by Lyle Daly | July 11, 2019
If you've been denied for a credit card, then you're probably wondering why it happened and if there's any way to get the decision reversed.
By law, the credit card company will need to mail you its reasons for denying your application, but these denial letters often aren't much help. They'll usually include any issues the card issuer found, so there's no way to know which of these were minor issues and which really mattered.
To help you get to the bottom of the denial, here are the most common reasons credit card companies deny applications, and an explanation of how you can correct each problem.
We're going to start with the most obvious. Although card issuers can be somewhat flexible about their requirements, with every credit card, there's a credit score range applicants need to reach to get approved.
So if your credit score is 600 and you're trying to get one of the best cards on the market that's intended for applicants with good credit, then you probably won't be successful.
What to do -- You have two options here:
The days of opening as many new credit cards as you want are long gone. Every card issuer will consider the number of recent credit accounts you've opened and applications for new credit you've made.
Some issuers even have strict rules and will automatically deny your application if you've opened too many accounts in the recent past, with Chase's 5/24 rule being the most well-known example of this.
What to do -- You can try giving the card issuer a call to see if they'll change their mind about approving your application. Otherwise, you'll just need to wait it out.
Check the card issuer's specific application rules, as this is the best way to know how long you need to wait. For example, if it's a Chase card, you'll need to wait until you've only opened four or fewer credit cards in the previous 24 months.
If the card issuer doesn't have any set rules that you know of, then three to six months is a reasonable timeframe to wait.
Credit card companies have their limits on how much credit they'll extend to you, and your income plays a large role in this. When you reach that limit, they will likely deny any future credit card applications.
Let's say that you have two credit cards with Capital One, both with $15,000 credit limits. Unbeknownst to you, Capital One has decided that the most credit it's willing to extend you is $30,000. You apply for another Capital One card, and they deny your application.
What to do -- Call the credit card company and ask them to reduce your credit limit on one or more of your cards with them. That way they can approve you for a new card without increasing the amount of credit you have with them.
Using the example above, you could call Capital One and ask them to lower the limits on both your cards with them by $5,000, freeing up $10,000. They could then approve you for another card with a $10,000 credit limit.
A red flag for credit card companies is when you apply for a card with high credit card or loan balances, because there's a greater risk that you'll end up missing payments or defaulting.
If a card issuer sees that you have a large amount of debt already, it could deny your application for that reason.
What to do -- Pay down your debt, and then reapply for the credit card you want. It's usually better to focus on your credit card debt first, because that's seen as a more significant issue than installment loan debt.
Although you don't need to be a big earner to qualify for most credit cards, some do have higher income requirements than others.
For example, certain credit cards have a minimum credit limit that the card issuer must approve you for if they're going to issue you the card, such as $5,000 or $10,000. If your income is too low, the card issuer could deny your application because it's not comfortable extending you that much credit.
What to do -- Ask the card issuer if they have any credit cards you do qualify for based on your current income. Most credit card companies have cards for people at just about every income range.
Any problem on your credit report, such as a late payment or a default on a debt, could work against you when applying for a credit card. How big of a role a negative item plays in a card issuer's decision will depend on how significant of a problem it is and how recent it is.
What to do -- First, make sure that the negative item is legitimate. If you have an error on your credit report, you can dispute it, have it removed, and contact the credit card company to see if they'll change their decision.
For legitimate issues, you'll need to wait before reapplying for the card. There's no one-size-fits-all timeframe here, but six months to a year is a good place to start.
When your credit file is a blank slate, it's hard to find credit cards that you'll qualify for. Credit card companies are understandably wary about approving those without much credit history, as there's no way to know whether those consumers will be responsible cardholders or will run up balances that they don't pay back.
What to do -- If you know anyone with good credit who is willing to cosign a credit card application for you, they could help you get the card you want that way.
You can also check out secured credit cards. With these cards, you pay a security deposit, so consumers with poor or non-existent credit histories have an easier time getting approved.
While a denial on a credit card application is frustrating, it can also be a learning experience. Once you know what motivated the card issuer's decision, you'll be able to avoid having the same problem in the future.
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases into 2022, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.