What to Do If You’re Denied a Secured Credit Card

First, find out why. Then consider approaching your own bank or a credit union, or work on building your credit through loan alternatives.
Virginia C. McGuire
By Virginia C. McGuire 
Edited by Kenley Young

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Getting rejected for a secured credit card might be a surprise. After all, you’re paying a security deposit to protect the card issuer in case you don’t make your payments. Approval is guaranteed, right?

Not quite. In most cases, the credit card issuer will still check your credit. You may be denied if you have a bankruptcy on your record, a history of missed payments, insufficient income or other red flags.

But don’t give up. You can improve bad credit and get approved for a credit card. Here’s how.

Find out why were you denied for a secured card

If you are denied credit, you have a legal right to know why. The credit card issuer should tell you why, but if it doesn’t, ask. You’re also entitled to a free copy of a credit report after you’re denied. If you were rejected because of a mistake on the credit report, it may be worth disputing the error.

Also, did you fund your secured card with a deposit? If not, you could go from approved to rejected.

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Turn to your own bank or a credit union

If you have a checking account, you might find it easier to qualify for a secured credit card with the bank where you already have a relationship. Apply there, in person if possible to make a good impression.

Also, check with a local credit union, which are nonprofit organizations. They often have more flexible approval standards than big, for-profit banks, as well as consumer-friendly financial accounts, including credit cards.

Use a different approach

Credit card applications typically lower your credit score slightly, so don’t keep applying for more cards if you’re likely to be denied.

Instead, work on building your credit with alternatives that:

  • Extend you a line of credit.

  • Report your on-time payments to the credit bureaus.

Prepaid debit cards, for example, don’t report to credit bureaus, so don’t bother with those if your goal is to rebuild your credit.

🤓Nerdy Tip

Several issuers specialize in unsecured credit cards for people with bad credit, but NerdWallet generally doesn't recommend them because of high fees. Our roundup of the best and worst cards for bad credit has more information on cards to avoid.

However, these alternatives to secured credit cards could help:

Share-secured loans from credit unions. These work like secured credit cards. You deposit money into a savings account, then borrow against it. With no risk to the lender, you get a low interest rate, and the loan helps build credit. Here are examples:

Credit builder loans from credit unions. Offered mostly by smaller financial institutions, such as credit unions and community banks, these loans are meant for people looking to build credit. Money you "borrow" isn't given directly to you. Instead, it's held on your behalf in a savings account while you repay the loan in monthly installments. Once you're done, the money is released to you — and your credit report shows a paid-off loan. Learn more about credit-builder loans.

No-credit-check secured cards. An example: The OpenSky® Secured Visa® Credit Card has no credit check, but still reports to the major credit bureaus. Its annual fee is $35. This can be a decent option if you've previously been denied a secured card, but have money for a security deposit.

Personal loans. These loans can be secured or unsecured. Unsecured loans don't require collateral, such as a car title, and generally have higher interest rates. The better your credit, the lower your rate is likely to be. Those with bad credit can expect to pay very high rates, if they can get a loan at all.

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