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Credit score: You're more than just a number

by Geoff Williams

Rejected for a credit card? Your credit score may not be the culprit. Unfortunately, your credit card issuer may just not be that into you.

When you apply for a credit card deal, or ask your credit card issuer for better terms, and get rejected, the knee-jerk action is to blame the credit score, and for good reason. If applying for a credit card is a little like dating, then a credit score is your appearance. If you have a lousy credit score, your credit card issuer probably won't look at you twice. If you have an excellent credit score, your credit card issuer is going to make ga-ga eyes at you.

It sounds unfair, but with over 311 million Americans in the country, lenders and their automated computer systems don't have time to get to know each and every credit card applicant over a cup of steaming espresso.

But if a lender likes your credit score enough to try to get to know the inner you, they still might reject you, or almost as bad, do the equivalent of suggesting you two just remain friends and offer you a warmed-over credit card offer that they offer anyone. If that seems to be happening a lot, it may be time for a financial makeover to attract a better offer from a lender. What should you try to change to make yourself more appealing to a credit card issuer? Several things. To wit:

Your lifestyle. We aren't making judgments, but if you've had six jobs in the last two years, and eight months of that period you were unemployed because you were unicycling across the country, a credit card issuer is probably not going to think too highly of your credit worthiness. Even if you explain everything to customer service.

That said, there are always exceptions, says Matt Hackett, an underwriting manager for Equity Now, a direct mortgage lender.

"If somebody has had six jobs in the last two years but is moving up — with a better salary each time — that's not a bad thing," Hackett says. "But if they're making less, or even just moving sideways, managing to stay employed but not holding down a job for a long period of time, that could mean that they're a bad credit risk."

He says that typically, if there has been a move downward, a lender still likes to see that a borrower has been at a job for two years.

Your paycheck. If it's paltry, credit cards will offer you a smaller credit limit. It's just that sad fact of life.

Your financial history. You may have a pretty good credit score, but a sparse credit history. Maybe you're in your early 20s and haven't had much time to have a history with credit cards or to pay off a car and show that you can make a major purchase and see it through.Perhaps you're recently divorced, and your husband's name was on all of the credit cards, and so you simply don't have much credit. That could be a strike against you, in which case you should apply for cards that are more middle of the road, and not chase the absolute best credit card companies until you've proven yourself a little more.

Your debt. You might have an excellent credit history in which you pay everything on time, and even more than the minimum payments. But if you have massive amounts of debt, credit card companies may not be eager to add to that. "It's best to keep your credit card debt under 30 percent," advises Tracy Becker, president and founder of North Shore Advisory, a New York-based credit restoration and education company.

Your history with the credit card. If you're asking for better terms, and you're denied, Becker says that it may be because your plastic is hidden in your wallet and never sees the light of day.

Becker, who says she has 10 credit cards, has a theory. She notes that every time she hasn't used a credit card for, say, a year and hasn't carried any revolving debt, but decides she may use it and asks for a lower interest rate, she is denied. But on a card that she routinely pays off the monthly balance and occasionally carries a little debt for, say, six months, the issuer has obliged when she's asked for a lower interest rate. "If you never carry a balance, they're not even charging you interest, so why should they bother?" Becker reasons.

If that's true, and it seems logical, it's an unusual reason for being denied. Your credit card may be rejecting you because it feels you're the one who just isn't that into it.

Published 12/22/11 (Modified 07/09/14)


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