If you apply for a credit card and get declined, that doesn’t necessarily mean you won’t ever get approved. There are many reasons why people get declined, and you may have nothing to worry about if your credit isn’t stellar but still in the average range. Review these reasons why people get declined so you can see if it applies to you, and then take steps to improve your chances of being approved next time.
There are a number of reasons why people get declined for credit card applications, some that can be avoided and others that can’t. Knowing what these reasons are will help you ensure your application is accepted in future. To make it easier to understand, we’ve divided these into categories. It should be noted that there isn’t always one definite reason an applicant may be declined but rather a combination of these factors.
For example, if an applicant has recently declared bankruptcy they would probably fall under both Declared Bankruptcy Within Last Two Years and High Credit Utilization Prior to Bankruptcy (90 Percent Utilization or More) below. The same would apply for other factors as well.
Remember, not all applicants who fall into any of these groups will be declined. This list is intended to give you insight into situations where many applicants end up getting declined. And again, it’s important to remember not all bad credit history scenarios are alike so while one may result in denial another with similar details might still result in acceptance.
1. Subprime credit card applicants/new credit cardholders
If you don’t have a strong credit score due to being new to credit or having numerous hard inquiries on your report, you might find yourself getting declined more often than someone who’s been using their cards regularly and responsibly over time.
2. Young applicants or those with low income
A surprising amount of credit card approvals go to students living at home whose parents co-sign for them, meaning younger applicants and those with less steady incomes are generally considered higher risk.
3. Those who have been denied before
Even though most credit card issuers require a waiting period between denials and re-applications (typically around 90 days), going through that process can hurt your credit scores which makes getting approved even harder when it comes time to re-apply.
4. Those with a recent bankruptcy
Credit card issuers want to know you’re capable of repaying money owed. If you just filed for Chapter 7 or 13 bankruptcy, it doesn’t show confidence in your ability to do so, no matter how much money you have in assets.
5. Those with high credit utilization prior to bankruptcy
As stated above, having large amounts of debt on multiple accounts right before filing is also viewed negatively by lenders.
6. Applicants applying for business credit cards
Some credit card companies only accept personal applications while others accept business ones as well. But regardless of which type you file, application information must remain consistent between personal and business accounts such as employment status, annual income and businesses owned by the applicant—and certain industries like auto dealerships aren’t allowed to use them at all.
Many factors come into play when you’re applying for a credit card. These factors include your income, how long you’ve been working, and whether or not you have any negative marks on your credit history. Usually, it only takes about one to three months to repair your credit history after getting declined. This depends on how quickly you make all of your payments, as well as how many accounts you want approved at once. The more applications you fill out, of course, the more time it will take to repair your credit. In general, though, most experts agree that repairing your credit typically isn’t that difficult—all you need is a solid plan and some patience. It’s best if you wait until everything is completely restored before applying again in order to ensure that you don’t face any other problems in your application process.