Although getting denied a credit card is disappointing, it can also be motivational. If you understand why you didn’t get approved, you can boost your chance of getting approved next time and reduce your money stress.
There are many reasons why you may receive a denial, but it often comes down to not meeting the qualifications the lender has.
Here are some common reasons why credit card applications are typically denied so you can see if any of these reasons apply to you.
Your credit score is too low
Credit scores are one of the most important components to credit card approval. Many lenders set specific credit score requirements for approval. That’s especially true for higher-risk or more lucrative credit cards, like reward credit cards.
The higher your score is, the more likely the lender will provide you with the approval. If your credit score does not fit under what is considered a good score (for FICO, that’s 670), then this is what you’ll want to work on before applying next time.
Pro tip: You can boost your credit score by building credit with one of the best credit cards for poor credit scores.
You’ve made too many late payments
Lenders typically want to be sure borrowers will make payments on time reliably. If your credit report shows you have several late payments, that’s a concern that can lead to a denial. It also impacts your credit score.
You can’t get late payments off your credit report unless they were not accurately reported. The best way around this, then, is to work on minimizing how often they occur.
You applied to too many credit cards
Credit card inquiries occur when a borrower applies for a loan or credit card. Some lenders see this as a reason for concern, especially if you have a lot of applications for credit cards or loans within a short amount of time.
There’s no specific number of inquiries that could hurt you, but the fewer you have, the better your chances of approval are likely to be.
You have too much debt
The more debt you have, the harder it may be for you to make payments to your lenders. Credit card lenders want to make sure you have enough income to cover your debts, including any new card they offer to you.
The higher the ratio of debt to the amount of available credit you have, the higher the risk to the lender you are. That can lead to a denial of credit until you find ways to reduce your debt.
You have high credit card balances
Having a lot of debt is one thing, but when your credit card balances are very close to your current available credit limit, that’s worrisome to lenders.
If you’re already close to your credit limit on all of your cards, you may need to pay them down before you apply for a new credit card. That, combined with other factors, can help you to qualify for a new credit card line.
Your income is too low
Many lenders also take into consideration the amount of income you have coming into your home each month. Lenders want to be sure you have enough income to cover your debts, including any new line of credit they offer to you.
Some lenders won’t lend to those who have an income level below the level they set. They may believe that to be too risky for a credit card, especially when they factor in other debts you have.
The lender has a lot of restrictions
Although some lenders are more lenient than others, that’s not always easy to know before applying for an offer. Some lenders have very specific credit scores or income. Others may require that you don’t open more than five new credit cards within the last 24 months.
Some lenders also won’t accept you if you have a bankruptcy or a judgment in your credit history, even if you have worked to raise your credit score since that occurred.
You have too many credit cards
Sometimes lenders do not want to lend to a borrower who already has a lot of available credit even if they do not have a lot of debt. If you have a lot of credit cards, that could influence a lender’s decision to approve your loan.
The hard part is that there’s no specific number of cards you should avoid since each lender sets its own rules for this.
You have a bankruptcy, collection, or another public record
Some credit card companies don’t lend to people who have a bankruptcy history, accounts in collections, or judgments against them.
That means that if your credit report shows you filed for bankruptcy five years ago, it could still be impacting your ability to qualify for a loan now. Take a look at your credit report now to find out if that’s a concern you have.
If so, and they are accurate, you may need to wait for those items to fall off your credit card or work to resolve them.
You’re too young
If you’re under the age of 18, it may be hard for you to qualify for credit without having a parent co-sign on the loan for you. Some lenders will allow those who are younger to obtain a credit card, but you need to show that you have your own income first.
You may also want to consider asking if you could become an authorized user on one of your parent’s credit cards. That could help you build up your credit score over time.
Pro tip: You could start building your credit sooner by applying for one of the best credit cards for teens.
Your credit history is too short
There are some situations where you have to have credit to get credit. That may sound like a problem to do, but some lenders just do not work with borrowers who are newer and without a proven background in using credit.
If your credit file is too thin — meaning you just do not have a lot of active credit use in the last few months — that could hurt your chances of obtaining a new car. That’s because this can impact your creditworthiness.
It may be beneficial to shop for the best secured credit cards which can help you build up your credit history.
There are many reasons why a lender didn’t approve your credit card application. Often, you can request more information about why they turned you down, and some will send you a letter explaining their reasons.
Sometimes it is as simple as not filling out the credit card application accurately or completely. Other times, you’ll need to work to pay down your debt or build your credit history.
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