You applied for a credit card and got declined. Now what? Does it hurt your credit score? Will you be able to apply for another credit card?
Fortunately, it’s not the end of the world — it’s what you do next that matters most.
It’s never easy to hear that you were denied a credit card. With a few simple steps, you can pick up the pieces.
These simple tips can help you get the credit card you need.
Ready to get started? Check out the steps below.
Here’s the frustrating thing. If your credit card application is denied, you won’t know the reason right away. You must wait for your adverse action letter to come in the mail. Credit card companies send this letter within 7 – 10 days of denying your application.
The letter provides the details you need to figure out how to move forward. It also tells you how to get a free copy of your credit report, should you need/want it.
Check out the top reasons your credit card application may have been declined.
Reason: You have too many credit cards with high balances.
Credit card companies like to see your credit card debt at no more than 30% of your available balance. For example, if you have a $5,000 credit limit, you shouldn’t have more than $1,500 outstanding. If you do, credit card companies see you as a high risk.
Solution: Pay your credit card balances down.
Focus on cards where you’re closest to your credit limit. Pay close attention to the cards with the lowest credit lines because even a small balance can easily eat up more than 30%.
Reason: You make your payments late.
Credit card companies pull your credit and look at your payment history. If you recently paid bills late, it’s a sign of financial problems. If you have any late payments within the last year, chances are they may affect your chances of securing a credit card.
Solution: Get caught up on your payments.
Get current on your payments as quickly as you can and make sure you stay caught up. Once you are caught up, it just takes time for your credit score to bounce back. Creditors often look back at the last 12 months, so you may find yourself waiting a while for that late payment to stop affecting you.
Reason: You don’t have enough credit.
It takes credit to get credit, but who’s going to give you a credit card if you don’t have credit? It’s a fine line you have to walk, but many credit card companies don’t issue credit cards to those with a thin credit file.
Solution: Get more credit.
You need to prove that you can handle financial obligations. If you can’t get an unsecured credit card, apply for a store credit card or a secured credit card. Make sure you use the card often and pay the balance in full or at the very least, make the minimum payment on time. As you build a history, you’ll have a higher credit score and you can try applying for an unsecured card again.
Reason: You don’t make enough money.
Credit card companies don’t display the amount of income you must make to qualify, they just deny your application if you don’t meet their requirements.
Solution: Get a side gig or a co-signer.
If you know someone willing to co-sign on a credit card for you, do it. Just make sure they are aware that they are responsible for the balance should you stop paying it. If you don’t have a close family member or friend to co-sign for you, consider getting a side gig to make extra cash and boost your income.
Reason: You have too many inquiries on your credit report.
Credit card companies want to know how many credit cards you applied for recently. If you have a lot of inquiries in the past month or so, it’s a sign that you’re in financial trouble and you’re trying to find a credit card fast.
Solution: Wait it out.
Unfortunately, the only thing you can do with too many inquiries on your credit report is to let time heal. Waiting between six and twelve months gives the inquiries time to fall off your credit report and for credit card companies to see your credit in a better light.
If your credit card application is denied, take a deep breath and wait a second. Don’t just keep applying for more credit or panicking to find another way to get money.
The more actions you take that affect your credit, the worse you’ll make the situation. Before you proceed, consider the following:
Don’t start fixing things until you know what’s wrong. Wait for your adverse action letter. You can’t do anything until you know the reason you didn’t get the credit card. Taking random actions may actually do more harm than good. It only takes about a week to receive the letter, so have patience.
Don’t guess what’s on your credit report. Get a copy of your credit report. Your adverse action letter will tell you which credit bureau the credit card company used to make the decision. You have 60 days to request a free copy of your credit report from that bureau. Take advantage of the opportunity and look for the negative information on the report and take the steps necessary to fix it.
Don’t apply for another unsecured credit card. Apply for a secured credit card. While it may not be what you wanted, a secured credit card can help boost your credit score as long as you use it the right way. Keep your balance at less than 30% of the total credit line and make your payments on time.
Luckily, a credit card rejection doesn’t directly hurt your credit score. This is good news if you have little to no credit to begin with — that first application probably isn’t going to set you back at the start.
That being said, you might lose some points just from applying to the card, regardless of your approval. Each time a creditor pulls a hard inquiry of your credit report to approve or deny your application, it goes on your future reports.
Hard inquiries are the record of how many creditors have pulled your report. While they don’t have a huge effect on your score, inquiries can still knock it down a few points. They usually stay on your history for about two years, but their impact goes down over time.
Just waiting a few months might be enough for your score to bounce back. Be sure to only make one application at a time to avoid multiple hits to your credit score.
Another option is to use prequalification offers from credit card companies. This is a kind of pre-application that the credit card company uses to let you know your chances of being accepted. They’ll do a “soft pull” on your credit report, instead of a hard inquiry, which doesn’t affect your score.
While a prequalification doesn’t guarantee approval, it can give you a much better idea if you’ll be denied than blindly applying for cards.
If you truly feel you shouldn’t have been turned down for the credit card, you can ask for a reconsideration.
Maybe you think you were close to being approved but just missed the mark. Call the customer service line and talk to a human agent. Discuss the reasons your application was denied and offer reasons for the explanations.
For example, if they say you have too many late payments on your credit report and you had good reason, such as you fell ill or lost your job, explain that. Also, explain how you’ve picked up the pieces and made your finances right again. You never know when your explanation may make the difference in the company’s response.
While it can be tempting to apply or reapply for a credit card after denial, it’s important to wait. Typically, you should wait for six months. If you apply for a card sooner, you may end up ruining your credit even further. While a denied credit card application doesn’t hurt your credit, every application you make does. Your credit gets hit with a credit inquiry (around five points) each time. Instead of applying right away, give your credit time to increase after you make changes. It takes time for your efforts to show in your credit score. Giving it at least six months gives you a better chance of securing the approval you desire.
If your credit card application is denied, take a step back. It doesn’t mean you’ll never get credit again. It just means you have some changes to make to improve your financial situation. With the right steps, you may find yourself with an approved credit card application is as little as six months.