Why Was My Credit Card Application Denied? 9 Possibilities

Key insights:

• Credit card applications can be denied for several reasons, including credit score, limited credit history or errors on your application
• Applying for a credit card without meeting the lender’s specific eligibility requirements may result in an automatic denial
•  A high debt-to-income ratio or too many recent credit applications can signal risk to issuers and affect approval chances
• Reviewing your credit report, correcting inaccuracies and applying for a credit card that matches your financial profile may help improve your chances of approval

Credit card denial can be disappointing and confusing. Fortunately, credit card issuers must send an adverse action notice within 30 days after receiving a completed application explaining why you were denied. Understanding why your application was denied can help you decide on your next move.

There can be many reasons why your application may be denied, from not meeting the lender’s eligibility requirements to application errors. Here are 9 potential reasons why your application may have been denied and what you can do next.

Credit score

Credit card issuers set credit score requirements for each card, and applicants who don’t meet them may be denied. Your credit score is based on factors like credit utilization (how much revolving debt you have compared to your total credit limit), payment history, credit mix and age of accounts. Some factors, like bankruptcy or debt that’s gone to collections, can seriously impact your ability to qualify for a new credit card.

Checking your credit score and credit report before applying for a new credit card can help you better understand your options.

Limited credit history

Credit card issuers may be more likely to deny your application if you have limited credit history. A short credit history isn’t necessarily a reflection of your ability to make payments. However, it can be harder for credit card issuers to understand your level of risk with insufficient information.

If you’re new to credit, it can typically take about 6 months to establish a credit score after opening your first account. If you’re building credit, it may be worth waiting to apply for a new credit card or getting a secured credit card.

Debt-to-income ratio

Credit card issuers must assess whether an applicant can afford to repay any debt they take on. If your existing monthly debt payments are high in comparison to your monthly gross income (also known as your debt-to-income ratio, or DTI), that could lead to a denied application.

In general, the lower your DTI, the better. If your DTI is over 30%, it may make sense to pay off debt before applying for another card.

Income

Some credit cards may require a minimum income. Credit card issuers typically have this requirement to ensure you can make monthly payments.

Your income doesn’t just include traditional employment. When you calculate your gross income, you can also include the following:

• Self-employment
• Investment income
• Retirement income
• Public assistance
• Alimony
• Child support

Additionally, if you’re 21 or older, you can include your household income, which is the total earnings of everyone living in the same home with you.

Recent hard credit inquiries

Applying for a credit card or loan can result in a hard credit inquiry on your credit report. These typically stay on your credit report for up to 2 years, and each hard inquiry can have a small impact on your credit score for up to a year. If a lender sees that you’ve had several recent hard credit inquiries, they may consider that a red flag.

Multiple open or new credit cards

Some credit card issuers may consider the number of credit cards you have, including how many of those credit cards are new accounts, when you apply. They may also look at the total amount of credit available to you across all credit cards. If lenders believe you have too many open or new credit cards, or too much available credit, they may deny your application.

Errors on the credit card application

Credit card issuers need the information on your application to verify your identity and assess your creditworthiness. If you didn’t fill out your application correctly, that can lead to a denial. You may want to watch out for mistakes such as incorrect address details and Social Security number errors.

Age

You typically must be at least 18 years old to apply for a credit card on your own. And if you’re 18 to 20 years old, you’ll have to show independent income to qualify for a credit card.

Frozen credit report

If your credit report is frozen when you apply, your application may be denied. Freezing your credit report stops anyone from opening new loans or lines of credit in your name. If your credit report is frozen, issuers can’t run a credit check and assess your eligibility. You’d have to unfreeze your credit report and apply again.

What to do if your credit card application is denied

If your credit card application is denied, reviewing your adverse action letter is often a good first step. Credit card issuers are required to send this letter within 30 days of receiving your completed application. The letter explains why your application was denied. If your credit score played a role in the decision, you’ll also see the credit score used and the credit bureau that provided it.

Understanding the reason for the denial can help you decide what to do next. You might explore credit cards that better match your current credit profile. A pre-qualification tool can also be helpful, since it shows which cards you may qualify for without impacting your credit score.

In some cases, waiting before applying again may make sense. Taking time to strengthen your credit score — such as making on-time payments and lowering your credit utilization — could improve your chances of approval in the future.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.