If you keep making credit card requests just to get turned down over and over again, you might be wondering what’s going on. Thanks to legislation passed in the 1970s, credit issuers are required to tell you exactly why they refused your credit card application. So if you wait about a week, you will receive a letter explaining exactly why your application was rejected.
Of course, just because you’ve read your adverse action letter doesn’t mean you still don’t have any questions. Does Declining a Credit Card Affect Your Credit Score? Can you be refused a secure credit card? How can you improve your chances of being accepted?
Let’s take a close look at what you can do when your credit card application is declined. This allows you to switch from a declined credit card to an accepted credit card.
Top Reasons Your Credit Card Application May Be Denied
When you apply for a credit card, it usually only takes a few minutes to find out if you’ve been approved or denied, but it can take up to two weeks to find out why your credit card application was denied. Thanks to the Fair Credit Reporting Act, lenders are required to tell you why they rejected your credit application. This is called an Adverse Action Notice (or Adverse Action Letter), and you can expect it to arrive between seven and 10 business days after your rejection. Here are some of the most common reasons credit card applications are refused.
Your credit score is too low
Credit cards are often refused because the applicant’s credit rating is too low. Each credit card has a recommended credit score range, and if your credit score is not high enough to fall within that range, the lender may deny your credit card application.
Before you apply for your next credit card, check your credit score. Know where you fall in the FICO and VantageScore credit score ranges: is your credit bad, fair, good or excellent? So take a look at our list of cards for each credit range to learn more about which credit cards might be right for you.
Your income is too low
In many cases, you must declare your income and your monthly housing payment on your credit card application and lenders may decide that your income is too low. While people can use credit responsibly at all income levels, a credit card issuer may view low income as too much of a risk factor, especially when combined with rent payments or high mortgage.
You have a negative credit history
If you’ve missed a lot of credit card payments recently, or have had trouble with debt collectors in the past, a lender might not want to give you a new line of credit. People who have a lot of derogatory notes on their credit reports, whether it’s due to missed payments, collections, foreclosure, or bankruptcy, might have a harder time opening new credit cards.
You have applied for too much new credit
If you apply for a large number of new loans at once, lenders may consider you to be a credit risk. Plus, every new credit card application generates a serious credit request that can lower your credit score. It’s a good idea to wait three to six months between credit card applications; Otherwise, you might feel like you are claiming too many new credits in a short period of time.
You have chosen a card that has application restrictions
Many credit issuers have app restrictions to prevent credit card churn and other card abuse, and not everyone knows how these restrictions work.
- If you’re applying for a Chase credit card, for example, you should know the Chase 5/24 rule: if you’ve opened five new credit cards in the past 24 months with an issuer, you likely won’t be accepted for. a new Chase card.
- If you are interested in a Bank of America credit card, you should know the Bank of America 2/3/4 rule: cardholders are limited to two Bank of America requests per month, three Bank of America requests per 12 months and four Bank of America Requests per 24 months.
Before you apply for your next credit card, check to see if the issuer has any application restrictions that could affect your application.
Does Declining a Credit Card Affect Your Credit Score?
Refusing a credit card doesn’t affect your credit, so you don’t have to worry about it. However, you might see a slight drop in your credit score due to the serious credit demand associated with your credit card application. Every time you apply for new credit, a lender performs a survey of your credit history and each of those credit calls can lower your credit score by a few points.
What to do in case of repeated credit card refusals
Asking yourself, “Why do I keep getting refused credit cards?” If you are regularly denied credit cards, read your adverse action notices to find out why your applications are denied. Look for common themes, such as “too low credit score” and try to address them.
If you are regularly denied your credit card, your credit history may not be strong enough to be accepted for a new credit account. Consider applying for a secured credit card, which gives you a small line of credit in exchange for a refundable security deposit. You can still be denied a secured card if your income is too low or you have too many derogatory notes on your credit reports, so approval is not guaranteed, but it’s worth a try.
You may also consider becoming an authorized user on a partner’s or parent’s credit card. This gives you the opportunity to build on someone else’s positive credit history and could help improve your chances of being accepted for a credit card in the future.
How to get your next credit card approved
If you want to get approved for your next credit card, there are a few things you can do to improve your chances. Here are five ways to increase the chances of your next credit card application being successful:
Use your current credit cards responsibly
The best way to get approved for your next credit card is to use your current credit cards responsibly. Make on-time payments on each card and try to keep your credit card balance below 30% of your available credit. The more you can prove that you can wisely manage your current credit accounts, the more successful your next credit card application will be.
If you’re having trouble making on-time payments on your credit cards, use mobile alerts to remind you when your payments are due or set up automatic payments. If you’re having trouble paying off your credit card balances, consider a balance transfer. The best balance transfer cards offer between 15 and 21 months of 0% introductory APR on transferred balances, during which you can pay off your balances without earning interest.
Build your credit score
Using your credit cards responsibly is one of the best ways to improve your credit score, but you may want to focus a little more on building your credit, especially if you have a bad credit score. or fair. Getting a good credit score is one of the best things you can do for your financial health, so take the time to learn what’s going on with your credit score and what you need to do to get it the most. high possible.
Want some tips to help you build your credit score fast? Keep your credit card balances as low as possible or pay them off in full. Make your credit card payments on time, every time. Avoid unnecessary credit checks and don’t apply for too many new loans in a short period of time.
Monitor your credit reports
As you work to build your credit and use your current credit accounts responsibly, don’t forget to regularly check your credit reports or sign up for a credit monitoring service that will check them for you.
There are two good reasons to monitor your credit reports. First, you will understand how your day-to-day credit activity affects both your credit history and your credit score. You might be surprised to learn, for example, that making a big purchase on your credit card can lower your credit score for a while. (Don’t worry, paying off your balance can boost your credit score.) The other good reason to monitor your credit reports is to be able to quickly spot and report errors. Millions of Americans have errors on their credit reports, so make sure all of the information on your credit report is correct and make sure you know how to dispute credit report errors just in case.
Know how long to wait between applications
It’s a good idea to wait three to six months between credit card applications. If your credit card application is denied, waiting three months to apply for your next credit card could help improve your chances of being accepted, especially if you are using that time to establish a positive credit history and improve your credit score. credit.
Choose the best credit card for you
When you’re ready to apply for your next credit card, take the time to compare credit cards so you understand your options and can choose the best credit card for you.
- Look for a credit card that is suitable for someone with your credit score.
- If you have bad credit, consider a secured credit card or one designed for people with low credit.
- If you’ve been successful in getting good or great credit, check to see if the credit card issuer has any application restrictions that might affect you.
- If you’ve bought more than five credit cards in the past 24 months, for example, Chase’s 5/24 rule means you likely won’t be accepted for a Chase credit card.
At the end of the line
The more you know about the reasons why credit cards are declined and what you can do to improve your chances of being accepted, the more likely you are to choose the right credit card for your credit score, your level. income and your financial goals. If your last credit card application was declined, use this information to make your next credit card application as strong as possible, as this is how you go from a declined credit card to an accepted credit card. .