Credit Card Application Denied: Most Common Reasons

Editorial Note:

Last Updated: July 30, 2022

You won’t always be expecting your credit card application to be denied, and sometimes you won’t be told exactly why it was rejected. Below are the most common reasons explained and what you should do to increase your chances of having your application approved.

High Credit Card and Loan Balances

You may be at risk of having your credit card application denied if your credit balance is not kept below 30%. Credit card companies do not want you to use too much of the credit made available to you or to max out your card. They may also have reason to believe you will not pay off your credit card if you have not previously managed to pay down your loan balances. Reducing both of these balances prior to applying for a credit card will increase your chances of being approved.

Negative Information on Your Credit Report

Your credit report will have information on your credit history as well as your public records which will include anything from bankruptcies to unpaid traffic violations or library fines. Any negative information on your credit report will decrease your chances of having your credit card approved. You can make sure all the information on your credit report is true and accurate by getting your credit report and reviewing it thoroughly. Any mistakes or inaccurate information you notice you can discuss with the bureau.

Too Many Credit Inquiries

If you have made too many credit card or loan applications in a short time frame it will show up on your credit history. Multiple applications, regardless of being successful or not, will reduce your credit score so it is recommended to wait at least 1 year before applying for a new card.

Too Many Credit Cards

Holding too many credit cards at once can cause reason for concern for credit card issuers. This can be difficult as the number of cards can vary from each issuer, however too many is when you cannot manage the payments of all of your cards or keep your card balances below 30%.

Low Income

If you do not earn enough or do not have an income at all this will result in your credit card application being denied. Having too many expenses and not enough income could convince the card issuer that you will not be able to keep up with repayments. The income requirement is variable and there is no set income for all issuers or card types. If you have been denied on this basis of low income you could reapply with a joint account.

Too Young Credit Account

Closing down accounts after short periods of time will reduce your credit age and credit experience. Once you have a credit card keep it open even if you don’t use it as this will increase your credit age. A low credit age could result in having your credit card application denied.

Unstable Employment History

Jumping from one job to another will look unstable. A steady income will show you will be able to meet your repayments. If you have been in the same job for at least 6 months this will look consistent and increase your chances of your application being approved.

You Are Too Young

If you are 18 years or younger you will not have your credit card application approved as you cannot enter a legally binding contract as a minor. You can, however, have a parent cosign on the account or alternatively they could add you as an authorized user of their credit card account.

Missing or Incorrect Information on Your Application

Any missing or incorrect information on your application will result in it being denied. Luckily, if you make your application out online you are likely to be notified if there is missing required information before you can proceed.

Increase Your Chances of Being Approved

All of these factors may not apply exactly to every credit card issuer, so make sure to shop around and find out which issuer suits you and your circumstances best. Considering all possible credit card issuers will increase your chances of being approved the first time.

Roman Zelvenschi

I started a digital marketing agency Romanz Media Group Inc. 12 years ago. Running my own business quickly taught me the importance of cash flow. Making sales was not enough, I had to have money in the bank to pay the vendors, staff and personal bills.

During those early stages of the company I learned how to get creative with debt and to save on interest cost. I paid for everything I could with a credit card to both get more points and to extend the payment date by 25 days (credit card grace period). I then utilized a 0% balance transfer offers to rotate this debt.

I learned a lot during this process and made a lot of mistakes. My key lesson is that the most important part of being financially independent is how much I managed to save, rather than how much I earned. Staying disciplined with savings and tracking spending is not easy and I tried many different methods to stay on track.

FinancialFreedom.Guru is a side project where I and my staff are trying to share the practical knowledge on how to understand finances and to build wealth.

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