Even if you have a credit card application that’s denied, you still have some options for getting a credit card. For one, you can call the card issuer's reconsideration line to make a case for why you should in fact receive the card. Alternatively, you could obtain a credit card with another person as your cosigner or become an authorized user on somebody else's account.
Your odds of success in these efforts will be greater if you understand the particular reasons you were rejected for the card. This guide walks you through some of the most common problems that lead to a credit card application being declined and how best to deal with them.
Common reasons consumers are denied a credit card
Your credit card application can be rejected for a variety of reasons. Depending on why your application was denied, you have a range of choices when it comes to how you respond and what options are available to you. If the decision was made based on information a lender obtained from your credit report, the Fair Credit Reporting Act (FCRA) requires the lender to mail you an official notice with the reasons your application was denied. If the denial was for some other reason, such as your income being too low to qualify, most banks will still send you an explanation in the mail.
Here are the most frequent reasons people are denied a credit card.
Loan/credit card balances are too high Credit card issuers frequently deny consumers access to credit if the applicant is already burdened by debt. To the bank, an individual carrying an above-average amount of debt is more likely than other consumers to default on at least one of their credit accounts. The best solution to this problem is, of course, to try to pay down as many outstanding bills as possible, and so lower your overall credit utilization — the proportion of your available credit that you are using. Experts recommend keeping your credit utilization ratio below 30%.
Income is too low/insufficient ability to pay The CARD Act of 2009, a federal law passed in the wake of the last recession, prohibits lenders from issuing credit cards to consumers who likely lack the ability to repay any debts they accumulate in using them. This is typically measured through assessing whether the cardholder could reasonably be able make a minimum payment on the card, assuming they were using the card's full credit limit. The consumer's income is also heavily considered. If you were rejected for this particular reason, check that you entered your income correctly on the credit card application.
Opened too many credit cards Most major credit card companies will also reject your application if they suspect you of attempting to game sign-up bonuses — by, say, opening multiple credit cards in a relatively short span of time. For example, you will be automatically denied most Chase credit cards if you have opened five or more credit cards in the past 24 months. In such a case, your best option is simply to wait; in time, the average age of your credit card accounts will go up and you will again be eligible to apply for more cards.
Recent collection or delinquency Banks turn down customers because they perceive the risk of them not paying their bill as too high. Therefore, you shouldn’t be surprised if a recent debt collection or delinquency on your credit report triggers a rejection. Regardless of the circumstances of the event, a card issuer perceives these issues as a signal of financial instability. There is no set amount of time to wait after a delinquency or collection. In the case of a recent bankruptcy, don’t apply for a new card until the bankruptcy is discharged. After a debt collection, delinquency or bankruptcy, your best odds of approval will be for secured credit cards.
Limited credit history Individuals who have a short or nonexistent credit history — such as students or new immigrants — will generally be denied when applying for a top-tier credit card. Banks want to see a track record of accountability before they extend a line of credit to you. If you are continually rejected due to having a limited credit history you're probably applying for the wrong credit cards. Look through our list of best starter credit cards, which are intended for people with limited credit histories.
What to do after your credit card application is denied?
Anyone who is initially rejected for a credit card has a chance to get the decision reversed. To do this, you must call one of the reconsideration lines operated by the card issuer. The customer service representative should explain to you why you were denied, in case you haven't yet received the formal rejection letter. You will also have a chance to argue your case for why the decision should be reversed. Try to remain calm and polite on the phone. You should also be ready with a rationale for granting you the card. For example, if you were rejected due to a limited credit history, you may present other recent bills you have been able to pay on time. Such explanations and supporting documents, while helping your case, do not assure that the card issuer will reverse the decision.
Below is a table with some of the largest U.S. credit card issuers and their application reconsideration phone numbers. These numbers change frequently. If you call one and it doesn't work, contact the bank's application line and ask to be transferred to the recon department.
Issuer Reconsideration Line
American Express (800) 567-1083
Barclay card (866) 408-4064
Bank of America (800) 732-9194
Chase (800) 935-9935
Citi (888) 201-4523
Discover (800) 347-3085
Capital One (800) 277-4825
US Bank (800) 947-1444
Wells Fargo (800) 967-9521 for Visa cards (877) 514-3717 for American Express cards
Alternative ways of getting a credit card
If everything we suggest above has failed, there are still two options available to obtain a credit card. While neither of these will make you the primary account holder for the card, either will allow you to obtain a card, and may allow you to build your credit card history and increase your chances of having your own credit card in the future.
Becoming an authorized user
If someone close to you, such as a relative or spouse, has a credit card you can become an authorized user on their account, if they agree to that. (They become responsible for debts you incur on the card, should you fail to pay them.) You'll be issued a credit card with your name and its own number. The primary account holder will still have full control over the card, however, which means they will be able to see all the purchases you make. However, not all banks report authorized user accounts to the credit bureaus, a step that’s required in order for you to build a credit history. If that’s important to you, be sure that the bank you choose does so.
Taking on a cosigner
If your credit standing is too low, you can take on a cosigner to your account and open a joint account. This is something best suited to married couples, since banks may not accept any other relationship between cosigners. Before you decide to open a joint account, make sure the other individual's credit standing is solid. If one or both of you have any of the problems on your credit report listed previously, your odds of receiving a card won’t increase through being cosigners.
Page Consumer Services is a Nevada-based company and is one of the highest-rated credit restoration companies in the nation. They have years of experience helping consumers understand and work to improve their credit and offer a 120-day money back warranty to every customer. You can call 855-700-7243 to schedule a free credit consultation with a Page Consumer Services counselor today.