Please ensure Javascript is enabled for purposes of website accessibility

10 Things That Will Keep You From Qualifying for a Credit Card

By Matthew Frankel, CFP® - Oct 2, 2017 at 7:36AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Your credit score isn't the only thing lenders look at.

Most people know that an application for a new credit card can be denied if your credit score is too low or there is negative information on your credit report. While this is certainly true, there are several other reasons why card issuers could reject your application. With that in mind, here are 10 of the most common reasons that can prevent you from qualifying for a credit card.

1. Low credit score

Perhaps the most obvious reason that you can be rejected when applying for a credit card is if your FICO credit score doesn't measure up to the lender's standards. Most lenders consider your credit score in combination with several other factors, but there are certain credit card products specifically designed for borrowers with excellent credit and others that require at least a "good" credit score.

A woman holding a handful of credit cards.

Image source: Getty Images.

2. No credit score or limited credit history

In order to have a FICO credit score, you need to have at least one credit account opened for six months or more and at least one account that has been reported to the credit bureaus within the past six months. If you don't meet these requirements, there isn't enough information on your credit report to generate a FICO score. Even if you have a FICO score, a limited credit history can be a reason for denying your application.

3. High balances

Simply put, the more money you owe to other creditors, the higher risk level you represent in the eyes of prospective lenders. If you owe a lot of money on other credit cards or have high outstanding loan balances, it can be difficult to qualify for a new credit card, even if your credit score is good.

4. You don't make enough money

One noncredit factor that a credit card issuer will consider is whether your income justifies a new line of credit. For example, if you only work part time and earn $200 per week ($10,400 per year), you may find it difficult to get approved for a card with a limit of more than a few hundred dollars.

5. You've recently missed a payment

If you have a high credit score to begin with, it's completely possible to miss a credit card payment and for your score to remain in the "good" range. However, missed payments on other accounts, especially those that occurred recently, can prevent you from qualifying for a new credit card.

6. You have other negative information on your credit report

In addition to missed or late payments, other adverse information can prevent you from qualifying for a credit card, even if it's older. This includes things like charge-offs, collection accounts, legal judgments, bankruptcies, and foreclosures.

7. You're under 18

In order to be legally liable for paying back a debt, you need to be an adult. If you're under 18, you cannot get approved for a credit card. You can, however, be an authorized user on a credit account owned by someone else, like a parent.

8. You're a college student without a job

Prior to the CARD act of 2009, credit card companies were notorious for preying on college students, offering free T-shirts, pizza, and other goodies in exchange for applying for a new account. Now, the rules have changed. Not only can credit card companies no longer use predatory tactics on college students, but if you're under 21, you cannot open a new credit card account unless you have enough income to justify it.

9. You've been looking for credit recently

When you apply for credit and a lender checks your qualifications, it generates a hard credit inquiry on your credit report. Too many hard inquiries in a short period indicates to lenders that you've been aggressively looking for credit and is considered to show a higher level of risk.

10. You've reached that lender's limit for active accounts

Regardless of how good your credit is, many lenders simply won't let you open too many accounts with them or within a certain period of time. For example, one major lender has an unofficial rule that limits consumers to four open credit card accounts with them at any given time. Another will typically not approve an applicant who has opened five or more credit cards in total within the past two years.

If you've been rejected, it's your right to find out why

Thanks to the Fair Credit Reporting Act, you have the right to know why your credit application was rejected if it was due to information on your credit report. Credit card issuers that deny your application are required to send you an "adverse action" notice that clarifies what red flags on your credit report prevented you from getting approved. This could list things such as "limited credit history" or "revolving credit balances too high."

In addition, most lenders will let you know if you were denied because of noncredit factors, such as your income, age, or having too many accounts with that particular lender.

The bottom line is that by reading the denial letter you receive, you'll know your weak points so you can improve on them before applying for any more credit cards.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.