Reasons You Should Know Why Your Credit Card Application Was Denied

Oct 06, 2022 By Susan Kelly

It is not common practice for companies that offer credit cards to inform applicants immediately if their card applications are declined. Instead, they will send you a letter called an adverse action letter within seven to ten business days of receiving your application. This letter will provide you with further information on the decision.

You may find out the particular reason or reasons why your application for a credit card was declined by reading the letter about adverse action. If a credit report is used in the decision-making process, the note will also contain directions for obtaining a complimentary copy of your credit report. While you wait to get your letter, here are some reasons why your application for a credit card can be rejected. If you have a good understanding of your credit history, you may be able to figure out which of these factors was responsible for your application being denied.

Your Loan Balances Are Too High

If you already have excessive debt, it may be difficult for you to take on a new payment obligation. Issuers of credit cards may hesitate to provide you with a card if you have a significant amount outstanding on other loans or lines of credit. Paying down the sums on any loans might increase your chances of being accepted for new loans.

Your Credit Card Balances Are Too High

The organizations providing credit cards want to ensure you only utilize a small part of the total credit available. You can be sure that your application for a credit card will be turned down if you use an excessive amount of your available credit, particularly if you've already reached your limit.

Too Many Inquiries on Your Credit Report

If you apply for many credit cards and loans quickly, your application for a credit card can be declined, even if you are accepted for some of the other credit cards. There is no predetermined limit to the number of times you may contact the bank before being denied approval. When applying for a new credit card, it is best to limit the number of times your credit report is checked.

Your Income Is Way Below Average

Different credit card issuers have additional minimum income requirements for applicants. If you don't earn enough money for that specific credit card or don't have an income of your own, then your application for a credit card can be turned down. Since credit card issuers do not make public the minimum income criteria for their cards, determining which credit cards are suitable for your income falls on your shoulders.

You Have an Excessive Amount of Credit Cards

The number of credit cards you currently own may play a role in determining whether or not your application for additional credit cards is approved. No one number may be used for all credit card applications; this is not the case. Instead, it is dependent on the issuer of the credit card.

You Have a Relatively Recent Collection

Your credit score will be less impacted by late payments, collections, and public records as more time passes. However, these items' credit score damage is most significant when they are reported for the first time. These significant delinquency instances are a red flag for the credit card firm, indicating that you do not have the funds to fulfill your monetary commitments.

Your Last Delinquency Was Too Recent

The nature of the default shown on your credit report is not the only factor that credit card providers consider. They will also look at how much time has passed since your most recent act of delinquency. If you want an accurate prediction of how you will manage a new credit obligation, go no further than your most recent payment history rather than your past from many years ago.

You Have a Charge-Off on Your Credit Report

A debt on a credit card that has been overdue for payment for at least six months may be charged off. It is one of the worst things that may show up on your credit report. [Credit reports] If you have a history of not paying your bills on time, mainly if it is somewhat recent, a new credit card issuer may be hesitant to offer you credit if you apply for one.

You Have a Limited Credit History

Your application for a credit card may be turned down if you've never had credit before or if you don't have much experience with credit cards. For FICO to create a credit score for you, the information in your credit report must include at least one account that has been used during the most recent six months. f you do not have a credit score, the credit card business will not be able to determine your creditworthiness and will thus be more likely to reject your application.

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