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

Credit card applications might be denied for a number of reasons. But the good news is that you have the right to find out why you were rejected for a credit card. Learn more about why you may get denied for a credit card and what you can do to improve your creditworthiness.

What you’ll learn: 

• Credit card issuers are required to provide an adverse action notice explaining why your application was denied.

• Even if your application is denied, you can work to improve your credit by doing things like paying your bills on time.

• If you’re new to credit, you might want to look at cards designed for people who are building credit.

• Getting pre-approved could help you see what cards you may be eligible for without hurting your credit scores.

If your credit card application was denied, issuers are required by law to send you an adverse action notice within 30 days of receiving your application telling you why it was denied. If you haven’t received your letter yet, here are eight reasons why applications for credit cards might get denied.

When you apply for a credit card, the issuer may check your credit reports and scores to see how you’ve managed debt in the past. Requirements vary depending on the issuer and the card, but good credit scores might help you qualify for a credit card. 

What you can do: Different factors affect your credit scores. But in general, using the credit you have responsibly can help boost credit scores. That means doing things like paying on time every month. And if you haven’t established credit, make sure you’re considering eligibility requirements and looking at credit-building cards.

A credit card issuer may hesitate to approve your application if you have a lot of hard inquiries on your credit report, especially within a short period of time. This is because it could suggest to the lender that your financial circumstances have changed negatively, according to the Consumer Financial Protection Bureau (CFPB). Hard inquiries can also cause a temporary dip in your credit scores.

What you can do: Depending on your financial circumstances, you might want to wait a few months between applications. The CFPB also recommends only applying for credit you need. One way to avoid hard inquiries is to check whether you’re pre-approved for credit cards before applying. Pre-approval won’t affect your credit scores if it uses a soft inquiry to check your credit.

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 of these is high, it might indicate that you could struggle to keep up with new payments.

What you can do: The CFPB recommends keeping your DTI ratio below 36% for homeowners, including mortgage payments, and below 15%-20% for renters, not including rent payments. And the agency recommends keeping your credit utilization ratio under 30%. These lower ratios could signal to lenders that you’re using credit responsibly and not overspending.

To assess your creditworthiness, lenders typically review your credit history. If you’re new to credit or have a thin credit file, you may not have had a chance to prove your creditworthiness yet. This can make it difficult to qualify for a credit card.

What you can do: You may want to consider applying for a secured credit card, which can be used to build credit with responsible use. Secured cards require a one-time, refundable deposit to open an account. Because of this deposit, a secured card may be easier to qualify for than a traditional card. Plus, after showing responsible credit use over time, the card issuer may let you upgrade to a traditional, unsecured card.

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

What you can do: Make sure you’ve listed all your sources of income from full-time, part-time or seasonal jobs, as well as 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.

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

What you can do: If you don’t meet the age requirements, consider asking a trusted loved one to add you as an authorized user on their card. If you and the primary account holder use credit responsibly, becoming an authorized user may help you build credit before you apply for your own card. But negative actions can reflect poorly on both your credit scores.

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

What you can do: If a derogatory mark isn’t accurate, you could dispute it. Otherwise, you could focus on good financial habits and read what the CFPB has to say about good credit scores.

If your credit is frozen to protect against identity theft, it restricts access to your credit reports. If you don’t lift the freeze before applying for new credit, the issuer might not be able to access your credit reports. And that could result in not being approved for a credit card. 

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

Getting denied for a credit card doesn’t impact your credit scores directly. However, the hard inquiry that occurs when you apply for a credit card can. 

A hard inquiry can cause your credit scores to drop by a few points. And it 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.

• Review your credit reports. After finding out why you were declined, reviewing your credit reports may help you understand areas where you could improve. 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.

• Dispute credit report inaccuracies. Regularly monitoring your credit reports can help you identify inaccuracies more quickly. If you spot errors in your credit reports, contact the credit bureaus to report them.

• See whether there’s a credit card better suited for you. Eligibility requirements vary from card to card, so it’s possible that you could get approved for a different card. You may also consider getting pre-approved before applying for a new credit card. Pre-approval can give you a better idea of what cards you may be eligible for and help you avoid too many hard inquiries.

• Try to improve your finances before applying for another credit card. Depending on your personal circumstances, it may take time to improve your financial situation. But practicing good credit habits, like paying your bills on time every month, 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 your application was denied. 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.

• Earn unlimited 1.5% cash back on every purchase, every day, with Quicksilver or other cash back rewards cards.

• 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.