Credit Card Application Denied – Why Did I Get Denied a Credit Card?
Have you ever applied for a credit card and got a denial? If you have, you’re not alone. There are literally thousands of people who have had their credit card application denied. Whether it was a denied credit card too many inquiries or something else, it can be discouraging. There are other factors that can result in your credit card application denied, and we’ll outline them for you below.
1. Thin Credit History
Lenders look at your credit history to see how reliable you are with your finances. They like to see a mix of accounts with a long history of on-time payments. If you don’t have a limited credit history, they’re hesitant to lend to you. Also, they see you as a riskier client that has a high probability of not paying them back.
2. Credit Balances Are Too High
Ideally, you only want to utilize 33% of your credit card’s limits at the most. If your balances go beyond this amount, it’s a red flag to lenders. You may be living beyond your means. You could easily end up with your credit card application denied. So the best thing to do is to pay down your balances. Work to keep your credit utilization below 33% across all of your cards.
3. Unemployed or Low Income
Your income can also play a significant role in your acceptance or denial when you apply for a new credit card. Lenders have to see that you have the income required to make your payment each month. Unemployed or low-income people may have trouble paying on time. Some lenders may even ask for proof of income before they accept your application for a credit card.
4. Denied Credit Card Too Many Inquiries
When you apply for a credit card or loan, an inquiry goes on your credit report. They can stay on your credit report for two years. They only lower your score a few points. However, denied credit card too many inquiries is very common. If lenders see a sudden cluster of inquiries, it’ll make them worried. They’ll wonder what’s happening right now that is so urgent. Minimizing your inquiries is the best way to avoid getting your credit card application denied.
5. Too Many Credit Cards
While it’s good to have a mix of accounts, too many credit cards isn’t good. Each credit card issuer has a different amount of credit cards they’ll accept. If you fall over their limit, they’ll deny your request. Having a lot of credit cards is another red flag that you’re living beyond your means. It also increases your chances of missing payments or forgetting them entirely.
6. Missed Payments
Your payment history makes up the bulk of your credit score. Even one late payment can cause your score to drop significantly. Credit lenders take your payment history into careful consideration when they approve or deny credit. Ideally, they like to see no or very few missed payments. If you have them, concentrate on not missing any going forward and build your payment history.
7. Recent Public Record or Collections
If an account sits in collections long enough, it’ll eventually become a public record. They hurt your score less over time. However, they can drop your score when they first appear on your credit report. These are serious delinquencies that ward off credit card lenders. It can result in your credit card application denied because the lender doesn’t think you have enough money for your debts. Paying these off can help. You can also negotiate to remove them from your credit file.
8. Errors on Your Credit Report
Errors on credit reports are extremely common. This is especially true if you’ve never checked it. Errors can drop your score and ruin your chances of getting a credit card. If you see errors, dispute them with the credit bureaus. They’ll do an investigation. If they are errors, they’ll remove them from your credit report. This can boost your score. It also cleans up your credit history. In turn, lenders will be more willing to work with you.
9. Charge-Offs on Your Credit Report
A charge-off is a huge issue for lenders. It’s a credit card balance that you didn’t pay for at least six months. If you didn’t pay another card, there’s no proof you’d pay this one. New credit card companies will hesitate to extend you a line of credit. You can try to negotiate to pay it off for removing it from your credit report. However, most will leave it on but update that you paid in full.
10. Recent Delinquency
Maybe you have a solid payment history, but you recently missed a payment. A popular reason for your credit card application denied is due to having recent delinquency. Even if you made your next payment on time, lenders would look at it. They may wonder if you’re slowly losing the ability to pay your debts. You should wait a few months, pay everything on time, and try again.
How to Improve Your Credit Score
If you got your credit card application denied, improve it before you apply again. There are a few ways you can do this, and they include:
- Authorized User – You can become an authorized user on a family or friend’s account. You’ll get the positive parts of their payment history. Basically, you’ll get your friend or family member’s line of credit. However, they’ll be responsible for the bill if you don’t pay for it.
- Don’t Miss Payments – Put everything on auto-pay if you can. This will ensure that you don’t miss any more payments. In turn, it helps you build a strong payment history.
- Pay Down Debt – Start paying down your debt. This will look good to lenders. It’ll also improve your debt-to-income ratio. They’ll be more willing to extend you a line of credit.
Bottom Line – Credit Card Application Denied
A credit card denial can be discouraging. However, there are things you can do to fix your credit before you apply again. Finally, take a look and see why they denied your application. You’ll get a starting point to fix your credit and get the next card you apply for.