Most consumers have gotten used to using their credit cards for everyday purchases
and are shocked when a charge they are attempting is denied. Many times this can
happen because you are approaching your credit limit but there are a number of
other reasons you may have been refused credit. Knowing what these are will help
you plan better and avoid this type of embarrassment in the
future.
Unusual Purchases
Credit card companies track your spending in
detail and build a file on the typical use of your card. They do this primarily
to help them spot fraudulent activity on the card quickly so they can limit
their losses. Even though you are not responsible for the purchases you didn't
make, the lender still needs to try and decline ones they suspect are not
legitimate. In their haste to minimize these losses they may occasionally deny a
real charge you want to make. This usually happens when you are trying to use
the card for an unusually large purchase. If your typical charges all fall under
a certain limit and then you try to use the card to make a major purchase, it
may be declined by the lender. To avoid this problem you should always call the
credit card company} to alert them to the possibility of a larger than normal
charge on the card before heading out to the store
Trying to use a credit card out of your normal purchasing area can
also result in you being refused credit. This can happen if you are booking a
trip, and a foreign hotel places a charge on the card for a reservation. The
credit card company} may flag this as fraud and deny the charge. This could even
happen if you were traveling to another town near your home and did more than
your usual amount of shopping in a day. Because the credit card company} may
view this use as unusual, they could deny the charges. The formula these lenders
use for detecting fraud varies widely between companies so it's hard to predict
these thresholds. The best thing you can do is contact the lender before making
these purchases to alert them that you may be shopping with the
card.
Pending Authorization
Some merchants will place a temporary hold
on your card for the rental of a car or hotel room. When you check out of the
room, they will put through the actual charges for your stay. The temporary hold
they put on the card was simply done to make sure you'd have enough credit left
on the card to satisfy your bill. The challenge is that this hold might take a
few days to age off the card and will count against your credit limit. If you
are doing a lot of traveling, these holds may force you close enough to your
limit to have a charge denied. The best thing you can do it contact your lender
and let them know you'll be traveling so that you don't suffer the embarrassment
of having your card refused at the front desk.
Changes to Your Credit
Report
You credit report is the file that all lenders used to qualify you for
credit. When you are first issued a credit card, this file was used to make the
determination as to your limits and interest rate for the card. Any changes to
this report may affect the credit cards you already have and these changes can
happen quickly. If you have something reported by one of your lenders that
negatively affects your credit score, other lenders may lower your limits or
even cancel your card. All of your lenders are alerted when these changes take
place and may even make these changes without alerting you beforehand. This
means you may be out to dinner and refused credit when you attempt to pay for
the meal using one of your cards. While this can be embarrassing, correcting the
problems on your credit report will allow you to eventually use the card
again.
Late or Missing Payments
Lenders are very serious about
receiving their payments on time and missing even one payment date can have a
devastating impact on all of your accounts. Because all of you lenders report
these late payments to the same credit agencies, they will know immediately
about any late payment on another account. They may decide to immediately lower
your limit on the credit card they issued you, even if you are current on your
payment to them. Avoiding this problem is a simple matter of making your payment
on time to all of your creditors.
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