Being denied for a credit card can be discouraging, and it may leave you with questions about why you were denied and how this will impact your credit. Credit card denials won't appear on your credit report, and the only thing that may affect your credit is the application. Applying for any credit card – regardless of whether you’re approved – will add a hard inquiry to your credit report. Hard inquiries can have a small impact on your credit score for up to a year and appear on your credit report for up to 2 years.
Let’s explore why credit card applications may be denied and ways to help boost your future approval odds.
Reasons your credit card application may be denied
There are several reasons why your credit card application might be denied. It often comes down to not meeting the card requirements. However, you can have good or excellent credit and still be denied for other reasons.
Some factors that may lead to a denied application include:
- Credit score: Lenders have credit score requirements for each card. A lower credit score can make it more difficult to qualify for many credit cards.
- Credit history: A longer credit history can give lenders a better idea of your behavior as a borrower. Lenders also consider factors like on-time payment history and bankruptcy filings.
- Age: Generally, you must be at least 18 to apply for a credit card.
- Debt-to-income (DTI) ratio: High debt levels, especially compared to your income, may result in being denied for a new credit card. A high DTI can signal to lenders that you could have trouble repaying new debt.
- Income: Your income gives issuers an idea of your ability to make payments. Lenders may exclude applicants that fall below a certain income threshold.
- Recent inquiries: If you’ve applied for several credit cards within a short period of time, that may make it harder to qualify.
Although less common, credit report errors, incomplete or inaccurate applications and frozen credit reports can also lead to denied credit card applications.
Improving your chances of being approved for a credit card
Being denied for a credit card can be disappointing, but your credit card journey doesn’t have to end there. The best step forward depends on why your application was declined.
Read your adverse action letter
If your credit card application is denied, you’ll get an adverse action letter explaining why. It also includes your credit score, if it influenced the decision, and tells you which credit reporting agency the report was pulled from. This can give you a blueprint for next steps.
Check to see if you’re pre-qualified
Credit card pre-qualification can help you understand if you’re more likely to qualify for a credit card. Pre-qualification involves a soft credit check, so it won’t impact your credit score. While it’s not a guarantee that you'll qualify, pre-qualification can help you find cards that are more likely to work for you.
Apply for a different type of credit card
A denied application doesn’t necessarily mean you’re out of options. Other types of credit cards might be a better fit.
For example, if your credit score is in the “good” range, you might avoid credit cards designed for those with “excellent” credit. A secured credit card could make sense if you’re working on building credit and can afford to put down a security deposit. And college students might consider student credit cards, which have requirements tailored to students building credit.
