If you’re struggling to get a credit card, it’s more than disappointing to get rejection after rejection. You will get an adverse action letter that explains why you’ve been rejected, but maybe you don’t want to wait the 7-10 business days for it to get there. Or maybe you’re anxious to know if anything on your credit report will disqualify you before you even apply. Be diligent and work on improving your credit and overall financial standing before you apply again. In any case, we’ve spelled out possible reasons below.
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Why Credit Card Applications Get Denied
There’s a lot of reasons why your credit card application could be denied, so be thorough before you submit another one.
Too Much Existing Debt
This one is fairly obvious; if you have a lot of existing debt, it can make you high-risk. Too much debt means that you’re already spread thin, and a creditor doesn’t think you’re a safe choice with that much on the line.
You might just have one large, looming debt, or a lot of smaller ones. Focus on diminishing these before you apply again.
Income Too Low
If your income is too low, it could affect your debt-to-income ratio, a measure of how much you owe versus how much you make. If your ratio is too high, it means that you don’t make enough to adequately cover your debts and a credit card.
Additionally, most creditors have a minimum amount of income that you need to have in order to qualify. If you’re wondering, you can always ask your creditor what their minimum income needed is.
Recent Charge-Off, Delinquency, or Bankruptcy
Having any of these negative instances on your credit report can be a big red flag to creditors. You might want to consider removing anything sent to collections or refuting negative items on your credit report.
Bankruptcy is a complicated issue, so consider your options carefully before filing. It will be deleted from your credit report after 7 years if you filed Chapter 13 bankruptcy, and 10 years if you filed Chapter 7 bankruptcy. If you’re struggling to get a credit card after filing bankruptcy, there are ways to rebuild your credit.
Too Many Recent Credit Inquiries
If you are continuously applying for credit cards, this can lower your score and result in your credit card application being denied. When you apply for a credit card, this usually triggers a hard inquiry. Too many of these in a short amount of time signal that you’re being reckless with debt and money, so creditors are less likely to approve you.
Either wait a while before applying again or only apply for lower-risk pre-approved cards. They are often retailer credit cards with lower standards, but that doesn’t necessarily mean that they aren’t worth having. You won’t get all the rewards of premium cards, but you will get a credit card faster.
Not Enough Credit History
You can totally get a credit card with no credit history, but not exclusive, top-tier ones. Credit history just shows that you’ve been using a line of credit for a while. This is different than your credit score, which is a weighing of several different factors.
So if you’re looking for an exclusive credit card with lots of rewards, then you might just have to wait until your credit history is a little more expansive.
Not Enough Employment History
Again, more elite cards will have more requirements. If you haven’t been at your current job for very long, or you’ve done a lot of job hopping, creditors might not view you as reliable. They’ll wait for you to prove yourself by staying at a job for a while.
You wouldn’t expect to get a job after only filling out the application halfway, right? It’s the same with credit cards. Make sure to fill out both sides and all the required fields. Too often people leave something blank, promising to come back to it later, and then they never do. Double check your work!
Errors on Your Credit Report
If you don’t think that any of these reflect your situation, you might have an error on your credit report. You’ll need to dispute it with the credit card companies in order to repair your credit. This is an uphill battle that takes several months, but you need to do it if you have serious problems with your credit report.
Does Getting Denied for a Credit Card Hurt Your Credit?
Getting denied for a credit card doesn’t hurt your credit, but applying for a credit card at all can. That hard inquiry is usually necessary to be approved. However, it only results in a temporary dip in your credit score, so don’t worry if you’ve only applied once or twice.
Take this opportunity to go through your credit and fix what you can. It might take you a while, but it’s definitely worth the effort to get a credit card.
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