If your application for a credit card is denied, you have a legal right to know why.
A low credit score or low income are two of the most common reasons for denial.
Being denied doesn’t hurt your credit score, but a hard inquiry into your credit may lower it.
If you aren’t approved for the card you want, you may still qualify for other cards.
No one likes being turned down. Whether it was from a school you wanted to attend or a job you interviewed for, it can hurt to hear the word “no''.
It also hurts to receive a rejection letter in the mail instead of the credit card you were expecting.
The credit card approval process can feel mysterious, but there are several things you can do to improve your chances of being approved.
Learn why Your Credit Card Application was Denied
Under the Fair Credit Reporting Act, if your application is denied, you are entitled to receive a notice known as an adverse action notice (AAN) explaining why you were turned down.
The adverse action notice will outline the specific reasons why your application wasn’t approved. For example, if your denial is related to something on your credit report, the credit card company is required to tell you which credit report they checked and what your credit score was.
Common reasons a credit card application might be denied include:
Credit score is too low - Almost every card requires a minimum credit score to be approved. The required score ranges will vary by card.
Income is too low - Even with a good credit score, a low income could mean that the company thinks an applicant may struggle to make payments.
Carrying too much debt - If an applicant is already carrying a large amount of debt relative to their income, credit card companies might be reluctant to give them more credit.
Applying for too many cards in a short period of time - Lenders may consider an applicant to be potentially risky if they have too many outstanding lines of credit, even if they're not using them.
Negative credit report - A credit report with negative marks such as too many late payments or a bankruptcy could prevent an applicant from being approved.
Ultimately, companies want to issue cards to people they believe will pay them back. If they have a reason to think that’s something you’ll struggle with, your application may be declined.
Does Getting Denied Hurt my Credit Score?
Getting denied for a credit card does not lower your credit score. However, the ‘hard inquiry’ that credit card companies perform on your credit report when you apply for a card can have a negative effect on your rating.
The good news is that as long as you use your credit responsibly and pay your bills on time, your credit score should recover fairly quickly from this type of inquiry.
It's a good idea to wait at least a few months between credit card applications. Too many hard credit inquiries in a short period of time can negatively impact your credit score and could be seen as a red flag by credit card companies.
What you can do When Your Credit Card Application is Denied
Even if your application for a credit card gets denied, you can take steps to improve your chances of being approved in the future such as:
Review your credit report for accuracy – A recent report shows that34% of consumers found an error on their credit report that negatively affected their credit score. You’re entitled to a free credit report every twelve months from the three major U.S. credit bureaus: TransUnion, Experian and Equifax. Request a free copy of your credit report through AnnualCreditReport.com and review thoroughly to make sure your report is accurate and free from errors.
Pay down the balance on existing credit cards - Credit usage is a measure of how much of your available credit you use, and is one factor in determining your credit rating. The lower that number is, the better for you, so paying down the principal should improve your score if you’re carrying too much credit card debt.
Pay down other debt - Too much outstanding debt can also impair your creditworthiness. Paying down your other debts could make you a more attractive candidate to credit card companies.
Wait to reapply - If you were rejected for applying for too many cards, you may want to wait at least six months from your last hard inquiry before applying again. You may need to wait longer if you were rejected because your credit score is too low, as you work to raise it.
Get a secured credit card - A secured credit card is a card that you pay for in advance, but putting money into an account, much like a debit card. A secured credit card can help to build a solid credit history.
Apply for a card that’s appropriate for your situation - Online tools can help guide you to cards you're more likely to be approved for based on your credit score. There are credit cards designed for people in all kinds of financial situations, so search for one that matches yours.
Get help if you need it - Consider speaking with an accredited credit counselor who can provide the advice and guidance you need to manage your financial situation.
Monitor Your Credit
It’s a good idea to keep an eye on your credit score and credit reports to deal with red flags like errors, identity theft or inaccuracies immediately rather than be surprised when you’re applying for a credit card.
The Last Word
While it never feels good to be told no, an AAN isn’t the final word on whether or not you can receive a credit card.
Take the time to understand why you were turned down, fix the issues, and look for a card that you can be approved for while you work to improve your credit score.
The Mission Lane Visa™ Credit Card is issued by Transportation Alliance Bank, Inc. dba TAB Bank, Member FDIC, or WebBank, pursuant to a license from Visa U.S.A. Inc.
Visa is a registered trademark of Visa U.S.A. Inc. All other trademarks and service marks belong to their respective owners.
Mission Lane LLC provides services for your Account, but is not a bank. The bank issuing your card will be identified on the back of your Visa Card and in your Cardholder Agreement, which governs your use of the Account.
Mission Lane LLC does business in Arizona under the trade name Mission Lane Card Services LLC. All trademarks not belonging to Mission Lane are the property of their respective owners.
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