What to do when your credit card application is denied

If you’re applying for credit cards and getting repeated denials, you might be wondering what’s going on. Thanks to legislation passed in 1970, credit issuers are required to tell you exactly why they declined your credit card application — so if you wait a week or so, you’ll get a letter explaining exactly why an issuer rejected your application.

Of course, just because you’ve read your adverse action letter doesn’t mean you’ve had all of your questions answered. Did getting denied for a credit card hurt your credit score? Can you be denied for a secured credit card? And how can you improve your odds of getting approved?

We take a look at what you can do after a credit card application is denied — so you can go from “credit card denied” to “credit card accepted.”

Why you were denied — and next steps to take

When you apply for a credit card, it can take only a few minutes to learn whether you’ve been approved or denied — but it can take up to two weeks to learn why your credit card application was denied. The Fair Credit Reporting Act provides consumer credit protections that include a requirement for issuers to tell you why your application was rejected. This document is called an adverse action notice or adverse action letter, and you can expect it to arrive between seven and 10 business days after your rejection.

Here are the most common reasons why credit card applications are denied and steps you can take to position yourself for future approval:

Your credit score is too low

Credit cards are often denied because the applicant’s credit score is too low. Among those with poor credit who applied for a new loan or financial product since March of 2022, 73 percent were denied, according to a credit denials survey by Bankrate. In contrast, only 29 percent of those with excellent credit who applied for a new loan or financial product within the same period were denied.

While this data includes more than just credit cards when talking about financial products, it’s a good illustration of how hard it could be to get approved with poor credit. Each credit card in particular requires a minimum credit score range — and if your credit score is not high enough to fall within that range, the lender might deny your credit card application.

What you can do about it

Before you apply for your next credit card, check your credit score. Know where you fall within the FICO and VantageScore credit score ranges — this will give you an idea as to whether a future creditor might consider your credit to be bad, fair, good or excellent.

Once you know your credit score, compare credit cards designed for applicants within that credit range. Those cards will give you a higher chance of getting approved than cards outside of your range. You can start by checking out Bankrate’s choices of:

• Best credit cards for bad credit
• Best credit cards for fair credit
• Best credit cards for good credit
• Best credit cards for excellent credit

As you research new cards, take the  opportunity to improve your credit score as best you can while you’re at it. You can improve your score by staying on top of payments owed on existing credit accounts, lowering your credit utilization rate and avoiding applications for new lines of credit, among other actions.

Your income is too low

In many cases, you’re required to report your income and any monthly housing payment on your credit card application. After reviewing this information, a creditor or lenders may decide that your income is too low to extend more credit. While people can use credit responsibly at all income levels, a credit card issuer may consider low income to be too much of a risk, especially when combined with high rent or mortgage payments.

What you can do about it

Being denied a credit card over income can have harsh effects on how you view your finances. According to Bankrate’s credit denial survey, 89 percent of those making under $40,000 a year who were recently denied a loan or financial product were likely to report that the denial hurt their financial outlook. This includes feeling more stressed about finances, as well as feeling forced to borrow money from friends and family or delay major financial milestones.

Your income can affect your approval odds for a new credit card, but it isn’t always clear what a lender considers as part of your income. You can typically use the following as sources of income on a credit card application:

If you’re a college student or someone working only part-time, you may find it difficult to get approved for a credit card. In that case, consider applying for a student credit card or a secured credit card. If possible, you can also become an authorized user on a loved one’s card. Both secured credit cards and student credit cards are great tools to build strong financial habits. Plus, most credit cards designed with students in mind don’t require an extensive credit history.

You have a negative credit history

If you’ve missed a lot of credit card payments recently or have had run-ins with debt collectors in the past, a lender might not want to issue you a new line of credit. People with many negative marks on their credit reports — whether due to missed payments, collections, foreclosure or bankruptcy — might find it harder to open new credit cards.

What you can do about it

You can’t erase late payments or other common credit card pitfalls from your credit report, unfortunately. But, if you can prioritize rebuilding your credit, you may be able to find a credit card for people with bad credit — or a card for average credit — that you’d qualify for.

Some of these cards are secured credit cards, while others are standard credit cards that don’t require a security deposit. These cards tend to have low credit limits and high interest rates, but you can also find cards that offer cash back rewards. The best secured credit cards allow you to graduate to an unsecured card after paying your statement balance on time consistently for a set period.

You’ve applied for too much new credit

If you apply for a lot of new credit at once, lenders might consider you a credit risk. Plus, every new card application generates a hard credit inquiry that can lower your credit score.

What you can do about it

It’s a good idea to wait three to six months between credit card applications. Otherwise, it might look like you’re applying for too much new credit in a short period of time.

You picked a card that has application restrictions

Many credit issuers have application restrictions to prevent credit card churning and other card misuse — and not everyone is aware of how these restrictions work.

• Chase: If you apply for a Chase credit card, you may be subject to the Chase 5/24 rule — if you’ve opened five new credit cards in the past 24 months with any issuer, you won’t likely see approval for a new Chase card.
• Bank of America: If you’re interested in a Bank of America credit card, know about Bank of America’s 2/3/4 rule — cardholders are limited to two Bank of America applications per month, three Bank of America applications per 12 months and four Bank of America applications per 24 months.

What you can do about it

Before you apply for your next credit card, learn whether the issuer has any application restrictions that might affect your application.

Can getting denied for a credit card hurt your credit score?

No, a credit card denial does not affect your credit. However, you might see a slight drop in your credit score due to the hard credit inquiry associated with your credit card application. Every time you apply for new credit, a lender conducts an inquiry into your credit history — and each of those hard credit pulls can lower your credit score by a few points.

How to get approved for your next credit card

Here are five ways to increase the odds that your next credit card application will be accepted:

1. Use your current credit cards responsibly

The best way to get approved for your next credit card is to use your current credit cards responsibly. Make on-time payments on every card, and try to keep your credit card balances below 30 percent of your available credit to maintain a good credit utilization ratio. This ratio is a factor that accounts for 30 percent of your credit score.

If you’re having trouble making on-time payments on your credit cards, use mobile alerts to remind you of when your payments are due — or set up automatic payments. If you’re having trouble paying off your credit card balances, consider a balance transfer. The best balance transfer cards offer between 15 and 21 months of 0 percent introductory APR on transferred balances, during which you can pay down your balances without accruing interest.

2. Build your credit score

In addition to using your credit cards responsibly, put a little extra focus into building your credit — especially if your credit score is poor or fair. Working your way up to a good credit score is one of the best things you can do for your financial health, so take some time to learn what goes into your credit score and what you need to do to get it as high as possible.

To build or rebuild your credit score, keep your credit card balances as low as possible — or pay them off in full. Your payment history makes up 35 percent of your credit score, and so you’ll want to make your credit card payments on time, every time. Avoid unnecessary credit inquiries, and don’t apply for too much new credit within a short period of time.

3. Monitor your credit reports

As you work on building your credit and using your current credit accounts responsibly, don’t forget to check your credit reports regularly at Annualcreditreport.com — or sign up for a free credit monitoring service that checks them for you.

There are two good reasons to monitor your credit reports. First, you’ll understand how your day-to-day credit activity affects both your credit history and your credit score. You may be surprised to learn, for example, that putting a big purchase on your credit card can lower your credit score for a little while. (Don’t worry, paying off your balance can bring your credit score back up again.)

Another good reason to monitor your credit reports is to quickly spot and report errors. Millions of Americans have errors on their credit reports, so make sure all your credit report information is accurate. Learn how to read your credit report, and make sure you know how to dispute credit report errors, just in case.

4. Get your timing right

The best time to apply for a credit card is when you’re more certain a potential lender or creditor won’t see you as a risk — and when you’re financially ready. That means waiting three to six months after your last card application and taking the steps to improve your credit first, as well as checking to see whether the credit card issuer has any application restrictions that might affect you.

Most major card issuers allow you to check for prequalified offers on select cards with information like your name and Social Security number — without a hard pull on your credit. This can help you better understand where you stand before applying.

5. Choose the best credit card for you

When you’re ready to apply for your next credit card, take some time to compare top credit cards so you understand your options and can choose the best fit for your budget, spending habits and financial goals. Some tips for finding the right card include to:

• Look for a good fit for someone with your credit score. Use our CardMatch tool to see preapproval odds with trusted issuers.
• Consider cards that complement your spending habits. If you’re not sure what type of card would be right for you, use our Spender Type tool to help you compare options that match your habits and financial goals.

What to do about repeat card denials

If you’re consistently getting denied for credit cards, read your adverse action notices to learn why your applications are being turned down. Look for common themes, like “credit score too low,” and address them in earnest.

If you’re consistently getting denied for credit cards, you might not have a strong enough credit history to get approved for a new credit account. Consider applying for a secured credit card — which can help you build your credit with a credit card that gives you a small line of credit in exchange for a refundable security deposit. You can still be denied a secured card if your income is too low or if you have too many derogatory marks on your credit reports, so approval isn’t guaranteed — but it’s worth a try.

You might also consider becoming an authorized user on a partner or relative’s credit card. This alternative gives you the opportunity to piggyback off someone else’s positive credit history, and might help improve your chances of acceptance for a credit card in the future.

The bottom line

The more you know about why credit cards are denied and what you can do to improve your chances of getting accepted, the better chance you’ll have of choosing the right credit card for your credit score, income level and financial goals. If your last credit card application was denied, use this information to make your next credit card application as strong as possible. It’s how you can go from getting your credit card application denied to getting it accepted.