Credit Card Approval Requires More Than Good Credit

Even a great credit score isn’t enough to guarantee your credit card application will be approved. It’s true, you can be denied a credit card even if you have excellent credit. That’s because your credit score isn’t the only factor credit card issuers consider when they decide whether to extend credit to you.

Your Income/Ability to Repay

Up until last year, you could get a credit card even without having your own income as long as your household income was high enough to meet the credit card issuer’s requirements. Now, you must have your own personal income to get a credit card. Unfortunately, this places credit cards out of reach for many young adults whose parents pay their expenses and parents who stay at home rather than work outside the home.

When you complete a credit card application, you might notice that it asks for your monthly rent or mortgage payment. Creditors often compare this number to your income to judge whether you have enough money leftover to repay a credit card balance. You may get turned down if your mortgage/rent limits your ability to repay.

Number of Other Credit Cards

There is such a thing as having too many credit cards. Unfortunately, we don’t know the magic number that credit card issuers consider to be “too many” and it’s likely that each of the issuers have their own criteria. Being denied for a credit card because you have too many is probably a good thing. Another credit card might cause debt problems or allow you to ignore the problems you already have.

Your Age

Credit card issuers are prohibited from discriminating against applicants because of their age, but you do need to be old enough to sign a contract, which is age 18 in most states. If you’re under age 18, you probably won’t be able to get a credit card in your name alone. However, you can be an authorized user or joint account holder on someone else’s credit card.

Amount of Debt

Too much debt can lead to a denied credit card application, even if the debt isn’t affecting your credit score. A large amount of debt, especially high credit card balances, puts you at risk of defaulting on a new credit card balance. Many credit card issuers aren’t willing to take the risk.

What Happens If You’re Denied

Credit card issuers are required to send a written notice telling you why your credit card application was denied, even if your credit was not a factor in the decision. If your credit score was a factor in the decision to deny your application, then you’ll get a free copy of the credit score that was used. You also have the right to a free credit report if something in your report was the reason you were denied. This free “adverse action” credit report won’t be sent automatically. Instead, you’ll have to order it directly from the credit bureau that provided the report to the credit card issuer.

Sources: FederalReserve.gov, FTC.gov