issuer should tell you, but if they don’t, ask.
You are also entitled to a free copy of a credit report after your card is denied. If you were turned down because of an error on your credit report, you may be able to dispute the error.
Also, did you fund your secured card with a deposit? If you didn’t you could be rejected just for that.
Go to your own bank or a credit union
If you have a checking account, it will be easier for you to qualify for a secured credit card with the bank you already have a relationship with. Make your request there, if you do it in person you will make a good impression.
Also, check with a local credit union, which are non-profit organizations. They typically have more flexible approval rules than the big banks, as well as consumer-friendly financial accounts, including credit cards.
Keep reading: What are the easiest credit cards to get in the United States
What to do if you’re denied a secure credit card: Take a different approach
Credit card applications often lower your credit score slightly, so don’t keep applying for more cards if you’re likely to be denied.
What you should do is work on building your credit with some alternatives:
- Extend a line of credit.
- Inform the credit bureaus about your timely payments.
Prepaid debit cards, for example, they don’t report to the credit bureaus, so don’t bother with them if your goal is to rebuild your credit.
TIP: Several issuers specialize in unsecured credit cards for people with bad credit. However, they are not highly recommended due to their high commissions.
However, the following alternatives to secured credit cards may be helpful:
These work like secured credit cards. You deposit money into a savings account and then borrow against it. With no risk to the lender, you get a low interest rate, and the loan helps you build your credit. Here are some examples:
Keep reading: Hidden benefits of credit cards that nobody tells you
Credit Union Construction Loans
This type of loan is offered mostly by smaller financial institutions, such as credit unions and community banks, these loans are intended for people looking to build credit. The money you “lend” is not given to you directly. Instead, it is held in your name in a savings account while you repay the loan in monthly installments. once you finish, the money is delivered to you and your credit report shows a paid loan.
Guaranteed cards without credit verification.
Let’s look at an example: The credit card OpenSky® Secured Visa® Requires credit check, but still reports to major credit bureaus. His annual fee is $35. This can be a good option if you have previously been denied a secured card, as long as you have money for a security deposit.
These loans can be secured or unsecured. Unsecured loans do not require collateral, such as a car title, and generally have higher interest rates. The better your credit, the lower your rate is likely to be. Those with bad credit will pay much higher rates, if they can get a loan at all.