A credit card rejection isn’t a personal jab, but it can sure feel like one.
It stings to be reminded of a part of your credit history you’d rather forget, or learn about a negative entry on your credit report from an automated message.
But as painful as rejections are, you can learn from them. Once you know why you didn’t qualify, you’ll be in a better position to either request a reconsideration or apply successfully for another card. Here’s how you can move on in five steps.
How to recover
- Read your adverse action notice
- Review your credit report
- Double-check the application
- Ask the issuer to reconsider
- Apply for a card you can get
1. Read your adverse action notice
There’s no need to guess why your application was rejected. The Fair Credit Reporting Act requires issuers to send you an “adverse action” notice if they deny you credit because of information that appears in your credit report. And if they deny you based on income or another non-credit-related factor, they’ll generally notify you about that as well. Many banks send these notices as electronic statements immediately after you apply; others deliver the news by letter or by phone.
Many banks send these notices electronically; others by letter or by phone.
Reading your adverse action notice can give you a better idea of what your issuer is looking for in an applicant and how you can improve your chances of a future approval. Here are some common reasons for rejection:
- Limited credit history: If you’re building credit from scratch, you might not qualify for most rewards and low-interest cards. Start with a student card, store card or secured card instead.
- Negatives on credit reports: Most negative entries, such as payments over 30 days late, collections accounts and public judgments, stay on your credit reports for seven years and can make it harder to get approved for some of the best credit card offers.
- Too many credit applications: If you have a lot of hard inquiries on your credit reports, issuers might be hesitant to extend you more credit.
- Low income: Some issuers will reject you if your rent is nearly as high as your income. Others will reject you if your annual income falls below a certain threshold, such as $10,000.
- Too much debt: If you have a lot of outstanding credit obligations — loans, mortgages and high credit card balances — issuers will view you as a riskier borrower.
- Too young: You’ll be denied credit if you’re under 18, and likely if you’re under 21 and don’t earn an independent income.
2. Review your credit report
Your adverse action notice might mention your credit score if it was a factor in the decision. It will also remind you that you have a right to request a free copy of the credit report used in the application decision within the next 60 days. Follow up on this offer, especially if the notice cites a negative entry in your credit reports that you didn’t know about, or your score is lower than you expected. Inaccuracies are fairly common: About 1 in 4 consumers have errors on their credit reports that might affect their scores, according to a 2012 Federal Trade Commission study, the most recent such information available.
Once you get a copy of your credit report, review it carefully. (Here’s how.) If you encounter errors, dispute them in writing with the credit bureau. Even if you don’t find anything amiss, that bird’s-eye view of your accounts can point you to ways to improve your credit and pay off debt.
3. Double-check the application
Take a second look at the information you provided to the issuer in case you accidentally made yourself seem less creditworthy than you really are. Maybe you said your annual income was $5,000 when you meant to say $50,000. Or maybe you reported that your rent costs $6,000 per month when you meant $600.
It’s not just fat-finger mistakes that can trip you up. You also need to know what counts as income. Most issuers don’t specify how applicants should report income, so some report only their own independent earnings. But an amendment in the Credit Card Act of 2009 allows applicants over 21 to report any income to which they have “reasonable expectation of access.” This is a big deal for homemakers or stay-at-home parents who might not earn any income themselves. Thanks to this provision, they can report a partner’s income and more easily qualify for credit.
If you realize you made a mistake on the application, call the issuer’s customer service line. A representative might be able to amend the error and approve your application. Here are the credit card customer service lines for each major issuer:
- American Express: 800-528-4800 (click on “Contact Us” at the bottom of the American Express page for a pop-up screen with contact information)
- Bank of America®: 800-732-9194
- Barclaycard: 888-232-0780
- Capital One: 800-227-4825
- Chase: 800-432-3117
- Citi: 888-201-4523
- Discover: 800-347-2683
- U.S. Bank: 800-947-1444
- Wells Fargo: 800-869-3557
4. Ask the issuer to reconsider
At this point, you probably have a decent idea of the credit card’s underwriting standards and how you missed the mark. Sometimes it’s best to accept the decision and apply for a card you’re more likely to receive. But if you were this close to meeting the issuer’s criteria, you might want to call its customer service line and ask for a reconsideration.
Explain how you’ve improved your credit habits and why you’d be a good customer.
Suppose you were rejected because of a 30-day past due payment from a few years ago. Explain how you’ve improved your credit habits and reassure the representative that you’ll be a good customer. Remember that the representative doesn’t have to honor your request. You might not be able to talk your way into a “yes,” but it’s worth a try.
5. Apply for a card you can get
Sometimes applying for a different card that fits your credit profile makes the most sense:
- If you have bad credit or no credit, consider applying for a secured credit card, which is a card that requires a security deposit, and building your credit by using it responsibly.
- If you have decent credit and are still having trouble, try another issuer. The card you end up with might not be your first choice, but if you manage the account well, it could open up other options in the future.
Improve your creditworthiness by making on-time payments, using only a small amount of your available credit and paying down debt. Eventually, these good habits could help you get another application approved.
Updated Oct. 26, 2017.