What to Do if Your Balance Transfer is Denied

March 22, 2019

By Sherry Keyles

Balance transfer cards with a 0% interest period can be a good way to pay off debt and save money on interest. However, requesting a balance transfer does not guarantee it will be approved.

Credit card issuers have strict criteria when assessing applicants for balance transfers, especially for promotional zero-interest offers. They want select customers who they believe are less likely to default on balances. When you apply for a balance transfer card, the card issuer performs a full credit check, reviewing your credit report and credit score.

If your balance transfer is denied, the first thing you need to do is find out why it was not approved. The issuer is required to tell you why your balance transfer was denied.

Understanding why the balance transfer was denied helps you determine how best to proceed in improving the chances of approval in the future.

Reasons Your Balance Transfer Was Denied

There are several reasons a credit card issuer will deny a balance transfer including:

  1. Low credit score: Every issuer has different guidelines for the minimum credit score required for approval. In general, most issuers require good to excellent credit scores for balance transfers. Late payments, high balances on existing accounts, applying for too many credit cards or having a thin credit file can all contribute to lowering your credit score. You may have thin credit.If you’ve only been using credit a short time or have just one or two active credit accounts.
  2. Excessive transfer requests: Frequently transferring balances among credit cards or applying for several new cards in a relatively short period of time can be red flags for credit card issuers. If they think you are desperate for credit or don’t have control of your finances, credit card companies are reluctant to approve you for a new account.
  3. Applying for a balance transfer card with the same card issuer:  Most credit card issuers will not allow you to transfer a balance to a card they issue. You will need to find a card at another issuer.
  4. Not enough credit available to complete the transfer: The transfer will be declined if your credit line is too small. Checking your available credit beforehand can give you an idea of how much you can reasonably expect to be able to transfer.
  5. Balance transfer request exceeds your credit line: Banks can limit transfer requests to a set dollar amount or percentage of your credit line. If your request is over the limit, the balance transfer will be declined. Some creditors will process partial balance transfers up to the credit line. This could mean you could have the balance split between two accounts.

Can the Decision be Reversed?

Under extenuating circumstances, the issuer may reverse the decision if you provide specific evidence. The chance of reversal will depend on why you were denied.  Only ask for a reversal if you are confident your specific circumstances warrant the issuer to reconsider.

  • Poor Credit - Offer justification for the negative marks on your credit on your credit report.
  • Low Income - Demonstrate you have other sources of income not reported on your initial application.
  • Lack of Available Credit - Resubmit your original request using a smaller dollar amount, which will require you to either pay off any remaining balance on the first card or apply for a second balance transfer card elsewhere.

How to Increase Chances of Balance Transfer Approval

Once you understand why the transfer was not allowed you can work on improving your credit.  Following the following tips can help maximize the chances your balance transfer will be approved going forward:

  • Check your credit score: Most credit cards offer free monthly access to your credit score or you can request a free credit report from  the three credit bureaus. Your FICO score helps determine if you qualify for the credit card you want to use to initiate the balance transfer.
  • Fix credit reporting errors: Thoroughly review your credit report to ensure its accurate and up-to-date. Report any errors or inaccuracies to the credit bureau reporting it. Credit bureaus are required to investigate and either correct or remove the information, which may improve your score.
  • Review your credit limit: Ensure your card can accommodate a balance transfer.
  • Prove your creditworthiness: Improve your credit score by practicing good credit habits.  Pay your bills on time, keep your credit balances low and use different types of credit.
  • Limit credit card applications: While you may be tempted, don’t immediately apply for another balance transfer offer. Additional applications can affect your credit. Too many credit inquiries in a short time can take 5-10 points off your credit score. Focus on improving your credit before applying again. You may be better off improving your credit before applying again.
  • Do your research: Once you get your credit on the right track, do your homework before applying for another balance transfer offer. Consider the credit you need to qualify for the card and how much you can transfer at one time. Also, review the balance transfer fees and APR terms to make sure you’re getting the best deal possible.

Having a balance transfer declined can be disturbing but it doesn’t mean you will never be able to execute a balance transfer. Knowing the reasons an issuer might deny a balance transfer can put you in a better position for the balance transfer to be approved next time.

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