Debunking Credit Card Myths: Can I Do Anything if My Card Application Isn't Approved?

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We discuss travel rewards credit cards quite frequently here at TPG. These cards allow you to earn top sign-up bonuses and then give you numerous bonus categories for everyday spending, opening up fantastic redemptions like premium-class flights and luxurious hotel rooms. However, there are a number of misconceptions out there when it comes to credit cards, so today I’ll continue our new series that debunks these myths and allows you to begin planning for your next vacation.

Previous entries includes having too many cards, closing a card you don’t use, how permanent of an impact an application has on your score, not paying your balance in full, paying an annual fee, keeping your points when canceling a card and whether annual fees count toward a sign-up bonus. Today I'll shift gears and look at a myth that can prevent you from significantly boosting your account balances.

Myth #8: There's nothing you can do if your credit card application isn't immediately approved.

Those of you who have been involved in the hobby for a while know there's a certain high that accompanies getting approved for a new credit card (or maybe it's just me). When you submit an application, those 20-30 seconds of processing can seem like an eternity, but when that immediate approval comes through, your mind immediately starts thinking about how you're going to redeem those bonus points or miles.

Unfortunately, there's a different page that can come up which will bring the exact opposite reaction, the ying to an immediate approval's yang (if you will). That page looks something like this:

Now, in some cases this isn't an actual denial. The above screenshot actually came from my application for the Citi Prestige Card last August, but this wound up being a glitch in the system, and I was approved just a few days later.

In other cases, you can fall into the limbo known as a "pending" decision. In this case, the issuer can't immediately approve you based on the information on your application and the inquiry it ran on your credit report. However, all is not lost in these situations. In some cases, I've received an email a few days after getting the "pending" notice letting me know that I have been approved. At least one other time, the new card simply showed up in my online account (and then arrived in the mail a few days later).

That being said, there's an important step you can take if you've been denied for a card or if you want to help ensure that a "pending" application turns into an approved application: call the issuer's reconsideration line.

Every bank that issues credit cards has automatic systems for processing online credit card applications, and these systems have a variety of factors that they consider. A large chunk of this is your credit score (which includes details like your payment history and credit utilization rate), but banks will also look at the income you reported on your application and the relationship you have with them. If your details fall below the preset thresholds, you won't be automatically approved (and may even get denied). This is where reconsideration comes in, as it allows you to speak to an actual person who may be able to override those systems.

If you're immediately declined for a credit card, I'd generally wait until you receive the formal rejection letter in the mail before calling, as this will outline the reason(s) your application was denied. This will give you a chance to plan your talking points before calling.

On the other hand, if your card goes into "pending" status, there are two schools of thought about calling the reconsideration line. Some feel like you should let the process unfold and then call if your application is eventually denied. They believe that calling preempts the regular review process and could actually hurt your chances. Personally, I belong to the other camp. I have always tried calling a few days after applying, and oftentimes it's as simple as verifying the information I submitted or shifting credit lines from an older card to the new card.

Now, keep in mind that there are cases where this will almost certainly fail. The most prominent example is Chase's 5/24 rule. If you've opened 5 or more new card accounts in the last 24 months, you will almost certainly be declined when you apply for many Chase cards (including the new Chase Sapphire Reserve). In these instances, calling reconsideration generally will get you nowhere.

Nevertheless, in most other situations, it can't hurt to try!

Bottom Line

When you apply for a new card, there are generally three results: approval, denial or "pending" status. While one of those is (obviously) preferred, all hope is not lost if you get either of the other two notices. Calling a reconsideration line and speaking to a customer service agent can go a long way toward turning a non-approval to an approval. Be sure to keep this in mind the next time you aren't immediately approved for a new credit card!

What are your experiences with calling reconsideration?