Why Credit Card Applications Get Denied | Capital One (2024)

Being denied a credit card can be disappointing. But the good news is you don’t have to guess why your application was denied. That’s because lenders are required to provide the reasons they rejected your application or tell you that you have the right to find out why.

Keep reading to learn more and what you can do to improve your creditworthiness.

Key takeaways

• Lenders are required to provide an adverse action notice as to why your credit card application was denied.
• Even if your application is denied, you can help improve your credit over time by doing things like paying your bills on time.
• It’s a good idea to consider eligibility requirements for the credit card you’re considering. And if you’re new to credit, you might want to look at cards designed for people who are building credit.
• If you apply for too many credit cards in a short amount of time, it could affect your credit scores. But by getting pre-approved, you could see what cards you may be eligible for without hurting your credit.

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 higher credit scores and a good credit history might help you qualify for a credit card.

What you can do: Different factors affect your credit scores. You’ll read about some of the specifics below. But in general, using the credit you have responsibly is one way to improve your scores. That means doing things like paying your statement on time every month. If you haven’t established credit, make sure you’re considering eligibility requirements and looking at cards designed for people who are building credit. But it’s also important to remember that applying for too many cards in a short period of time can hurt your credit scores.

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. If these credit inquiries were from multiple credit card applications, they could suggest to the lender that your financial circ*mstances have changed negatively. Hard inquiries can also cause a temporary dip in your credit scores.

What you can do: Depending on your financial circ*mstances, you might want to wait between applications—for instance, a few months. It’s also a good idea to apply only for credit you need, as the Consumer Financial Protection Bureau (CFPB) recommends. 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 because it typically uses a soft inquiry to check your credit. But keep in mind, pre-approval also doesn’t guarantee you’ll be approved for the credit card.

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 you can do: If your budget allows, consider paying down debt before applying for new credit. The 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.

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 you can do: You may want to consider applying for a secured credit card, which can be used to build credit history with responsible use. 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 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.

If you can’t show adequate independent income, you could consider asking a trusted family member to co-sign your card or add you as an authorized user on their account. Keep in mind that not all credit card issuers allow co-signers, though.

You need to be at least 18 years old to apply for your own credit card account. But 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 remember, not all issuers allow co-signers.

What you can do: If you don’t meet the age requirements, consider asking a trusted loved one if you could be an authorized user on their card. If the primary account holder uses 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.

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 you can do: If the charge-off isn’t accurate, you could dispute it. 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 charge-off status.

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 you can do: If your credit card application was denied, you’ll receive a written adverse action notice within 30 days about why it was denied. If the rejection was due to an application error, you could ask about reapplying.

You may want to start rebuilding credit after bankruptcy, but some credit card issuers might hesitate to approve your application. That’s because a bankruptcy could indicate you had trouble paying back debt in the past.

What you can 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.

If your credit is frozen to protect against identity theft, it restricts access to your credit reports. But 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 your application being denied.

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 can be frustrating. But depending on your personal circ*mstances, here are some steps you can take:

1. Find out why your application didn’t get approved. You should receive an adverse action notice within 30 days of the lender receiving your application. After finding out why you were declined, reviewing your credit reports may also 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 access to your TransUnion® credit report and VantageScore® 3.0 credit score.
2. Dispute credit report inaccuracies. If you spot errors in your credit reports, you can contact the credit bureaus to report the inaccuracies and possibly have them removed.
3. See if 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. But to avoid having too many hard inquiries on your credit file, you may want to consider getting pre-approved before applying for a new credit card.
4. Work on improving your situation before applying for another credit card. Depending on your personal circ*mstances, 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 are things you can do to improve your chances of approval in the future.

Capital One’s card comparison tool allows you to explore cards based on your credit level. Plus, you can first find out if you’re pre-approved without hurting your credit.