Does getting denied for a credit card hurt your scores?

Getting denied for a credit card can be disappointing. But it won’t technically hurt your credit scores. Neither will an approval, for that matter. 

Some parts of the application process could hurt your credit scores, though. It all has to do with what ends up in your credit reports.

Key takeaways

• A hard inquiry from a card application can cause a small, temporary drop in credit scores.
• A denial or approval won’t hurt your credit scores, because decisions aren’t reflected in credit reports.
• When making lending decisions, card issuers use credit reports and credit scores to determine creditworthiness.
• Getting pre-approved can show you card offers you may qualify for without requiring a hard inquiry.

When a lender checks your credit report after you apply for credit, it triggers a hard inquiry. This is when the lender asks for a copy of your credit report from a credit bureau. According to credit-scoring company FICO®, a hard inquiry can cause a drop in credit scores. It's usually just a few points.

The lender’s approval or rejection decision makes no difference to your credit scores. But if a rejection leads you to apply for more cards, that would mean more hard inquiries. And multiple hard inquiries over a short period could have more of an impact on credit scores. 

Each card issuer has its own credit policies that help it decide whether to approve or deny a credit card application. Lenders may consider things like an applicant’s employment status, income and debt-to-income (DTI) ratio. If the lender has previous experience with an applicant, that might be considered, too. 

Credit is also important. A positive credit history and good credit scores may suggest that you’re good at managing your finances and you use credit responsibly. That means doing things like paying your statement on time every month. Low credit scores and derogatory marks might be used as indicators that you have a higher credit risk.

If your credit application is declined, you have the right to know why.

The Equal Credit Opportunity Act (ECOA) is a landmark civil rights law that protects credit and loan applicants from discrimination on the basis of race, color, religion, national origin, sex, marital status and age, among other things.

ECOA requires creditors to give applicants an adverse action notice explaining why they were denied. And if a consumer suspects a lender has been discriminatory, they can take action.

One way to avoid unnecessary hard inquiries on your credit reports is by checking whether you’re pre-qualified or pre-approved for a credit card. That can give you an idea of how likely you are to be approved if you take the next step and apply for a card.

With Capital One’s pre-approval tool, you can check your eligibility for some of Capital One’s credit cards before you submit an application. It’s quick and only requires some basic info. And checking it won’t hurt your credit scores, because it only requires a soft inquiry.

But what if you need to improve your credit to qualify for a credit card? Here are a few examples of responsible behaviors that could help you rebuild your credit or build credit from scratch:

• Pay your bills on time. Payment history is an important factor in calculating credit scores. You could consider setting up automatic payments to help you make payments on time. Catching up on missed and late payments could also help. 
• Stay well below your credit limits. The Consumer Financial Protection Bureau (CFPB) says “keeping a low credit utilization ratio—under 30 percent—shows lenders you’re responsible and have available credit.”
• Pay your credit card balances in full. The CFPB also says that you should always pay as much of your full credit card balance as you can. It can help you stay below your credit limits and pay less in interest than if you carry over your balance month after month.
• Apply only for the credit you need. “If you apply for a lot of credit over a short period of time, it may appear to lenders that your economic circumstances have changed negatively,” the CFPB explains. So try to apply for credit only when you need it.
• Try a different approach. If a lack of credit history is making it tough to get a credit card, you could explore becoming an authorized user on a trusted friend’s or family member’s account or applying for a secured credit card.
• Monitor your credit. Keeping tabs on your credit can help you spot opportunities for improvement and even catch mistakes. You can get free copies of your credit reports from AnnualCreditReport.com. And with CreditWise from Capital One, you can access your TransUnion® credit report and VantageScore® 3.0 credit score without hurting your scores. CreditWise is free for everyone. You don’t even have to be a Capital One customer to use it.

A credit card application might be rejected for a variety of reasons. But getting approved or denied for a credit card doesn’t directly hurt your credit scores. Rather, it’s the act of applying that may lower your credit scores. 

Applying may lower your credit scores by a few points because it will trigger a hard inquiry. But you might be able to avoid rejections and unnecessary hard inquiries by getting pre-approved before you even apply.