6 reasons you may be denied a credit card ⁠— and how to improve your chances


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A credit card application rejection may be a minor blow to your ego, but it can also be beneficial in helping you identify the areas in your financial life that need a bit of work.

When you submit an application for a credit card, potential issuers take a holistic view of your finances to determine whether you’re a responsible borrower to whom they’re comfortable lending. That means they look for a number of factors that can give better insight into your financial habits, like credit score, payment history, income and more.

If your application is denied, issuers are required to tell you why. This is called an adverse action notice and it can give you insight into the areas you can work on to improve your chances of scoring your perfect card.

Here is a rundown of some of the criteria issuers use to determine whether to accept your credit application and ways you can improve your chances if you’ve been denied:

1. Credit score

Credit scores are one of the best tools that credit card issuers have to determine your creditworthiness.

Your credit score is essentially a measure of how successful you have been at borrowing money and paying it back in the past, and it’s one of the most standardized (though there are a few different scoring models) and thorough views of your financial health.

But according to a recent Bankrate survey, nearly a quarter (24 percent) of Americans have been denied a credit card based on their credit score.

Before you submit your application, make sure you know your credit score and read reviews for the card you want to determine whether your credit score is on par with what the issuer requires. Often a review of a credit card will include the credit score range it’s aimed toward, premium cards are usually designated for those “excellent” credit scores or a beginner card that will accept people with “fair” to “good” scores. Consider building your credit with a card you qualify for now so you’re a better candidate for the card you want in the future.

2. Past applications

Even if you have great credit, a high number of credit card applications within a short amount of time can make you look risky to issuers.

Every time you apply for a new credit card, an issuer makes a hard inquiry on your credit report to get the full picture of your credit history. Each of these inquiries can make your score fall temporarily, but several within a short time also paint a picture of someone potentially in financial trouble.

“When you have many inquiries, it makes issuer think that maybe you’re about to have a run of bad luck with money,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News and World Report. “You’re very risky all of a sudden, because why do you need all this credit?”

Limit your applications to only those cards that you’re confident you’ll be approved for and don’t apply for too many cards at once. Wait until you’re in good financial health to take on a new card.

3. Length of your credit history

Your credit history, or the length of time each of your accounts has been open and how long since each account was used, accounts for 15 percent of your FICO Score, and is another important consideration for issuers.

It’s often impossible for people with limited credit histories to receive a very high credit score or get approval for the most premium cards, because it takes time to build your credit history and show your ability to borrow responsibly.

Harzog recommends becoming an authorized user on a card owned by someone you trust with great credit or taking on a more accessible card, like a secured credit card, in order to build your history. And it’s especially important to keep your accounts open during this time, even if you upgrade to a new card, because scoring models favor longstanding accounts and high amounts of available credit.

4. Payment history

One of the ways issuers can evaluate whether you’ll pay your balances on time is by looking at your payment history for credit cards and other loans. This is one of the most influential factors in your credit score as well as for credit card applications.

“It’s not just paying your credit card on time, but pay every single bill,” Harzog says. “Payment history is 35 percent of your FICO Score, so this is why you want to pay close attention, it’s a big part of that. Pay your rent on time, car payments on time. That all makes you look very responsible with creditors.”

If you have late or missed payments, they can remain on your credit report for up to seven years. Even if old negative payment history no longer impacts your credit score, an issuer could still see it and deny your application. That’s just one reason why it’s always important to be diligent in making timely payments in full toward all of your open accounts.

5. Debt-to-income ratio

The income you report to the issuer when you submit a credit card application may be a reason for denial in itself: your current income may be too low in the eyes of the issuer to qualify you for a high annual fee premium rewards card or maybe you’ve only been at your employer for a short time.

Often, though, your income could lead to a denial if it’s too low in relation to the amount of debt you currently have. If your debt-to-income ratio is at 50 percent, for example, it’s unlikely that an issuer will think you can handle more debt, especially if much of that is already made up of credit card debt.

If you have large amounts of debt, consider whether now is the right time to take on a new card. Take time, instead, to develop a budget that will allow you to pay off debt more quickly, lowering the ratio so you’re a better candidate for the card you want in the future.

6. Individual issuer criteria

Issuers may have other determining factors that they use to determine whether to issue you a card or not.

For example, Chase’s infamous (but unofficial) 5/24 rule restricts anyone from getting a new Chase card if they have opened five or more credit cards across all issuers in the past 24 months.

Each issuer has its own quirks like the 5/24 rule which may be official guidelines or unspoken standards. If you are in good financial health and pass the above considerations, though, you should have no trouble. Still, it may be helpful to do some research into your potential issuer’s approval guidelines before submitting your application to ensure you won’t run into any surprises.

Bottom line

Credit card denials are nothing to be ashamed of, and they can even act as motivation to improve certain aspects of your financial health.

If you receive an adverse action notice from your issuer and you disagree with the reason you’ve been denied, you can call to follow up or dispute the denial. Whether you agree with the conclusion or not, use it as a guide for what you can work on to improve your creditworthiness.

“Read it carefully and take action on the information, either call them or do what it takes to overcome what the reasons were,” Harzog says. “Sometimes it just takes time or getting another credit card that you can actually get approved for and building your credit history with that.”