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12 Possible Reasons Your Credit Card Application Was Denied

Explanations for a Denied Credit Card Application

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If you’ve had a credit card application denied, you’re probably wondering why. The credit card company rarely tells you on the spot why your credit card application was denied. Instead, they send a letter, an adverse action letter, within 7-10 business days of your application. The adverse action letter will give you the specific reason your credit card application was denied. While you’re waiting to get your letter, here are some possible reasons your credit card application could be denied.

1. Your loan balances are too high.

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If you haven’t been lowering your loan balances, credit card issuers are hesitant to give you a credit card because you may not pay that off either. Before you apply for a credit card, pay off some of your existing loan balances.

2. Your credit card balances are too high.

Credit card companies want to see that you’re only using a portion of the credit that’s available to you. If you’re using too much of your available credit, especially if you’re maxed out, you can count on having your credit card application denied.

3. There are too many inquiries on your credit report.

Applying for too many credit cards and loans within a short period of time can get your credit card application denied, regardless of whether you’re approved for the other credit cards. Minimize your inquiries to improve your chances at getting your next credit card application approved.

4. Your income is too low.

Income limits vary by credit card issuer. Your credit card application could be denied if you don’t make enough money for that particular credit card. Seldom do credit card issuers publish minimum income requirements for their credit cards, so it’s up to you to estimate which credit cards fit your income.

5. You have too many credit cards.

The number of credit cards you have can influence whether your credit card application is denied. There’s no universal number that applies to all credit card applications. Instead, it varies by credit card issuer.

6. You have a recent collection or public record.

As time goes on, collections and public records affect your credit less. However, when these negative items first appear on your credit report, they hurt your credit score most. These serious delinquencies are a sign to the credit card company that you don’t have enough money to meet your financial obligations.

7. Your last delinquency was too recent.

Credit card issuers not only look at the type of delinquency, they also consider how long it’s been since you were last delinquent. A 90-day late payment from six years ago won’t hurt as badly as one from six months ago.

8. You have a charge-off on your credit report.

A charge-off is a credit card balance that went unpaid for six months or more. It’s one of the worst things that can appear on your credit report. Honestly, if you failed to pay another credit card, a new credit card company will hesitate to give you a credit card. Paying the charged-off balance will improve your chances at getting approved.

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

Having little or no experience with credit could result in a denied credit card application. If you don’t have at least one account that’s been active in the past six months, FICO can’t generate a credit score for you. Without a credit score, the credit card company can’t approve your application.

10. You're not old enough to get a credit card.

If you’re under age 18, you’ll probably have your credit card application denied. There are some exceptions, for example, if you’ve already been added as an authorized user to your parents’ credit card. Even young adults under 21 can be denied if they don’t have income or a co-signer.

11. You didn't completely fill out the application.

If your application is missing vital information, you risk being denied. The good thing about most online credit card applications is that they often won’t let you submit the application until it’s complete. That way, you eliminate the risk of having your credit card application denied because it wasn’t complete.

12. You haven't been at your current job long enough.

An unstable work history could have your credit card application denied. Credit card issuers like applicants who have been on their job consistently. If you’ve been job-hopping and have periods of unemployment, you may have a hard time getting approved for a credit card.

Improve Your Credit Before the Next Application

The adverse action letter will include instructions for ordering a free copy of your credit report, if something on your credit report led to your application's denial. Order the credit report and review it for any errors. Dispute errors with the credit bureau if you find any. Otherwise, use this free credit report as an opportunity to repair your credit before your next credit card application.

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