{"id":763,"date":"2024-11-01T15:23:58","date_gmt":"2024-11-01T21:23:58","guid":{"rendered":"http:\/\/www.lexingtonlaw.com\/blog\/?p=763"},"modified":"2024-10-31T16:24:07","modified_gmt":"2024-10-31T22:24:07","slug":"10-reasons-credit-application-denied","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/credit-101\/10-reasons-credit-application-denied.html","title":{"rendered":"Why do I keep getting denied for credit cards?"},"content":{"rendered":"\n
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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. <\/em>See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

Whether you\u2019re just starting your credit journey or looking to grow your access, you might be in the market for a new credit card. But if you\u2019ve sent in application after application only to be rejected, you might have some questions\u2014namely, why do I keep getting denied for credit cards?<\/p>\n\n\n\n

The answer depends on many factors, including credit score, income and employment history, among others. To help you get started, here are some of the most common reasons for credit card denials, plus some tips to help you shore up your report for approval. <\/p>\n\n\n\n

<\/a>Why do I keep getting denied for credit cards? <\/h2>\n\n\n\n

There are various reasons your credit card application may have made its way into the rejection pile. Here are 10 common causes for denial that might apply to you. <\/p>\n\n\n\n

<\/a>1. You don\u2019t have much credit history <\/h3>\n\n\n\n

It takes credit to build credit<\/a>. A credit history shows lenders you\u2019re capable of borrowing and repaying responsibly. Before approving your credit card application, creditors will check your credit history to determine how much risk they\u2019re assuming by lending to you. But if you have little or no credit history, things can get tricky.\u00a0<\/p>\n\n\n\n

While a nonexistent credit history isn\u2019t the same as having bad credit, it can still make borrowing more difficult. If\u00a0your credit profile is thin,<\/a> you likely don\u2019t have enough data to give lenders the full picture of your qualities as a borrower. If this is the case, you can seek out lenders who specifically lend to first-time borrowers.\u00a0<\/p>\n\n\n\n

<\/a>2. Your existing credit cards are maxed out <\/h3>\n\n\n\n

Your credit utilization ratio is also important to lenders. This represents the percentage of available credit you have in use each month. Ideally, this percentage should be at or below 30 percent<\/a>. For example, if you have one credit card with a $5,000 limit and a credit line with a $1,000 limit, your total available monthly credit is $6,000. To keep your ratio below 30 percent, you can limit the amount of credit you use and carry over from month to month to $1,800.\u00a0<\/p>\n\n\n\n

Maxed-out cards can result in a much higher credit utilization ratio. From a lender\u2019s perspective, you may seem to have trouble paying off your current debt, a sign that accepting you as a borrower could be risky. Reducing your in-use credit or earning a credit limit increase can lower your overall credit utilization ratio, which might make you eligible for a new card. <\/p>\n\n\n\n

<\/a>3. There are negative items on your credit report <\/h3>\n\n\n\n

Collection accounts, foreclosures, bankruptcies and unpaid tax liens are negative items that can remain on your credit report<\/a> for up to 10 years.<\/strong> These not only hurt your credit but may also increase the difficulty of opening new credit cards.\u00a0<\/p>\n\n\n\n

The further you are from the date you received a negative item, the less impact it has on your borrowing power. While you probably don\u2019t need to wait until the item drops off completely to apply for a new card, time can prove to creditors that you aren\u2019t a high-risk borrower. <\/p>\n\n\n\n

<\/a>4. You\u2019ve missed some payments <\/h3>\n\n\n\n

Lenders look at your payment history to assess your likelihood of repaying a loan. If you\u2019ve missed multiple payments, there\u2019s a greater chance you\u2019ll be denied\u2014especially if the slip-ups happened recently. In this case, a credit clean-up<\/a> may help you get your report back on track.\u00a0<\/p>\n\n\n\n

<\/a>5. Your credit score is too low <\/h3>\n\n\n\n

Some credit cards are only available to those with high credit scores. Most of the time, a preferred credit score range is prespecified\u00a0and applicants who don\u2019t meet the criteria are denied. To increase your chance of approval, only apply for a card if you fall within the recommended score range<\/a>.<\/p>\n\n\n\n

<\/a>6. You have a high debt-to-income ratio <\/h3>\n\n\n\n

Debt-to-income ratio (DTI)<\/a> is the amount of debt you have versus your income. If this number is too high, creditors may feel you can\u2019t afford to take on more debt. Typically,\u00a0creditors look for a DTI<\/a> of 15 to 20 percent if you rent (your monthly rent payment won\u2019t be included in this ratio) and 36 to 43 percent\u2014or higher\u2014if you have a mortgage (your monthly mortgage payment will be included in this ratio).<\/p>\n\n\n\n

<\/a>7. Your income isn\u2019t high enough <\/h3>\n\n\n\n

Before a creditor lends you money, they\u2019ll want to ensure you can pay them back. In this case, a low income represents a greater risk to the lender. If you\u2019ve applied for a card with a high limit, your income may be too low for approval. <\/p>\n\n\n\n

<\/a>8. There\u2019s an error on your credit report <\/h3>\n\n\n\n

Occasionally, a credit report may include errors. If you notice debt that isn\u2019t yours or credit cards you never applied for on your report, it could be a mistake. These errors may bring down your credit, so it can be helpful for you to address them with the credit bureaus<\/a>.\u00a0<\/p>\n\n\n\n

To avoid errors in the future, get in the habit of reviewing your credit reports at least once a year. That way, if a mistake appears, you\u2019ll catch it right away. <\/p>\n\n\n\n

<\/a>9. You\u2019ve recently had a hard inquiry <\/h3>\n\n\n\n

Being denied for a credit card won\u2019t impact your credit. However, when your credit report is run by a lender, it usually results in a hard inquiry<\/a>, which can affect your credit. Hard inquiries indicate that a lender has asked to view your credit history in the process of reviewing a loan or credit application. Whether you\u2019re approved or denied, an inquiry will appear.\u00a0<\/p>\n\n\n\n

A single hard inquiry may not have any impact on your credit, or it might temporarily lower it by a few points. However, multiple hard inquiries in a brief period of time may have a more significant negative impact on your credit, and this is generally not a good sign from a creditor\u2019s point of view. For this reason, if your application is denied, it may be best to wait to reapply. <\/p>\n\n\n\n

<\/a>10. You have a history of job-hopping <\/h3>\n\n\n\n

Employment status can greatly impact your credit card eligibility. Recent unemployment or chronic job-hopping can lead creditors to classify your income as unstable. From their perspective, a lack of consistent employment puts you at a higher risk of default. <\/p>\n\n\n\n

If you\u2019ve changed jobs lately, it might take some time before your position stabilizes in the eyes of creditors\u2014especially if your current job is in a brand-new career field. Maintaining steady employment can prevent work history from interfering with your credit card application. <\/p>\n\n\n\n

<\/a>What can I do after my credit card application is denied? <\/h2>\n\n\n\n

If you\u2019ve reviewed the explanations above and still aren\u2019t sure why you keep getting denied for credit cards, the next thing to do is ask. Fortunately, banks are required to give you a reason for your denial in the form of an adverse action notice<\/a>. This letter describes why your application was rejected and usually offers suggestions for how you can improve.<\/p>\n\n\n\n

Once you know why you were denied, you can plan your next steps accordingly. Here are some common strategies that may put you on the path toward approval. <\/p>\n\n\n\n

<\/a>Ask for a reconsideration<\/h3>\n\n\n\n

Credit card issuers must reconsider applications upon request when they contain new or additional information. If you think your application was denied unfairly or impacted by external factors, you can ask to be reconsidered. Depending on the lender, you can make your request by phone or in writing\u2014just be prepared to offer proof of any new information. <\/p>\n\n\n\n

<\/a>Wait before applying again <\/h3>\n\n\n\n

You can always reapply for a credit card, especially if you think you\u2019ve remedied some of the barriers mentioned above. With that said, as we mentioned, it\u2019s a good idea to wait a little while before resubmitting your application. Back-to-back applications can leave you with too many hard inquiries on your credit report in a short amount of time, which can damage your credit. Consider waiting a few months, potentially more than six, before having another go. <\/p>\n\n\n\n

<\/a>Consider a different credit card <\/h3>\n\n\n\n

If your credit isn\u2019t in great shape or you have a thin credit history, you might be better off applying for a different card. Some creditors offer cards specifically for those with little or poor credit<\/a>, such as secured cards, which require a security deposit upon approval. These credit cards are often easier to obtain as your deposit significantly lowers the lender\u2019s risk.\u00a0<\/p>\n\n\n\n

<\/a>Review and improve your credit <\/h3>\n\n\n\n

It\u2019s a good practice to regularly review your credit reports and consider where there\u2019s room for improvement. All factors, including missed payments and high credit utilization rates, can be improved with time and focus.\u00a0The team at Lexington Law is standing by to provide further guidance on your credit journey\u2014just take our\u00a0free credit assessment<\/a> today to get started.\u00a0<\/p>\n\n\n\n

Note:<\/em><\/strong><\/a> The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Was your credit card application denied? Here are some reasons why this might have happened and how you could improve your chances of approval.<\/p>\n","protected":false},"author":63,"featured_media":14655,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"yoast_head":"\nWhy do I keep getting denied for credit cards? - Lexington Law<\/title>\n<meta name=\"description\" content=\"Was your credit card application denied? 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