Why can’t I get approved for a credit card?

Credit card issuers might deny applications for a number of reasons related to credit scores, debt and more. But the good news is that you have the right to know why. 

Learn more about why your applications for a credit card might be denied. And explore ways to improve your creditworthiness.

What you’ll learn: 

• Credit card issuers deny applications for reasons that include low credit scores, high debt and too many recent credit applications.

• If your application is denied, federal law requires credit card issuers to provide an adverse action notice to explain why.

• If you’re new to credit, you might want to look at cards designed for people working to build credit.

• Checking for pre-approval offers could help you identify cards you may be eligible for without hurting your credit scores.

When a credit card issuer denies your application, the law requires them to tell you why. Issuers do this through what’s called an adverse action notice. The issuer must send this notice within 30 days. 

Here are eight reasons why a credit card issuer might decline your application.

You need to be at least 18 years old to apply for a credit card account. And if you’re under 21, you have to prove that you have sufficient independent income to make your minimum credit card payments. Having a co-signer who’s older than 21 is another option, but many major issuers don’t allow co-signers.

What you can do: If you don’t meet the age requirements, consider asking a trusted family member or friend to add you as an authorized user on their card. If you both use the account responsibly, becoming an authorized user may help you build credit before you apply for your own card. But irresponsible use by either party can negatively impact the credit scores of both.

To assess your creditworthiness, lenders typically review your credit history to see how you’ve managed debt in the past. A thin credit file could make it difficult to qualify for a credit card.

What you can do: You may want to consider applying for a secured credit card. Secured cards require a one-time, refundable deposit to open an account. This deposit may make qualifying for a secured card easier than qualifying for a traditional card. Plus, if you use the card responsibly, it could put you in position to build credit and upgrade your card.

Credit card issuers typically have credit requirements that applicants must meet before being approved for a card. Requirements vary depending on the issuer and the card, but good credit scores may help you qualify. 

What you can do: A variety of factors affect your credit scores. But in general, using the credit you have responsibly can help boost your scores. That means doing things like paying on time every month.

A credit card issuer has to make sure you have enough income to make the required payments on your card. If you don’t, you might not be approved.

What you can do: Make sure you’ve listed all your sources of income, including full- and part-time jobs, seasonal work, and self-employment. Your income might also include interest, dividends, public assistance or shared income, including money someone else regularly deposits into your account or a joint account.

Having too much debt might hurt your chances of being approved for new credit. You could get a sense of how issuers might view your debt by checking two ratios: your debt-to-income (DTI) ratio and your credit utilization ratio. 

Your DTI ratio measures your debt as it relates to your income. Your credit utilization ratio measures how much of your available credit you’re using. If either ratio is high, it might indicate that you could struggle to keep up with new payments.

What you can do: The Consumer Financial Protection Bureau (CFPB) recommends a DTI ratio below 36% for homeowners, including mortgage payments, and below 15%-20% for renters, not including rent payments. And the agency recommends a credit utilization ratio below 30%. Ratios at the recommended levels could signal to lenders that you’re using credit responsibly and not overspending.

Each credit application you submit triggers a hard inquiry on your credit reports. And a credit card issuer may hesitate to approve your application if you have lots of hard inquiries within a short period of time. According to the CFPB, this is because multiple hard inquiries could suggest negative circumstances to issuers. 

What you can do: The CFPB recommends only applying for credit you need. Depending on your financial circumstances, you might want to wait a few months between applications. One way to avoid hard inquiries is to check whether you’re pre-approved for credit cards before applying.

If you have derogatory marks on your credit reports, it could hurt your credit scores. These negative indicators could come from late payments, foreclosures, charge-offs and bankruptcies. Depending on the mark, it could stay on your credit reports for seven years. Some records of bankruptcies can stick around for 10 years.

What you can do: If you find an inaccurate derogatory mark, you can dispute it with the credit bureaus. You could also work on raising your credit scores. That could help improve your credit record and general financial situation over time.

When you freeze your credit reports to protect against identity theft, you restrict access to them. If you don’t lift the freeze before applying for new credit, the issuer might not have access and could deny your application. 

What you can do: Contact the credit bureaus to unfreeze your credit. This can be done permanently or temporarily, and each credit bureau has a different process. Once your credit is thawed, you may be able to reapply for the credit card.

When a credit card issuer denies your application, your credit scores won’t be directly affected. However, the hard inquiry that occurs when you apply for a card might affect them. 

A hard inquiry can cause your credit scores to drop by a few points. And the inquiry can stay on your credit report for up to two years. But you may notice your credit scores recover from the hard inquiry in about 12 months.

Getting denied for a credit card can be disappointing. But depending on your circumstances, there may be some steps you can take.

1. Review the notice from the card issuer. Federal law requires credit card issuers to send an adverse action notice briefly explaining why your application was denied. 

2. Review your credit reports. Reviewing your credit reports could help you identify areas for improvement. You can get free copies of your credit reports by visiting AnnualCreditReport.com. You could also use CreditWise from Capital One, which provides free access to your credit report and credit score.

3. Dispute credit report inaccuracies. If you spot errors on your credit report, contact the credit bureau that produced the report.

4. Wait before applying for another card. Waiting three to six months before reapplying may help you avoid having too many hard inquiries on your credit reports in a short time. In addition, some credit card issuers restrict how many times you can apply for a card within a certain period of time.

5. Find a card that might be a better fit. Eligibility requirements vary from card to card, so it may be possible to get approved for a different card. You may also consider getting pre-approved before applying for a new card to help gauge your options.

6. Work on improving your finances. Building credit takes time. But practicing responsible credit habits, like paying your bills on time every month and keeping your credit utilization low, can help pave the way for future financial success.

If you’re feeling confused about why you can’t get approved for a credit card, remember that lenders are required to disclose why they denied your application. And there may be things you can do to improve your chances of approval in the future. 

If you’re new to credit or searching for your next credit card, Capital One can help.

• Compare Capital One cards and explore cards based on your credit level. 

• Check for pre-approval offers with no risk to your credit scores.

• Explore credit cards you can use to build credit responsibly and earn rewards.

• Monitor your credit score with CreditWise. It won’t hurt your credit, and it’s free for everyone.