What does "declined" mean? Is it bad?
November 1, 2011 2:23 PM   Subscribe

Application declined? Did I just inadvertently hurt my credit score?

I'm in the process of moving all of my banking from Wells Fargo to a local credit union. I have two credit cards now; one of which has a $21,000 limit and the other has $15,000. Both have low balances, no late payments, etc. (I intend to get them both completely paid off in the next couple months and then only use the CU one, paying it off each month.)

When I applied for a credit card, the form was prepopulated with a $25,000 limit. I didn't think much of it. I figured that was just a default value and they'd actually give me whatever limit they decided to give me. Today, the CU emailed me that the application had been declined and they were making a counter-offer of $15,000.

I remember reading somewhere that a declined credit card application goes on your credit report, and looks bad. Is that true? If I'd have realized I was risking that, I'd have put in a lower number. Is there some way to... undo?

Thanks a lot.
posted by anonymous to Work & Money (9 answers total) 1 user marked this as a favorite
My ex worked in the field. AFAIK, running your credit will negligibly affect your credit score -- so unless you are getting your credit run a lot, I don't think this will affect anything.
posted by DoubleLune at 2:44 PM on November 1, 2011

Being declined or not does not show up in the report. Running the report is what very slightly makes a negative impact. Doing it once is negligible though. Running tons of checks in a shirt while, like if you applied to a dozen banks because they all rejected you is what would be bad.
posted by Threeway Handshake at 2:46 PM on November 1, 2011

It's actually not declined, they're just offering you a card with a lower limit. Take it. The application and the card will both show up on your report, but the details of the app won't, so it will look exactly like an acceptance. Which it is.
posted by rabbitrabbit at 2:49 PM on November 1, 2011

It may not even count as a rejection. There are many more important things in life to consider than your credit score.
posted by theora55 at 2:55 PM on November 1, 2011

I just had a similar situation happen. While I was not approved for the "default" credit limit, I was approved for a different amount.

My credit score actually went up when the dust settled (having credit available to you whether or not you use it can be a boon to your score, apparently).
posted by erstwhile at 3:12 PM on November 1, 2011

I've seen my credit report and it reports when the score has been viewed but not what is done with it.
posted by zzazazz at 4:03 PM on November 1, 2011

I agree with zzazazz - I just looked at my credit report, and it showed where my credit had been checked, but it did not show when my I had been declined for a credit card.

and theora, while the credit system may be flawed, if you want a loan or mortgage, it's worth paying attention to your credit score
posted by insectosaurus at 6:11 PM on November 1, 2011

Also, check with your credit union--they don't all report to the credit bureaus to the same extent that banks do.
posted by pullayup at 7:20 PM on November 1, 2011

Your credit report does not show credit decisions like that. In pertinent part, it shows inquiries and it shows trade lines. You're fine, don't worry, take the $15,000 credit line.

Optimally, if you will actually charge more than $4,000-$5,000 a month, you might try to negotiate that number upwards. Even though you pay your balance off every month, the balance is still reported to the CRAs. Explain to the CU that you charge (and pay off) x every month, but you don't want to take the (slight, if your overall utilization is low, but you don't have to tell them you know that) score hit for the high utilization and would like a higher credit line, even though you never intend to use that much.

I'm assuming you can talk to a credit analyst who has actual decisionmaking authority and not some lackey who types a number into a computer which then spits out a yes/no. They still may say no, depending on your income relative to your existing credit lines and the length of your file, but there's a decent chance they'll say yes if you explain your reasoning.

insectosaurus, you can add insurance to that list.
posted by wierdo at 7:52 PM on November 1, 2011

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