When you're denied credit, the lender has to state the reason for the denial. Denial because of a high debt ratio means that too much of your monthly income is going toward debt payments. When denied credit you have the right to get a free copy of your credit report from the credit bureau(s) the lender used in making the lending decision. Bankrate provides contact information for the three main credit bureaus in its Guide to Managing Credit.

You say that this small bank loan is the only open credit account on your credit report. If that is the case, and you don't have any late payments on your credit report, it's odd that you can't get credit approval for a new credit account.

Married couples have separate credit reports, but both reports will show joint obligations. If you are an authorized user on your husband's credit cards, then that payment history will also show up on your credit report. If the mortgage is in both of your names, or you live in a community property state, then that too will show up on your credit report.

Paying off the bank loan will increase your credit score and free up some debt capacity by lowering your debt ratios. What could be the real holdup, however, is if you are at or near the limit on your credit cards. Applying for a new card when you're maxed out on the old cards is a red flag to the new lender that you aren't able to manage your existing debt load.

Multiple credit denials won't help things either. Every time you apply for credit, the credit application shows up and stays on your credit report for two years. A string of applications with no new accounts makes it look like you're desperate for credit. Lenders don't like lending to people who appear desperate. Take a breather and wait a few months before applying for another card. When you're ready, then shop cards on Bankrate using its credit card search feature.

-- Posted: April 13, 2004