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Getting denied for a credit card is an experience that no one enjoys. But once you get past the initial frustration, you should try to dig a little deeper. Learning why a credit card issuer turned down your application empowers you to try to fix the situation. With a little work, you might talk the card issuer into reconsidering your application, or perhaps you can improve your odds of qualifying for a different credit card in the future.
6 Reasons You Might Be Denied When You Apply for a Credit Card
The reason a credit card company denies your application isn't always evident. But there's an easy way to uncover more information. You can look over the adverse action letter the card issuer sends you in the mail. As an alternative, try calling the card issuer to request more information about the denial.
In the meantime, here are six common reasons a credit card company might deny your application.
1. Low Credit Score
Credit card issuers use credit scores to help predict the risk of loaning money to consumers. Most credit card companies set a minimum credit score that every applicant needs to meet to qualify for a new account. If your credit score doesn't meet this minimum threshold, you can work on improving it and try again later — or consider a different credit card option for now.
Solution: Start by checking your credit reports from Equifax®, TransUnion®, or Experian®, and the credit scores based on those reports. Once you identify what's holding your credit score back, you can craft a plan to fix or overcome those issues. Try this free credit improvement guide to get started.
2. Negative Credit History
Certain items on your credit report could also make it difficult to qualify for a new credit card. Recent late payments, bankruptcy, charge-offs, and foreclosures are a few examples of the types of derogatory details that could hurt your credit card approval odds.
Solution: Depending on the card issuer, you might need to wait six months, 12 months, or more from the date of a recent negative credit event before you apply again. But if there are incorrect negative items on your credit report, you can dispute the errors with the appropriate credit reporting agency. Finally, if you have serious credit problems, you might want to consider credit cards for bad credit and build from there.
3. Insufficient Credit History
Having no credit or a thin credit file could also be a problem when you apply for a credit card. When you have little to no credit history, your risk level is unknown. So, it's hard for a card issuer to predict whether you're likely to repay the money you borrow as promised. This lack of information may make credit card companies nervous about doing business with you or approving you for certain cards.
Solution: Look for card issuers that are willing to work with credit newbies, like yourself. Student credit cards — like the Chase Freedom Student Card — or secured credit cards may be good types of accounts to consider until your credit history is more established.
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4. Income or Debt Issues
When you fill out a credit card application, you must disclose details about your monthly income. The card issuer will compare your income with the existing debts on your credit report. If your debt-to-income ratio is too high, your application might be denied.
Solution: If you can afford to do so, work to pay down your debts starting with high-interest credit card balances. Paying off credit cards could save you money and might improve your credit score as your credit utilization ratio shrinks.
Also, make sure to report all of your income on your application. You can use pretax or gross income figures. The CARD Act of 2009 also enables you to include your full household income on credit card applications, not just personal earnings. You might consider calling the card issuer's reconsideration line if you underreported your income initially and received a denial.
5. Too Many Recent Account Openings or Credit Applications
Some card issuers are sensitive to the number of recent credit cards you've opened. Chase, for example, has an unofficial 5/24 rule. If you've opened five or more new cards in the last 24 months, the bank will probably deny your application. Too many recent credit inquiries could also cause you problems with some card issuers.
Excessive credit inquiries may suggest that you're having financial problems or you're seeking a lot of sign-up bonuses in a short period of time. Either behavior could make you a less profitable customer. Even with excellent credit scores, too many recent account openings or credit inquiries might get your card application denied.
Solution: Credit inquiries only remain on your credit report for 24 months, and they only have the potential to impact your FICO® Score for 12 months. If you need a new credit card before those records age off your credit report, you might want to try a different card issuer that's less inquiry sensitive.
If you can't open any new Chase accounts due to the 5/24 rule, you may need to be patient. However, if you're an authorized user on a credit card that's been opened in the last two years, getting removed from the account might open up the opportunity to qualify for a new Chase card sooner.
6. Credit Freeze
Freezing your credit report with Equifax®, TransUnion®, or Experian® can be a good way to protect yourself from fraud. But if you forget to “thaw” the appropriate report before your application for new credit, the oversight could result in a denial of your credit card application.
How to Ask for Reconsideration
To keep costs down, most credit card companies rely on automated computer systems to review applications from new potential customers and current customers. But card issuers employ human underwriters as well. If a credit card company rejects your application and you think you should have been approved, it might help to speak with a live person and ask for help.
Contact the Reconsideration Department
Most card issuers have departments that handle reconsideration requests. Some companies even share the phone numbers for these departments online. With others, you might need to wait until you receive your official denial letter in the mail (called an adverse action letter) to learn more about why the card issuer rejected your application and to find the appropriate phone number to call for reconsideration. You could also call the standard customer service number and ask to be transferred to someone who can discuss your recent application and answer questions.
Once you’re connected with the right department, you can gather more information about the reason for your denial (if needed). Depending on the reason for the rejection, you may be able to plead your case and request reconsideration.
If card issuer denied your application due to a forgotten credit freeze, it might be an easy fix by contacting the appropriate credit bureau, removing the credit freeze and resubmitting your application.
Downgrade or Upgrade an Existing Card
Another potential obstacle you might be able to overcome is the issue of having too many accounts with the same card issuer. In this scenario, you could talk to the credit card company about your options. If you’re willing to upgrade or downgrade an existing credit card to get the new account you wish to open, that might solve your problem.
Do You Have Too Many Credit Cards?
What to Do if a Card Issuer Won’t Reconsider Your Application
You may not always be able to convince a credit card issuer to reconsider your application after a denial. But even though getting rejected for a credit card can feel disappointing, you can start working to improve your approval odds for the future. The following steps could help.
Improve Your Credit
Your credit history and credit score have meaningful influences over your ability to qualify for a new credit card (and the terms a credit card issuer will offer you if you qualify). So, it’s wise to review your credit reports from all three credit bureaus and work to find ways to improve your credit in any way possible prior to applying for new credit.
Correct Credit Errors
If you discover mistakes or fraud on your credit reports, it’s important to correct those errors as quickly as possible. The Fair Credit Reporting Act gives you the right to dispute inaccurate information with all three credit bureaus.
Avoid Common Mistakes
It’s also important to learn about common mistakes to avoid when choosing a credit card. For example, you don’t want to apply for a credit card that you’re unlikely to qualify for based on your current credit rating.
Once you discover why you were turned down for a credit card, you have a few options. Depending on the situation, you may want to call the credit card company's reconsideration line to see if you can change the outcome of your application. Alternatively, it may be best to go back to the drawing board and research the best credit card offers available for your current situation. When you take the time to research suitable options upfront, you're less likely to see your credit card application denied.
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The minimum credit score needed for credit card applications varies based on the applicant's credit profile. Creditworthiness is determined by a slew of factors such as credit utilization, credit history and debt to income.
Your Amazon credit card application could have been denied due to not meeting the minimum credit score threshold, having too much existing debt or having a history of missed payments.
Applying for a new credit card can result in a hard inquiry, which involves a lender checking your credit reports. This can lead to a temporary drop in your credit score. Hard inquiries stay on your credit reports for up to two years.
The time frame for reapplying for a credit card after being denied is dependent on the individual's circumstances, therefore there's no specific rule to abide by. However, as a general suggestion, it's recommended to wait for around six months before applying for another credit card.