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 have 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.
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.
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.
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.
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. 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.
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
Asking 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 credit card denied, 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……..Read More>>