Consumer Comeback Blog

Credit Card Application Denied? Here’s Why

Written by Jeffrey Trull

denied stampCredit can be confusing, and figuring out why your credit card application was rejected may be no different.

According to Bargaineering, there are a whopping 36 reasons creditors use to indicate why you’ve been denied credit. These codes are merely a hint, and they won’t always point to the exact cause for being turned down.

Here’s more on the most common reasons your credit card application was denied and what you can do to get approved next time.

Credit history problems

Many rejections come down to different risk factors that have to do with your credit history. These include:

  • Too many inquiries. Applied for several credit cards or other lines of credit in the last year? You might be turned down just for this reason.
  • Delinquencies. If you have several delinquent accounts or are behind on large balances, creditors might not be willing to grant you access to more money.
  • Not enough recent information. If it’s been a while since you’ve had an open credit account or made a payment, banks may turn you down.

Many of these problems found on your credit history overlap, so don’t be surprised if your rejection includes a combination of the above.

Job and income issues

Your job and income are standard questions on most credit card applications. Credit history aside, how you answer these questions can impact whether you’ll get a credit card.

This information might disqualify for:

  • Too little time at a job. If you’ve been at a job for less than six months, that might not be long enough for some creditors. Sometimes it’s just a matter of waiting a bit longer.
  • Insufficient income. If you don’t make enough money, some creditors might not give you a credit line. This information can be tied to your current credit info, like outstanding balances, too.
  • Unemployment. Tying the above two bullets together, not having a job can mean a rejected application.

The fix for these problems is often simple: reapply once you’ve spent longer on the job or are earning more.

Errors on your credit report

While having an error on your credit report likely won’t be a specified reason for being denied a credit card, it can certainly factor in.

If you’re denied for a credit history reason, make sure to check your credit report to see if there are any noticeable issues.

A rejection letter that specifies “late payment history” when you know you’ve always paid on time could be the sign of problems.

Dispute any credit report issues and consider applying for credit again.

Too many cards with one issuer

Some card issuers will cap the number of credit cards they’ll give to you. There are no stated rules for this, so you’ll have to test this out for yourself to see. Each issuer may limit the total credit line they’re willing to extend to you, too.

If you’re rejected for one of these reasons, you can call up the reconsideration line to find out more. It’s possible you can solve the problem by closing out an existing account to open a new one.

Too much debt

Having a lot of debt is seen as risky, and creditors might not be willing to let you have more if you’re already carrying large balances.

While your credit score will likely reflect how much debt you have, card issuers may look at this more closely when you apply.

Pay down your debt first so you’re using less available credit, and you may have better luck getting approved the next time you apply.

“Excellent” credit required

Many of the best credit cards require an “excellent” credit rating, while others say a “good” score is enough. If your score is less than what’s required, you may be automatically rejected.

Look for indications as to what level of credit is required before you apply. Many card issuer’s websites will say how good your credit needs to be.

For example, Visa’s Card Advisor tool will say if you need “good” or “excellent” credit for each card. While it stops short of providing you with a credit score required, there’s a description of what having good and excellent credit mean. You can check typical credit score ranges to get an idea.

If you’re in doubt, credit websites typically list the customer service number where you can speak with someone before applying and ask about the likelihood of your approval.

Limited credit history

Tied to recent activity, creditors want to see how you’ve handled your credit in the past. They’re often hesitant to hand out credit cards to applicants that have no or limited credit history. If there’s no information for them to base their decision on, you may simply be rejected.

Start with secured credit cards that will help build credit without requiring an established credit history. Once you’ve shown that you can pay bills on time, transitioning to a regular credit card should be easier.