Why Was Your Credit Card Application Denied?

Written by , October 8, 2012

Why Was Your Credit Card Application DeniedEven if you’re in a good overall financial position, it’s still possible that you can get rejected when you apply for a new credit card. The approval process itself is something of a mystery, since the credit card companies don’t specify exactly what it takes to get approved, and why certain applications get rejected.

Because having a credit card is an important part of building a positive financial profile – as well as being a significant convenience in modern life – it’s important to be aware of the possible reasons your recent credit card application was rejected.

Here’s some credit card advice about some of the most common reasons for denial.

  • There Were Mistakes or Omissions On Your Application. Since the application review process is automated, any mistakes on your application can quickly lead to a rejection. For example, inadvertently misstating your income or misspelling the name of a prior employer can lead to a red flag that results in your application being declined. To avoid this problem in the future, fill out your application online rather than with pen and paper (since your handwriting may be misread or mis-scanned), and double check your entries before you submit. Furthermore, omitting any key piece of information is almost always going to lead to an application rejection.
  • Your Credit History Wasn’t Good Enough. If you’ve been late in paying your credit card bills in the past, that can likely lead to a rejection of an application for a new card. Different credit card companies are going to use different standards for their accounts, but the more negative information you have on your current credit report, the less likely it is you’ll be able to get a new card.
  • Insufficient Credit History. As lending standards have become tighter, having an insufficient credit history is often the cause of a credit card application denied. This is often the case if you’ve had no credit activity over the past six months or a year.
  • Your Debt to Income Ratio is Too High. On the other hand, if your existing debt is considered to be too high, at least in comparison to your income, then you will also be denied a credit card. The credit card company will examine your monthly income and compare it to your current debt obligations. If your debt levels are too high, your application can be rejected.
  • You Have Too Many Cards. In addition, the number of credit card accounts you currently have can play a factor in becoming approved for a new account. The definition of “too many accounts” will vary depending on a number of factors – including your level of income and prior credit history.
  • You’ve Applied For Too Many Cards Recently. Each time you apply for a credit card, the company makes an inquiry for your credit report. If there are too many recent inquiries for your credit report, the new company may take this as an indication that you’re having financial difficulties, and that you’re looking to get as much credit as possible.
  • When you are aware of the most common reasons that people are rejected for new credit cards, you can work to avoid them on your next application.

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