Applying for a new credit card should be a pretty straightforward process. You find a card that you’re interested in, you put in your personal information, and you hit apply. If things go well, you’ll be approved instantly. However, sometimes, there’s not an immediate decision and you need to wait 7-10 business days to see if a card shows up in your mail.
In most cases, you’ll still get approved, but what happens if a letter of rejection shows up? You’ll obviously be disappointed and to complicate things, credit card providers rarely reveal why you were denied. If you’re wondering about why your application was denied, here are some potential reasons.
You don’t meet the income requirement
Most of the higher tier credit cards available have a minimum income requirement for you to qualify. For example, the Visa Infinite class of cards requires you to have a personal income of $60,000 or a household income of $100,000. Mastercard has even stricter conditions for its World Elite cards which requires a personal income of $80,000 or a household income of $150,000.
If you don’t meet these minimum requirements, you’re unlikely to get approved. However, if you’re a longtime client at your bank, they may approve you for a higher tier card based on your banking relationship. It’s also worth noting that many American Express cards don’t have a formal income requirement to be approved.
Too many recent applications
If you’ve applied for multiple credit cards recently, there’s always a chance that your most recent application will be declined. When doing a credit history check on you, credit card providers might be concerned about your recent activity. They may see all your applications as a sign that you’re desperate for credit which is risky for them.
Even if you’re applying for different cards with good intentions, a credit card provider may automatically reject you due to their own rules. For example, one credit card company may not allow you to get two cards with him within a three-month time frame. Even if you’re applying for different cards, they may automatically reject you. If you really want to get around this, call the provider and let them know why you’ve applied again so quickly. If the rep is satisfied with your answer, they may manually approve you.
Your credit score is too low
Although it’s never stated anywhere, most credit cards require a minimum credit score for you to be approved. Since this information isn’t available publicly, your guess is as good as mine. That said if your credit score is at least 660, you’d probably have a better chance of being approved.
If you know your number is below 560, the odds are high that you’ll get rejected for credit card applications since your credit score would be considered poor. For those who still need access to credit, consider applying for a prepaid credit card or a secured credit card as you’ll have a better chance of being approved.
You’re not a citizen or are a permanent resident
While this may sound obvious, not everyone realizes that being a citizen or are a permanent resident is a standard requirement to be approved for a credit card. It’s not like you’re going to start applying for local credit cards when you’re visiting new countries, but some people will try to put in applications while at home.
There are some Canadians who regard American credit cards highly since they come with better benefits. There are a few tricks that you could use when applying for American cards which may get you approved, but they may backfire on you. If a U.S. credit card provider asks you to prove your U.S. residency and you can’t do it, you’re going to be declined.
There’s some information is missing
On occasion, it might be something simple such as missing information that’s holding you back from being approved. It could have been an honest mistake such as you forgetting to fill out a box when you applied online or the credit card provider may not be able to verify your identity.
The good news is that quite often when it’s just missing information, the credit card provider will call you to get what they’re missing. If you’ve applied for a new card but weren’t approved right away, you could call them just to see if you need to provide them with any additional information to speed up the application.
You may have access to too much credit
Some credit card providers may look at how much credit you have access to and decide to decline you for that reason alone. It’s similar to having too many credit cards or having too many recent applications. Credit card providers might be concerned that you have access to too much credit and you may abuse it.
On the other hand, some credit card providers have a hard cap on how much credit they’ll extend to you. Let’s say you currently have a credit limit of $5,000 with one credit card provider and you want to apply for another one of their cards. They may decline you unless you lower the limit on your current card. That means you could go down to a $3,000 limit and then be approved for a $2,000 limit on a new card. I know it sounds ridiculous, but it happens.
You declared bankruptcy in the past 7 years
Just about every credit card provider has a hard rule about declining applicants if they’ve declared bankruptcy in the past 7 years. It doesn’t matter if you’ve rebuilt your credit score to the point where it’s considered excellent and you have stable employment, that bankruptcy note on your credit report will hold you back. The “good” news is that after 7 years, the bankruptcy note will fall off your credit report so you can start applying for better credit cards.
There are many reasons why your credit card application may have been denied. Some things can be easily rectified to get approval, but other times, you may have to accept that you’ve been declined.