Once you get approved for a credit card, you’ll get the information immediately. But when your credit card application gets rejected, the credit card company may rarely inform you immediately. Instead, they will send you a letter, called an adverse action letter, within 7-10 business days of your application, informing you about that decision.
The adverse action letter will specify the reasons for which your credit card application was denied. The letter will also include instructions for getting a free copy of your credit report.
There are some possible reasons that can make your credit card application rejected. If you can’t guess why to check out the reasons below:
1. You have high credit card balances
The credit card company will always want to see that you’re using a tiny portion of the available credit. But, if you’re using too much of the available credit, you can expect that your next credit card provider will deny your credit card application.
So, what can you do about this? It’s simple.
You should keep your credit uses below 30% of your available credit. It is best for your credit score and will put a positive impression on your credit card providers. As a result, your chances will increase to get approved for a new credit card.
2. Your loan balances are quite high
Carrying too much loan or debt might become harder for you and might lose your affordability. If your credit balance is high, and you are paying too many monthly payments to pay off your debts, then credit card providers may think twice before approving you for a credit card. As a result, they might reject your credit card application.
So, you need to reduce your debts, pay off your loans, and improve your chances of getting approved.
3. Too many inquiries on your credit report
If you have applied for too many credit cards within a short period, it can be one of the reasons behind your credit card application rejection. You should try to reduce the frequency of your credit shopping so that your inquiries also get reduced.
There is no fixed number of inquiries that will prevent you from getting a credit card. So, reduce your credit inquiries as low as possible.
4. Your income is quite low
The income criteria may vary depending on the different credit card providers. Your credit card application can be rejected if you don’t earn enough to afford monthly payments on your debts and that particular credit card.
Credit card companies initially hid the minimum income requirements for their credit cards. So it’ll be your job to calculate and apply for the perfect credit cards that’ll fit your income.
5. Do you have any recent delinquency
Credit card providers will definitely have a look at your credit report to find out any type of delinquency in your report. They will also consider how long you were delinquent.
Your most recent payment history will be considered to determine how well you’ll handle a new credit card. Recent delinquency may create trouble for your credit card application.
So, too many delinquencies may be a prime reason that your credit card application is rejected.
6. You have a short credit history
- Your credit card application may be denied if you’ve never had credit previously.
- Your credit report will contain all of your financial activities, including credit accounts.
- You need one credit account active for six months so that FICO can generate a credit score for you.
- If you don’t have a credit score, the credit card providers may reject your application because they can’t estimate your creditworthiness.
- If you’re about to build credit, consider a secured credit card or student credit card to get your credit history started.
7. You have a Charge-Off credit account
A charge-off account is a credit account that has been unpaid for the last six months or more. The original creditor usually sells off the account to a third-party collector. This is one of the darkest errors appearing in your credit report.
If you have a charge on your credit card account recently, a new credit card provider will definitely ignore your credit card application.
8. You are too young to get a credit card
If you’re under age 18, your credit card application might get rejected because you’re under the legal age to use a credit card. But there are also some exceptions.
You might get approved for a credit card if you have a decent income and you’ve already been added as an authorized user to your parent’s credit card.
9. You have an unstable job history
Unstable work history can result in your credit card application rejected. Credit card providers may want you to have a decent job with a consistent work record.
If you’ve been job-hopping or facing unemployment for a period of time, you may experience a hard time getting approved for a credit card.
10. You didn’t properly fill out the application form
If your application is missing important information, like your physical address or the date of birth, or any other required info, your application will be rejected instantly.
The best thing about most online credit card applications is that they won’t accept the application as “completed” and won’t let you submit the application form until it’s correctly filled.
So, try to apply through an online application form. That way, you may eliminate the risk of having your credit card application denied.
The adverse action letter may include instructions to order a free copy of your credit report. Credit card providers normally do this if there are errors in your credit report that led to the rejection. Order the credit report and review it for any errors. Dispute errors with the credit bureau if you find any. Otherwise, use this free credit report as an opportunity to repair your credit before your next credit card application.