Top 5 Reasons Why Your Credit Card Application Was Rejected

Image source: Upsplash/The Motley Fool

Applying for a new credit card is exciting. But there's always a risk of rejection when you hit that "submit" button on the application. If it happens to you, the company is required to notify you in writing of the reason.

But to give yourself a leg up before your next credit card application, here are five possible reasons why you could be rejected.

1. Your credit score is too low

Many credit cards are targeted toward consumers who have credit scores within a certain range -- for example, good to excellent credit, meaning FICO® Scores between 670 and 850. If you're under that range, you might not qualify for the card you want.

This doesn't mean you have no chance of approval if you're just a little below the minimum score. Card issuers consider more than just credit score. They also look at your income, payment history, and current debt levels.

Just the same, it's a good idea to research the card you're interested in beforehand and see what your credit score is. If there's a wide gulf between the card's range and your score, you might want to save your time (and the hard credit inquiry that will further lower your score by a few points).

2. Your income isn't high enough

While credit card companies don't necessarily publicize income requirements for cards, it's a safe bet that they exist. And if you're trying to open a luxury card that comes with a high annual fee and a high credit limit, your income is likely even more important for approval.

You're allowed to include all income you'd have access to -- so you might consider providing your entire household income on an application, rather than just the income you earn from your job. If the card you want is out of reach, though, you might need to wait until you're earning more money and try again.

3. You have too many recent inquiries

Credit cards can be great financial tools, but applying for too many of them in short order can hurt your approval chances (and it'll ding your credit score to boot). Credit card issuers assess risk in deciding whether to approve applicants, and if it appears that you're living beyond your means on credit, that'll be a problem.

It's also a red flag if you "churn" credit cards -- open a lot of them, get the welcome bonus, then stop using the card (or close the account altogether). Aim to space out your credit card applications. Waiting six months to a year between them is a good move.

4. You've declared bankruptcy

Filing for bankruptcy is a legal process that can offer relief from debt if you're in such a deep hole that there's no way to get out of it otherwise. Your debts will either be reorganized to make payoff easier, or you may be able to get clear of your debts altogether. But it has serious repercussions for your financial life, and especially your credit.

If you've had a recent bankruptcy, you're allowed to apply for credit cards, but credit card issuers will likely see you as a risk, unfortunately. You may have had your heart set on a flashy travel rewards card, but you may want to start rebuilding your credit post-bankruptcy with a secured credit card instead.

With these cards, you make a security deposit to open the account, and that becomes your credit limit. As you use your card and pay it off, you'll build a positive credit history and may eventually be able to graduate to an unsecured card.

5. Your credit is frozen

Finally, the reason for a credit card application denial could be as simple as having a frozen credit profile. Keeping your credit frozen most of the time is actually a smart move to stop identity theft -- it prevents other people from using your credit to open fraudulent accounts in your name.

But it also keeps credit card issuers from accessing your credit. So if you froze your credit a while back and it slipped your mind, your application will be denied.

This is an easy fix, at least. Contact the credit bureaus to temporarily thaw your credit (if you do it online or by phone, it'll happen within an hour), and then get in touch with the credit card issuer to ask it to process your application again.

Try, try again -- and be patient

No matter the reason you were denied a new credit card, rejection always stings just a little bit. If it was due to an issue with your credit, take some time to boost your score and try again.

If you recently declared bankruptcy, be patient. And if you just applied for too many credit cards in too short of a period, take a break before trying again.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy .