With online and mobile banking becoming increasingly popular, most credit card and retail companies have switched to automated application systems that allow them to access and review financial information in a few minutes or less. Because of this automation, you may be wondering how can you cancel a credit card application?
Here, you’ll learn all about how credit card applications work and what your cancelation options are should the need arise. If you can’t cancel your credit card application, don’t worry, you may still be able to take advantage of some awesome benefits with your new line of credit!
Why You May Want To Cancel a Credit Card Application
Depending on their financial situation, there are several reasons why someone may want to cancel a credit card application from going through.
Too Many Hard Inquiries
Every time you complete an application for a credit card, loan, or another line of credit, the financial institution you are inquiring with will request an official credit report. When lenders request official credit reports, this is referred to as hard credit pull—having too many hard inquiries on your credit profile may signal to lenders that you are financially irresponsible and are, therefore, less likely to grant approval for credit cards or other funding opportunities. If you have recently been applying for loans or other forms of funding, now may not be the best time to submit a new credit card application.
If you have been the victim of identity theft or fraud, you most likely placed a freeze on most of your financial accounts. During this time, lenders and financial institutions will be locked out of your accounts and may not be able to view your data. Fraud alerts on your credit report may also prevent credit card issuers from confirming your identity and processing your application, which may then result in its cancellation.
Credit Limit Increases
If you already have a credit card, see if you can get a credit limit increase before applying for a brand-new card. You may get a limit increase from your credit card issuer by showing that your credit score has improved, your income has increased, or that you have paid off a significant amount of debt. If one or more of these circumstances currently applies to you, you may not have to apply for a new credit card in order to get the funding you need.
Instead of relying on getting a new credit card, you may want to try other forms of funding to help you out with your finances. You may be able to save money on interest rates, get a higher funding amount, or receive better payback terms with other funding options like personal loans or bad credit installment loans.
How To Cancel an Application With a Credit Card Company
Unfortunately, it is unlikely you will be able to cancel a credit card application after officially submitting all the required documentation. If you are currently going through the process, however, all you need to do to cancel your application is to stop. If you are in the middle of a paper or online credit card application, simply stop filling out the form and either close out of your web browser or properly destroy and throw away any paperwork you’ve completed.
But, if you have already submitted your application, you’ll have to act fast. You can call the credit card issuer’s customer service line and tell a representative that you need help canceling a credit card application. If your application happens to be still pending or under review, you may be able to cancel the application. In this case, make sure you get written confirmation of the cancellation from the credit card company to ensure a hard credit check doesn’t get added unnecessarily to your credit report.
What To Do if You Can’t Cancel Your Credit Card Application
If your credit application has already gone through and you can’t cancel it, you have a few options available. It’s highly recommended that you do not cancel your credit card account unless absolutely necessary. Once credit card companies process your application, your approved credit limit is added to your credit profile, where it will then be reported on in future credit reports. Canceling the account may cause your credit utilization ratio to go down and lower your future credit scores.
Your credit utilization ratio refers to how much available credit you have compared to how much you are currently using. For example, say you have one credit card with a credit limit of $1,000, and you are carrying a balance of $500. At this time, your credit utilization rate would be 50%. If you acquired a new credit card with a limit of $1,000 and carried no balance, your credit utilization would drop to 25% since $500 is 25% of the combined $2,000 credit limit from both cards.
Keep Your Card but Don’t Use It
Instead of canceling a credit card you don’t need, just keep the card and don’t use it. If you don’t use your credit card, you won’t have to worry about making monthly payments or accumulating interest charges. In fact, you may not have to spend any money on your credit card at all unless your card comes with extra charges, such as an annual fee.
Switch Credit Cards
You can also check with your credit card company if you are able to switch credit cards. For example, say you saw a credit card offer that had better interest rates, no annual fee, or another rewards program you would prefer. In this case, you may ask your credit card issuer if they can switch your account to the other card. This may be an extremely simple adjustment, especially if the card you’d like to switch to is with the same issuer.
Do Credit Card Applications Go On Your Credit Report?
Yes, credit card applications are included on your credit report. Applications for credit cards, monthly installment loans, online payday loans, auto title loans, and other lines of credit are all included in a consumer’s credit history report. Credit card applications, if approved, will also affect your credit utilization ratio.
Other financial information that goes on your credit report besides credit applications are:
- Payment history.
- Credit mix.
- Length of credit history.
- Current debts and income.
Pros and Cons of Working With a Credit Card Issuer
Before you even start the application process, consider the pros and cons of owning a credit card. Some benefits you may enjoy from having a credit card are:
- You don’t have to pay back your purchases in full right away – Most credit cards do not require borrowers to pay back their monthly balances in full at the end of each billing cycle. Instead, issuers usually only require borrowers to make minimum monthly payments.
- You can make purchases even when you are short on cash – If you don’t have sufficient funds in your checking account to use your debit card, you can use your credit card to make purchases.
- Rewards to utilize – Many credit card programs offer borrowers bonuses like cash back, travel points, or other rewards. Depending on how often you use your credit card, you could earn a few hundred dollars or more a year in credit card bonuses.
- Pay interest only on what you spend – When you get a loan, lenders charge interest on the entire loan amount, regardless of how much of it the borrower spends. Credit cards, on the other hand, only charge borrowers interest on the amount of money they spend, not their entire credit limit.
There are also some potential disadvantages that can come with credit cards that all borrowers should be aware of.
- Easy to accumulate massive credit card debt – Since credit cards are a revolving line of credit, it can be easy for borrowers not to use their credit card responsibly and to get into the habit of relying on their available credit to make regular purchases. While spending on credit can be extremely convenient, it’s also easy to fall into a deep hole of debt if you are not clearing out your balance regularly as well.
- High-interest rates if you carry a balance – Credit cards can also have high-interest rates that make paying off a high balance difficult. Depending on how much your balance is, interest rates may cause your monthly minimum to be insufficient when it comes to paying off your overall balance.
The Bottom Line: Can Canceling a Credit Card Hurt Your Credit Score?
Keep in mind that canceling a credit card will affect your credit utilization ratio, especially if the card you are canceling is your only credit card. But, sometimes, it is in your best interest financially to cancel a credit card. To keep your credit score intact after canceling a credit card, make sure you stay on top of your payment history and avoid applying for unnecessary credit in the future!
Can I Cancel a Credit Card Application? | Experian
How To Cancel A Credit Card | Forbes Advisor