Why Aren’t You Getting Credit Card Approval?

Learn why your credit card application was declined and how to improve your chances of approval the next time around.

Getting a new credit card might be thrilling, but not being approved for one can be discouraging. After submitting your application, the card issuer looks over your details to check if you qualify. If your application is declined, lenders must either provide you with the reasons for the denial or inform you that you have the right to find out why. You may also do things to improve your chances of getting accepted in the future.

Continue reading to learn more about some of the 14 reasons you might not get authorized—and what you can do to enhance your chances of getting approved in the future.

1. Credit Score Issues

When you apply for a credit card, the issuer may do a credit check to determine how you’ve dealt with debt in the past. Credit cards may be easier to obtain if you have an excellent credit score and a long credit history. However, you may have difficulties if your credit score is low depending on the credit card.

What to do: Apply for a secured credit card, which often requires a security deposit and can be used to establish a credit history. The card issuer may allow you to upgrade to a standard, unsecured card without canceling your original line of credit if you demonstrate appropriate credit utilization over time.

2. Outstanding Debt is High

Too much debt might make it challenging to get new credit, mainly if your debt-to-income ratio or credit utilization ratio is high. Your debt-to-income ratio is a calculation that compares your debt to your income and can help you determine whether you can take on more debt. On the other hand, your credit usage ratio evaluates how much of your available credit you’re utilizing. If one of these is high, it may indicate that you will have difficulty making payments on any new credit.

What to do: Consider paying down debt before applying for new credit if your budget allows it. The Consumer Financial Protection Bureau (CFPB) recommends that homeowners keep their debt-to-income ratio below 36 percent, including mortgage payments. Renters keep their debt-to-income ratio below 15 percent -20 percent, excluding rent payments. Also, maintain your credit usage ratio under 30%. These lower ratios could indicate to lenders that you’re not overspending and are utilizing credit sensibly.

3. Your Credit Reports Have Too Many Inquiries

If you have a lot of hard inquiries on your credit report, especially in a short period, a credit card issuer may be hesitant to approve your application. Frequent credit applications may indicate to the lender that your financial situation has deteriorated.

What to do: Depending on your financial situation, you might wish to wait a few months between applications. Before applying for a credit card, you should check if you’ve been pre-approved. Pre-approval is a soft inquiry that has no bearing on your credit score. It’s also a good idea to only apply for the credit you require.

4. Limited Credit History

Lenders often look at your credit history to determine your creditworthiness, which includes whether you’ve made on-time payments in the past. If you’re new to credit or have a limited credit history, you may not have yet had the opportunity to demonstrate your creditworthiness. It may be tough to obtain a credit card due to this.

What to do: You should look into getting a secured credit card or a credit builder loan. However, you might want to see whether you’ve been pre-approved for unsecured credit cards.

5. Low income

A credit card provider must verify that you have sufficient money to make the mandatory card payments.

What to do: Make sure you’ve recorded all of your sources of income, including full-time, part-time, seasonal, and self-employment positions. Interest, dividends, governmental assistance, and shared income, which is money that someone else routinely transfers into your or a joint account, are all possible sources of income.

6. You are ineligible to apply because you are under 18.

To apply for your credit card account, you must be 18 years old. If you’re under 21, though, you may need to show that you have sufficient independent income to cover your minimum credit card payments. If you don’t have enough independent income, a co-signer, guarantor, or joint applicant who can meet the card’s requirements may be required.

What to do if you don’t satisfy the age requirements: Ask a trustworthy family member to co-sign your card on their account if you don’t meet the age requirements. However, keep in mind that not all credit card companies allow co-signers.

7. Credit Reports with a Charge-Off

If you haven’t made a required payment on your credit card account for 180 days, your account will be charged off. Although the creditor or lender deems the debt a loss and terminates the account, you are still liable for paying the outstanding balance. It may also indicate to a lender that you may default on another credit card in the future, making approval more difficult.

What to do: If the charge-off is incorrect, you can contest it. If this is the case, you may be able to contact the creditor and inquire about a repayment plan. Keep in mind that a charge-off can appear on your credit record for up to seven years after the first late or missed payment that resulted in the charge-off. If you don’t pay it, lenders may assume you won’t be able to pay the future debt. According to Experian, paying the charged-off sum may improve your credit score with some lenders.

8. Incorrect Application.

Although credit card applications appear simple, they might be filled out incorrectly. For example, you can inadvertently report a lesser income or provide the incorrect Social Security number.

Lenders must either tell you why they rejected your application or inform you that you have the right to know why. You could inquire about reapplying if the denial was due to an application error.

9. Bankruptcy Filings in the Recent Past

After a bankruptcy, you may want to start rebuilding your credit, but certain credit card providers may be hesitant to approve your application. This is because bankruptcy may signal that you have had difficulty repaying debt in the past.

What to do: After your bankruptcy is cleared, some credit card companies may qualify you for a secured credit card. Other issuers may demand you to wait a specified amount of time—with no new bankruptcy filings—before they will consider you for a new account.

10. Credit Report That Has Been Frozen

If you’re concerned about identity theft, you can call the credit bureaus to have your credit reports frozen, limiting access to your credit reports. However, you may need to release the freeze before applying for new credit;

What to do: Unfreeze your credit by contacting the credit bureaus. You may be able to reapply for the credit card once your credit has “thawed.”

11. Keep an eye on your credit.

Regularly reviewing your credit reports can aid in the detection of inaccuracies or potential symptoms of identity theft. You’ll also be able to keep track of your financial situation and dispute any errors you find. Checking your credit ratings might also assist you in determining whether or not you are eligible for a credit card.

CreditWise from Creditneat is one way to keep track of your credit. CreditWise gives you free access to your TransUnion® credit report and weekly VantageScore® 3.0 credit score without affecting your credit score. Anyone can use CreditWise for free, even if they don’t have a Creditneat account.

12. Before you apply for the next job, work on improving your credit.

If your application were denied due to something on your credit report, the adverse action letter would provide directions for acquiring a free copy of your credit report. Order a copy of your credit report and check it for any mistakes. If you find any inaccuracies, report them to the credit bureau. Otherwise, take advantage of this free credit report to restore your credit before applying for a new credit card.

13. You haven’t spent enough time in your current job.

Credit card companies prefer applicants who have a track record of repaying their bills. You may have difficulty getting approved for a credit card if you’ve been job-hopping and have gone long periods without receiving a paycheck.

14. You have a limited credit history or a thin credit file.

If you’ve never had credit before or don’t have much credit experience, your credit card application may be declined. For FICO to calculate a credit score for you. Your credit report must have at least one account that has been active in the last six months.

\8 Because it can’t assess your creditworthiness without a credit score. The credit card business is more likely to decline your application. If you’re new to credit, try getting a secured credit card or a student credit card to start building your credit history.