Credit cards can be a useful way to build credit, pay for things you need, and access exciting cardholder perks. Unfortunately, credit card companies reject new applications every day – and it’s not always clear why.
If you’ve found yourself asking - why am I not being approved for a credit card? - read on for a few common credit denial reasons.
Credit card issuers check your credit report to determine your creditworthiness. If you have a short or non-existent credit history, you may be denied for having a “thin credit file.” There simply isn’t enough information to prove you’re a responsible borrower.
If you have a thin credit file, you have a few options: you can get a co-signer; open a secured credit card (which requires an up-front deposit); or use apps like StellarFi to build credit with your monthly bills.
Credit card companies make money by charging interest, but they still prefer you keep your balance low. That’s because maxing out your cards suggests you don’t have the most stable finances.
If you’re not being approved for a credit card, check your debt-to-credit ratio. Keeping yours below 30% is better for your approval odds – and your credit score.
The more debt you carry, the less room you have in your budget for another monthly payment. That’s why high debt levels can make lenders hesitant to approve your credit application. Pay down your overall loan balance to boost the odds on your next application.
Credit card issuers want to see a long history of on-time payments. If you’ve got a few negative marks from several years ago, you might still get approved. But recent missed and late payments suggest your current credit habits are less than desirable. Get and stay current on all your accounts, and these negative factors will have less influence over time.
Income requirements vary from card to card, and issuers don’t usually share this information with the public. If you have low or no income, it may be why you’re not being approved for a credit card.
Applying for too many lines of credit in a short period of time can ding your credit and make card issuers less likely to approve your application. There’s no hard and fast rule, but it’s best to minimize your applications and only go after cards you really want.
Recent collections, charge-offs, and negative public records make credit card companies less likely to approve your application – especially if the debt is tied to credit card use. If you have recent negative marks, settle up and work to get them removed from your report.
With few exceptions, credit card companies will not extend credit to borrowers under the age of 21. If you’re young, consider becoming an authorized user on your parent’s account or build credit using Stellar.
Credit card companies consider job stability an indicator of your ability to pay your debts. Job-hopping or going for periods of time without a paycheck can make it harder to get approved – especially if you have a weak credit history.
Getting denied a credit card doesn’t hurt your credit score. However, lenders review your credit report when you apply. These inquiries can cause your score to dip in the short term, regardless of whether or not you were approved.
While you’re much more likely to be approved for a secured card, you may be denied if: you’re low- or no-income; you can’t cover the security deposit; you have extremely poor credit; or you’ve recently filed bankruptcy.
Read more: Secured vs. Unsecured Credit Cards
If you’re not being approved for a credit card, it’s generally recommended to wait around six months before reapplying. That’s because your score takes a hit from hard inquiries, and can take a bit of time to recover. In the meantime, use apps like Stellar to build credit and improve your approval odds.
You’re more likely to be approved for a credit card with a strong credit history. StellarFi impacts factors that make up 100% of your credit score – including on-time payments, credit use, and credit age.
Best of all, you can build your credit using bills you pay already.
Signing up is easy. The more bills you link, the more impact you’ll have on your score. Ready to check it out?
The StellarFi blog is intended to serve as an informational resource. While StellarFi can help you build your credit, we do not provide financial, legal, or accounting advice. Please consult a trusted advisor for financial, legal, or accounting guidance as needed.