Part of Applying for a Credit Card Series
What to do when your credit card application is denied
If you keep turning in credit card applications only to get denied over and over, you might be wondering what’s going on. Thanks to legislation passed in the 1970s, 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 your application was rejected.
Of course, just because you’ve read your adverse action letter doesn’t mean you still don’t have questions. Does getting denied for a credit card hurt your credit score? Can you be denied for a secured credit card? How can you improve your odds of getting accepted?
Let’s take a close look at what you can do after your credit card application is declined—so you can go from “credit card denied” to “credit card accepted.”
Main reasons your credit card application can be denied
When you apply for a credit card, it usually only takes 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. Thanks to the Fair Credit Reporting Act, lenders are required to tell you why they’ve rejected your credit application. This 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 some of the most common reasons why credit card applications are denied.
Your credit score is too low
Credit cards are often denied because the applicant’s credit score is too low. Each credit card has a recommended 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.
Next steps: Before you apply for your next credit card, check your credit score. Know where you fall within the FICO and VantageScore credit score ranges—is your credit bad, fair, good or excellent? Then take a look at our list of cards for each credit range to learn more about the credit cards that might be best for you:
- Best credit cards for bad credit
- Best credit cards for fair credit
- Best credit cards for good credit
- Best credit cards for excellent credit
Additionally, take this as an opportunity to improve your credit score. You can do this by staying on top of payments you may owe on existing credit accounts, lowering your credit utilization rate and not applying for new lines of credit often, to name a few.
Your income is too low
In many cases, you are required to report your income and your monthly housing payment on your credit card application—and lenders may decide that your income is too low. 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 factor, especially when combined with high rent or mortgage payments.
Next steps: Your income can impact your approval odds for a new credit card, but it isn’t always clear what a lender will consider as part of your income. You can typically use the following as sources of income on a credit card application:
- Public assistance
- Insurance payments
- Child support
- Spouse’s income
Lastly, if you’re a college student and only working part-time, you may have difficulty getting approved for a credit card. If this is the case, consider a secured credit card, becoming an authorized user or applying for a student credit card. A student credit card is a great way to build strong financial habits, and most credit cards designed with students in mind don’t require a 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 who have a lot of derogatory marks on their credit reports—whether due to missed payments, collections, foreclosure or bankruptcy—might find it harder to open new credit cards.
Next steps: Unfortunately, you can’t erase late payments from your credit report, but if you can prioritize rebuilding your credit, you may be able to find a credit card designed for individuals with bad or fair credit to help you get the job done. Some of these cards are secured credit cards, but 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 some offer cash back rewards. You may even be able to graduate to an unsecured card from a secured card after paying your statement balance on time consistently.
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 credit card application generates a hard credit inquiry that can lower your credit score.
Next steps: 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 misuses—and not everyone is aware of how these restrictions work.
- If you apply for a Chase credit card, for example, you need to be aware of the Chase 5/24 rule: if you’ve opened five new credit cards in the past 24 months with any issuer, you probably won’t be accepted for a new Chase card.
- If you’re interested in a Bank of America credit card, you should 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.
Next steps: Before you apply for your next credit card, check to see if the issuer has any application restrictions that might affect your application.
Does getting denied for a credit card hurt your credit score?
Getting denied for a credit card does not affect your credit, so you don’t have to worry about that. 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.
What to do about repeated credit card denials
Ask yourself, “Why do I keep getting denied for credit cards?” 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 try to address them.
If you’re consistently getting denied for credit cards, you might not have a strong enough credit history to be accepted for a new credit account. Consider applying for a secured credit card, which gives you a small line of credit in exchange for a refundable security deposit. You can still be denied for 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 gives you the opportunity to piggyback off someone else’s positive credit history, and might help improve your chances of being accepted for a credit card in the future.
How to get approved for your next credit card
If you want to get approved for your next credit card, there are a few steps you can take to improve your chances. Here are five ways to increase the odds that your next credit card application will be accepted:
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. The more you can prove that you can handle your current credit accounts wisely, the more likely your next credit card application will be accepted.
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.
Build your credit score
Using your credit cards responsibly is one of the best ways to improve your credit score—but you might want to 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.
Want some tips to help you build your credit score quickly? Keep your credit card balances as low as possible—or pay them off in full. 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.
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—or sign up for a credit monitoring service that will check 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.)
The other good reason to monitor your credit reports is so that you can quickly spot and report errors. Millions of Americans have errors on their credit reports, so make sure all your credit report information is accurate. And make sure you know how to dispute credit report errors, just in case.
Know how long to wait between applications
It’s a good idea to wait three to six months between credit card applications. If your credit card application is denied, waiting three months before applying for your next credit card could help improve your chances of getting accepted—especially if you use that time to build a positive credit history and improve your credit score.
Choose the best credit card for you
When you’re ready to apply for your next credit card, take some time to compare credit cards so you understand your options and can choose the best credit card for you.
- Look for a credit card that’s a good fit for someone with your credit score.
- If you have bad credit, consider a secured credit card or a card designed for people with poor credit.
- If you’ve built your way up to good or excellent credit, check to see whether the credit card issuer has any application restrictions that might affect you.
- If you have taken out more than five credit cards in the past 24 months, for example, Chase’s 5/24 rule means you probably won’t get accepted for a Chase credit card.
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. That’s how you go from “credit card denied” to “credit card accepted.”