Getting denied for a credit card may seem like a big deal to you, but trust us, it is not. Before you go further, calm down, everything’s going to be alright. Ok, now that’s out of the way, let’s talk about how a denial impacts your credit score and how you can work towards getting approvals, not denials.
How getting denied for a credit card impacts your credit score
Long story short, it doesn’t impact your credit score that much. If you’ve looked at our FAQ on credit scores, then you know that a credit card application makes up the smallest percentage of your credit score and only subtracts about 3-5 points on average. You do not receive any derogatory remarks on your credit score because of a denial.
What’s really important
What’s more important is that you understand why you were denied for a credit card. The credit issuer that denied you will send you a written response, typically within 30 days of your denial. This response explains why they denied you. There are several reasons why you could be denied for a credit card, but here are the most common:
- Not enough established credit history
- Bad credit score because of late payments, bad credit utilization ratio, bankruptcy, etc.
- Too many open accounts in a short period of time (each issuer defines “short” differently)
- Maxed out available credit that an issuer feels comfortable extending you. Maybe an issuer only will extend you $30,000 of credit based on your income and you may have already hit this number.
What can you do to improve your chances of being approved in the future?
- Pay off all of your bills and credit card statements in full and on time (early)
- Never max out your credit cards and keep a low (less than 30%) credit utilization
- If you do not have established credit, apply for an “entry-level” card and use it responsibly for a period of time. RewardStock can recommend a card for you if you find yourself in this situation.
In the event of a credit card denial, there is an option to call the credit card issuer’s reconsideration line. You can read more information about reconsideration lines here.
As always, email us at firstname.lastname@example.org if you have any specific questions.