“Why did I get denied for a credit card? What did I do wrong?” Having your credit card application denied is never a good feeling, especially if you don’t know why it was denied. It can seem like a personal slight, even if the bank doesn’t know you personally.
When you are denied for a credit card because of something on your credit report, the bank is required under the Fair Credit Reporting Act to send you an adverse action notice. In it, the bank must share why the denial happened.
However, since banks have 30 days to send out the notice, you may have to wait before you can take action to improve your chances of being approved.
Here’s what you can do in the meantime to get some answers on why your credit card application was denied.
First: Call the credit card issuer’s reconsideration line
The first step to take after being denied is to call the credit card issuer’s reconsideration line. You can ask them to reconsider your application and even reverse the denial.
“The reconsideration line gives you a way to plead your case to a live human,” said Kristin McGrath, editor at CreditCardForum.com. “It’s no sure thing, but you can explain why you want that specific card and why you’d be an attractive customer.”
Here are the reconsideration lines for some of the top credit card issuers:
- American Express: 877-399-3083
- Barclaycard: 866-408-4064
- Capital One: 800-625-7866
- Chase: 888-270-2127
- Citi: 800-695-5171
- Discover: 888-676-3695
- U.S. Bank: 800-947-1444
- Wells Fargo: 866-412-5956
If your bank isn’t on the list, do a quick internet search of the bank and its reconsideration line. Alternatively, you can call the bank’s application status line and ask to be redirected to a credit analyst.
If you’re unsuccessful in trying to convince the bank to reverse the denial, the credit analyst will likely give you the reason for the denial. Depending on what it is, you can begin making preparations to improve your chances next time you apply.
Why did I get denied for a credit card?
There are so many factors that banks consider when you apply for a credit card. They look at your credit report, credit score, income information, and make a decision based on their own criteria. It’s not always obvious why your credit card application was denied.
But it is important to find out and remedy the situation. Here are 15 reasons why you may have your credit card application denied and what you can do about each one.
1. Your credit score isn’t high enough
Each credit card has a credit score requirement, even if banks don’t always share it publicly. Rewards credit cards and cards that offer low APRs or 0% APR promotions often require good or excellent credit.
If your overall credit picture looks good, a score just below the target range may not be an issue. But if it’s well below the range, you may get denied with no option for reconsideration.
What you can do: Take a look at your credit scores through a free credit monitoring service before you begin searching for a credit card. Note that these services do not provide a FICO score in most cases, though this is the credit scoring model most credit card issuers use. Even so, you can get an idea of what range your scores fall into based on these free options.
During your search for a new card, try to find information about each card’s credit requirements. If there isn’t any available, call the credit card issuer directly.
As you work to improve your credit score, you’ll ultimately have a larger credit card selection available to you.
2. You don’t have enough credit history
When you’re just starting out, accessing credit can be a catch-22. It’s not easy to qualify for a credit without a credit history, but you can’t build a credit history without access to credit.
The main problem for banks or other credit card issuers is that they don’t know if they can trust you. With no way to prove that you’re not a risk, they may not approve you for some of their best cards.
What you can do: Many credit card issuers offer starter credit cards that can help you build credit without previous credit experience. Most fall under the student and secured credit card categories.
As you’re searching for starter credit cards, though, beware of high fees. The best starter cards charge no or low annual fees and no other major fees.
3. You have too many recent hard inquiries
Every time you apply for credit, it results in a hard inquiry on your credit report. Hard inquiries differ from soft inquiries in that they can actually ding your credit score. Soft inquiries are usually a result of pre-approval offers as well as employer or landlord credit checks.
Too many hard inquiries may signal that you’re desperate for credit and can raise a red flag.
What you can do: Hold off on applying for new credit for a while and apply only when you need it. Also, keep in mind that hard inquiries usually stay on your credit report for up to 24 months. Download a copy of your credit report to see when the inquiries were made so you can ensure there’s enough time between applications.
4. You have too much debt
If you’re already overloaded with debt, credit card issuers are much less likely to offer you more. The way this is evaluated is by calculating your debt-to-income ratio — your total monthly debt payments divided by your monthly gross income.
This process helps the credit card issuer make sure that adding more debt won’t put too much strain on your ability to repay your debts.
What you can do: Use a debt-to-income calculator to see where you currently stand. Then start paying down your debt before applying for a credit card. This may take time, but you can speed up the process by using the debt avalanche or debt snowball methods.
5. Your credit utilization is too high
Even if you don’t have a lot of debt overall, using a high percentage of the credit limit on your other cards can be off-putting for credit card issuers. Your credit utilization is calculated by dividing your current balance by the card’s credit limit.
For example, if you have a $1,000 balance on a card with a $2,000 limit, your credit utilization is 50 percent.
What you can do: Experts recommend keeping your credit utilization below 30 percent, so start working to pay down your credit card debt. The good news is that your credit utilization is updated monthly when your financial institution reports your balance to the credit bureaus. Paying off the card in full could solve the problem sooner than later.
6. You have too much existing credit with the card issuer
If you already have other credit cards with the issuer, they may be wary of giving you more. If you end up maxing out all your cards with them, you’ll be more likely to miss payments and even default.
What you can do: If you’re in this situation, according to McGrath, you may have room to negotiate when calling the reconsideration line. For example, you can offer to close another card or shift your credit limit from one card to the one you’re applying for.
“This might calm the bank’s anxiety about giving you tens of thousands of dollars in available credit across multiple cards,” McGrath said.
7. You made an error when filling out the application
If you accidentally write the wrong Social Security number or miss a zero when stating your income, the computer likely won’t know it’s an error.
You can call the reconsideration line and note that your stated income is too low or something else may be off, so the credit card issuer knows you just made a mistake.
What you can do: Apply online to avoid missing important information on the application. The online process generally won’t let you proceed to the next step if a field is missing.
The online application process will also include a “Review” step, where you can check your entries before submitting. Avoid skipping this section to weed out any mistakes.
8. You’re too young
You must be at least 18 years old to apply for a credit card, and even if you’re 18, you still might have a hard time qualifying for a card on your own without a cosigner.
Applicants under 21 need to have sufficient independent income to get approved without needing a cosigner to apply with them.
What you can do: If you’re under 18, ask your parents to add you as an authorized user on one of their credit cards. If you’re over 18 and can’t get approved because you don’t earn enough, consider asking a parent or other family member to cosign on a credit card with you.
Keep in mind that not all issuers allow cosigners on their credit cards. Double-check with the credit card issuer before applying.
9. Your income is too low
If you’re unemployed or working part-time, a credit card can be a lifeline until you get back on your feet. But the Credit CARD Act requires that issuers consider your ability to repay the debt you incur on a credit card.
With little or no income, you may not meet the credit card issuer’s minimum income requirements.
What you can do: Your only option here is to find a way to increase your income. Avoid lying about your income on your credit card application – that would be considered credit fraud.
The good news is if you’re a stay-at-home parent with a working spouse, you can usually count your spouse’s income on your credit card application.
10. You have public records on your credit report
Your credit report lists just about everything that financial institutions consider a credit risk, including public records. Some of these records that can affect your chances of getting approved for a credit card include:
- Unpaid tax liens
- Civil judgments or court orders that require you to pay money to a third party
What you can do: Most public records stay on your credit report for seven to 10 years. But their influence on your credit can decrease over time if you have a newer credit history that is positive.
For example, if you’re making on-time payments, maintaining low credit card balances and a good mix of credit, your credit history will experience a positive turn. Keep an eye on your credit score and work to develop good credit habits.
If you have an unpaid tax lien on your report, for instance, pay it as soon as you can. You can then fill out a form with the Internal Revenue Service (IRS) requesting they remove the lien from your credit report.
11. You have a recent delinquency
Late payments can be an early warning sign that you’re struggling financially. The longer you’re delinquent on an account, the more of an impact it can have on your credit. It also decreases your chances of getting approved for a credit card.
What you can do: Make sure you’re paid up on all of your credit accounts before applying again. It may also help to wait six to 12 months to let new, positive credit history develop to help offset past mistakes.
12. You have charge-off or collection accounts
A charge-off is a declaration that a financial institution doesn’t believe that a debt is collectible. Depending on the amount of the debt, the next step is sending the account to collections.
Defaulting on a credit card or loan raises a red flag for banks. It shows that you could be a default risk again, leaving them with unpaid debts.
What you can do: All things considered, a paid collection account is better than an unpaid one. Work toward paying off your debts, whether or not they’ve already gone to collections.
After that, you may still need to wait six to 12 months to soften the impact of those accounts on your credit.
13. Specific credit card issuer restrictions
Depending on which credit card issuer you’re applying through, it may have internal controls in place to prevent abuse.
For example, a credit card issuer may have a rule on many of its cards that make it hard to get approved for a card if you’ve opened five or more accounts in the previous 24 months.
What you can do: Before applying again, call the credit card issuer to see if they have any internal restrictions that may give you trouble.
14. They can’t verify your identity
In some situations, the credit card issuer may require that you verify your identity before approving your application.
This can happen if the credit card issuer detects fraud or if you’ve placed a fraud alert on your credit report. If you can’t answer the verifications questions correctly, the credit card issuer may shut down your application without reconsideration.
What you can do: Take the identity questions seriously. If you’re having trouble, ask a representative on the phone if there are other ways to verify your identity. In the meantime, check your credit report to make sure there isn’t legitimate fraud on there.
15. Your work history is unstable
During the application process, you’ll fill out information about your employment. If you’ve been job hopping or have inconsistent income, you may get denied.
What you can do: If you have an unstable job history, wait until you’ve been on the job for at least six to 12 months before applying for a credit card. Also, volunteer to share pay stubs or other income documents to prove that your current situation is stable.
When to apply again after getting a credit card application denied
According to McGrath, there’s no hard-and-fast rule for how long you should wait to apply for another credit card after getting denied.
“Don’t re-apply until you’ve taken measures to correct whatever that letter lists – and until those changes are reflected in your credit reports,” McGrath explained.
In the meantime, continue using the credit cards you have. Or, if you don’t have a credit card, use a debit card or cash going forward.
Getting a credit card application denied isn’t a fun experience, but it’s not a permanent declaration. Learn about the credit card issuer’s concerns then work toward resolving them to improve your chances of approval next time you apply.
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