In this article:
- 1. You Have a Low Credit Score
- 2. You Have a Limited Credit History
- 3. You Have Insufficient Income
- 4. You Have a History of Late Payments
- 5. You Have High Debt
- 6. You’re Too Young
- 7. Your Credit Report Is Frozen
- 8. You Have a Recent Bankruptcy
- 9. You Have Too Many Recent Credit Inquiries
- 10. You Didn't Fill Out the Application Correctly
- Does Getting Denied for a Credit Card Hurt Your Credit Score?
- What to Do if Your Credit Card Application Is Denied
Getting denied on a credit card application can be a demoralizing experience, but it's nothing you should take personally. There are a variety of reasons why credit card issuers deny applications, and understanding what the reasons are for your specific situation can help you take the right steps to get approved the next time you apply.
Creditors are required by law to provide you with an adverse action notice if your application was denied due to something found in your credit report. This makes it easy for you to know what you need to do next time around. Here are some of the top reasons why your application may have been turned down.
1. You Have a Low Credit Score
Credit cards are available for consumers across the credit spectrum, but many have stricter credit score requirements than others. With most of the top rewards credit cards, for instance, you may need good or even excellent credit to get approved.
Each lender has its own criteria for what constitutes good or excellent credit, but according to FICO, good credit starts at a 670 FICO® Score☉ .
Check your credit to find out where you stand and work on areas that need improvement. Also, consider using a tool like Experian CreditMatch™ to get card offers based on your credit profile.
2. You Have a Limited Credit History
If you're fairly new to credit, it can be challenging to get approved for some credit cards. While this doesn't seem fair—after all, you can't build credit without getting approved for and using credit accounts—it comes down to uncertainty for lenders.
Having a limited credit history doesn't mean you're not trustworthy. However, it likely means the card issuer doesn't have enough information on how you manage credit to determine whether you'd be a good customer.
Consider applying for a credit card that's designed to help people build credit, or with a card issuer that uses alternative credit data like income and expenses to evaluate credit applications.
3. You Have Insufficient Income
Card issuers typically don't disclose how much money you have to earn to get approved. But if you're a college student or only working part time, it could prove difficult to convince a credit card company that you have the ability to repay all debts you charge to the card.
Understand what counts as income on a credit application to ensure that you're not leaving anything out.
4. You Have a History of Late Payments
Your payment history is the most important factor in your FICO® Score, so if you've missed even one payment by 30 days or more, it could damage your credit score and make it hard to get approved for certain credit cards.
Unfortunately, you can't get rid of late payments unless the information is inaccurate. But some secured credit cards and other cards for bad or fair credit could still be accessible as you work to rebuild your credit score.
5. You Have High Debt
The more debt you have, the harder it can be to keep up with all of your monthly payments. And because credit card issuers prioritize on-time payments, having too much debt relative to your income can hurt your odds of getting a new credit card.
If you have high credit card balances or a lot of debt payments in general, consider paying down your credit cards before you apply again.
6. You're Too Young
You must be at least 18 years old to get a credit card on your own. If you're younger than that, consider asking a parent to add you as an authorized user on one of their credit cards. It'll help build your credit and give you a card you can use before you apply for another card of your own.
7. Your Credit Report Is Frozen
Credit card issuers use your credit reports to determine whether you're eligible to open a new account. If you've frozen your credit reports to stop identity thieves from accessing or using your information to open fraudulent accounts, you'll need to unfreeze them before you submit an application for yourself.
8. You Have a Recent Bankruptcy
As previously mentioned, payment history is the most influential component of your FICO® Score, and filing bankruptcy indicates that you didn't pay your debts as originally agreed.
If your bankruptcy is still open, it can be incredibly difficult to get approved for a new credit card because you could technically include it in the bankruptcy. Even if your bankruptcy has been discharged, it may still take a while and some positive credit history before you'll qualify for certain cards.
Fortunately, there are some credit cards that are still available if you have a bankruptcy on your credit report, such as a secured credit card. Keep in mind, though, that you may need to provide a security deposit or pay high fees and interest.
9. You Have Too Many Recent Credit Inquiries
Each additional hard inquiry on your credit report doesn't impact your credit score by much. But if you have multiple credit inquiries in a short period and they weren't for rate-shopping a mortgage, auto loan or student loan, that could indicate that you're having a hard time managing your finances without debt.
In that event, you may need to wait until some inquiries fall off your credit report before you apply again. Hard inquiries remain on your report for two years but won't affect your credit score for that long.
10. You Didn't Fill Out the Application Correctly
In some cases, applicants who have been denied may have accidentally entered incorrect information on their credit application. If this happens and it causes you to be viewed in a more negative light, you could potentially fix the error and request that the card issuer reconsider your application.
Does Getting Denied for a Credit Card Hurt Your Credit Score?
Getting denied doesn't directly hurt your credit, but the hard inquiry from applying can temporarily lower your credit score by a few points. And remember, if you apply for multiple credit cards in a short period in the hopes that one card issuer will approve you, that can have a compounding negative effect on your score.
In most cases, though, your credit score will bounce back in a few months to a year after a single inquiry.
What to Do if Your Credit Card Application Is Denied
If your credit card application has been rejected, it's important to avoid applying for another card until you've received the adverse action letter in the mail to find out the reasons for the denial. In some cases, you may also be able to contact the card issuer directly to get the information.
Once you know why you were denied, take steps to address the issue. For example, you may need to increase your credit score, pay down other credit card balances, get caught up on past-due payments or unfreeze your credit reports.
One relatively easy way to improve your credit score is through Experian Boost™† . With this tool, you can get credit for on-time payments you've made with your phone, utility and certain subscription services. Simply connect your financial accounts and choose which payments you want to have added to your Experian credit file. If the new additions can increase your score, you'll see the results immediately.
No matter why you were denied for a credit card, be proactive about improving your credit and financial situation so that the next time you apply for the card you want, your odds of getting approved will be higher.