Why aren’t you getting approved for a credit card?
Learn why your credit card application may have been denied and how to increase your chances of getting approved next time.
February 10, 2022 7 min read
It can be exciting to get a new credit card, but not being approved for one may leave you disappointed. After filling out your application, the card issuer reviews your information to see whether you qualify. If your application is denied, lenders are required to provide the reasons they rejected your application or tell you that you have the right to find out why. And there are things you can do that may help you get approved in the future.
Read on for more information about some of the possible reasons for not being approved—and what you can do to improve your chances of approval in the future.
1. Low credit score
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. Higher credit scores and good credit history might help you qualify for a credit card. But you could have trouble if your credit score is on the low side, depending on the credit card.
What to do: Consider applying for a secured credit card, which usually involves putting down a security deposit and can be used to build credit history. After showing responsible credit use over time, the card issuer may let you upgrade to a traditional, unsecured card without closing your original line of credit.
2. High outstanding debt
Having too much debt might hurt your chances of being approved for new credit, especially if your debt-to-income ratio or credit utilization ratio is high. Your debt-to-income ratio measures your debt as it relates to your income, and it may indicate whether you can handle more debt. And your credit utilization ratio measures how much of your available credit you’re using. If either of these is high, it might be an indicator that you could struggle to make the required payments for any new credit.
What to do: If your budget allows, consider paying down debt before applying for new credit. The Consumer Financial Protection Bureau (CFPB) recommends keeping your debt-to-income 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 be a sign to lenders that you’re using credit responsibly and not overspending.
3. Too many inquiries on your credit reports
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. The frequent credit applications could suggest to the lender that your financial circumstances have changed negatively.
What to do: Depending on your financial circumstances, you might want to wait between applications—for instance, a few months. You might also want to consider checking whether you’re pre-approved for credit cards before applying. Pre-approval is considered a soft inquiry and won’t affect your credit score. But keep in mind, it also doesn’t guarantee you’ll be approved for the credit card. It’s also a good idea to apply only for credit you need, as the CFPB recommends.
4. Limited credit history
To assess your creditworthiness, lenders typically review your credit history, which includes whether you have a track record of making payments on time. 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 to do: You may want to consider applying for a secured credit card or a credit builder loan. But you could also consider checking whether you’re pre-approved for unsecured credit cards. As a reminder, pre-approval doesn’t guarantee you’ll be approved for a credit card.
5. Insufficient income
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 to do: Make sure you’ve listed all sources of your income, including those 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, which includes money someone else regularly deposits into your account or a joint account.
6. You’re too young to apply
You generally need to be at least 18 years old to apply for your own credit card account. But if you’re under 21, you might need to prove that you have enough independent income to make your minimum credit card payments. If you can’t show adequate independent income, you may need a co-signer, guarantor or joint applicant who can meet the card’s requirements.
What to do: If you don’t meet age requirements, consider asking a trusted family member to co-sign your card on their account. Keep in mind that not all credit card issuers allow co-signers, though. If you’re a student or married, for example, you may be able to list shared income that someone else might regularly deposit into your account or a joint account.
7. A charge-off on your credit reports
A charge-off generally occurs if you haven’t made a required payment on your credit card account for 180 days. The creditor or lender considers the debt a loss and closes the account, but you’re generally still responsible for paying the amount owed. If you have a charge-off on your credit reports, it might hurt your credit scores. It also could signal to a lender that you might default on another credit card in the future, so it may be difficult to get approved.
What to do: If the charge-off isn’t accurate, you could dispute it. If it is, you might be able to contact the creditor to ask about a repayment plan. Keep in mind, a charge-off will generally stay on your credit reports for up to seven years after the first late or missed payment that led to the charged-off status. And if it’s not paid, lenders may think that you won’t be able to pay for future debt. If you pay the charged-off balance, it could look better to some lenders, according to Experian.
8. The application was filled out incorrectly
Credit card applications may seem straightforward, but it’s possible to make errors on them. For instance, you could mistakenly report a lower income or enter the wrong Social Security number.
What to do: Find out why you weren’t approved. Lenders are required to disclose the reasons they rejected your application or tell you that you have the right to find out why. If the rejection was due to an application error, you could ask about reapplying.
9. Recent bankruptcy filing
You may want to start rebuilding credit after a bankruptcy, but some credit card issuers might hesitate to approve your application. That’s because a bankruptcy might indicate you had trouble paying back debt in the past.
What to do: Some credit card issuers may approve you for a secured credit card after the bankruptcy is discharged. Other issuers might require a certain amount of time to pass—with no additional bankruptcy filings—before you qualify for a new account.
10. Frozen credit report
If you’re concerned about protecting against potential identity theft, you might contact the credit bureaus to freeze your credit, which can restrict access to your credit reports. But you might need to lift the freeze before applying for new credit—otherwise, the issuer might not be able to access your credit reports, which could result in your application being denied.
What to 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.
Monitor your credit
Checking your credit reports regularly can help you look for errors or potential signs of identity theft. Plus, you’ll be able to track your financial health and dispute any mistakes you find. And checking your credit scores can help you figure out whether you might qualify for a credit card.
One way to monitor your credit is with CreditWise from Capital One. CreditWise gives you free access to your TransUnion® credit report and weekly VantageScore® 3.0 credit score—without hurting your score. CreditWise is free and available to everyone—even if you don’t have a Capital One account.
You can also get free copies of your credit reports from the three major credit bureaus. Visit AnnualCreditReport.com or call (877) 322-8228 to learn more.