Tempting credit card offers are everywhere — from closed-loop store cards offering a bevy of rewards to the most elite credit cards on the planet. But just because you desire to add a particular credit card to your wallet doesn’t mean you can. First, you have to apply. This holds true even if you receive a preapproval offer for a credit card. In this instance, the credit card company only thinks you will qualify, and you’re still required to fill out an application.
Once you apply for a credit card, you have to be approved. Depending on various factors, you may not be. If you’ve recently applied for a credit card that you didn’t get or you’re thinking about applying but aren’t sure if you’ll be approved, here are some reasons why a credit card application can be denied and what to do if it happens to you.
You Don’t Have Enough Income
Make sure you have some stream of income coming in.
“Most credit card issuers have a minimum income requirement for their credit cards, though it varies by issuer,” said Mike Pearson, credit expert and founder of the personal finance site Credit Takeoff. “If you don’t have an income, or you don’t make enough money for a particular credit card, your application could be denied. Here’s the even trickier part: card issuers generally don’t publish any minimum income requirements for their credit cards on their websites, so it can be hard to know what income you need. One tip is to search on Reddit and other personal finance forums for the card you are interested in to see if any other users are discussing the income they had to get approved for the card. This will give you general guidance for what income you need to get approved for your card.”
You Have Limited Credit History
Keep an eye on your credit report. The Federal Trade Commission states that you are entitled to a free credit report annually from the three credit bureaus — Equifax, TransUnion and Experian.
“A very common reason why often people’s first credit application is denied is because they have a limited credit history,” said Scott Nelson of MoneyNerd. “It’s hard for a creditor to judge how likely you are to pay back credit if you have no history. To fix this, before applying for any major loan, take out a credit builder card.”
If you are interested in more tips on building your credit history, here are 5 of the best ways.
Your Credit Card Balances Are Too High
If you’ve got a relatively high credit balance in comparison to what your spending limit is, that can have a negative effect.
“A high credit utilization, which is the amount of revolving debt you’re using divided by the amount of debt available, is a common reason why credit card applications get denied,” said R.J. Weiss, CFP and founder of The Ways to Wealth. “To improve your credit utilization ratio, your options are to pay off existing debt or increase the amount of debt you have available to borrow. The latter can be more easily done by contacting your existing credit card company and asking for a rate increase. A good rule of thumb is keeping your credit utilization rate below 30%.”
You Have a Bankruptcy or Other Negatives on Your Credit Report
Have you got a bankruptcy? That can be seen as a negative, but
“Bankruptcy stays on your credit report for seven to 10 years, and is definitely a red flag to credit card companies,” said Jenna Vasquez, formerly a senior finance editor at BestCompany and now content manager at Pattern. “Especially if you recently declared bankruptcy, credit card companies will likely deny you a credit card, as your recent financial history has been a little rocky. The best thing to do in this situation is to patiently start to build your credit again. Pretend you have hit the reset button, and after some time has passed since you declared bankruptcy, talk to your bank about getting a starter credit card with a very low credit limit. You won’t see changes to your credit score overnight, but in the world of credit, time is your friend, and you’ll start to get back on your feet financially and build your credit little by little.”
Other negative information on your credit report, such as payments that are late by 30 days or more or charge-offs, such as failing to make your payments six months in a row, can reflect poorly on you as a credit user, hurt your credit score and cause your application to be denied. Unfortunately, delinquencies and charge-offs can stay on your credit report for seven years. The good news is that their impact can lessen over time. While waiting for them to drop off, practice good credit habits such as always paying your credit and loan payments on time to show responsible use of credit.
Your Credit Report Has Too Many Hard Inquiries
“If a bank sees you’ve been applying for a lot of other credit cards or you’ve had too many inquiries, it’s a sign that you’re trying to seek credit — and fast,” said Alex Miller, founder and CEO of UpgradedPoints. “People in this category tend to misuse that credit and can’t handle it well, and the bank is likely to deny a credit card. The solution for this is to wait to apply for the next credit card; let several months elapse before applying.”
Note, however, that if you’re making a big purchase, keep hard inquiries around the same time frame — such as when you’re applying for a car loan or a mortgage — to minimize the impact. Why is that? Multiples of the same type are seen as one inquiry. How long is that time? Usually around 15 to 45 days, give or take, according to Equifax.
Your Credit Report Has Errors
A credit card denial can happen through no fault of your own, such as errors on your credit report. Common errors are unrecognized accounts, unrecognized debts reported to collections or a payment wrongly reported as late or missed. You can get your free TransUnion credit score and $1 credit report from GOFreeCredit.com. If you find an error, here’s advice on how to fix it:
“Contact both the credit bureau and organization that provided the information to the bureau,” said John Corraro, a financial planner for Barnum Financial Group. “Both are responsible for correcting inaccurate or incomplete information in your report. Let them know what information you believe is inaccurate. Credit bureaus must investigate the item(s) — usually within 30 days. Include copies of documents that support your position.”
How To Move Forward
If you’ve been denied a credit card, start by determining the reason. A quick call to the credit card issuer might illuminate the problem. For example, you might learn the credit card issuer is looking for cardholders with a higher income. In that case, you might choose to apply for a different credit card. But if your application was denied due to a low credit score, it might be time to work on building your score.
Sarah Sharkey contributed to the reporting for this article.
Last updated: April 6, 2023
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- FTC. "Free Credit Reports"
- Capital One. 2022. "Why Aren’t You Getting Approved for a Credit Card?"
- Equifax. "Understanding Hard Inquiries on Your Credit Report."
- Capital One. 2021. "Does Getting Denied for a Credit Card Hurt Your Score?"