Being denied for a credit card can feel like flunking a test, but it usually just means your current income and credit profile needs to be matched with a card that better suits you. If this happens to you, you’re also not alone—roughly 15% of credit card applicants are rejected, according to the Federal Reserve Bank of New York’s most recent data. Here’s are some steps you can take to successfully get that new card.
Find out why you were rejected
The first step is to review your rejection notice. By law, card issuers must give you a reason why your application was rejected. This “adverse action notice” should be mailed to you within 7-10 days by the credit card company.
The most common reasons will be:
bad or limited credit history
low income
delinquencies or outstanding debt payments
having too many credit cards
bankruptcies and foreclosures
employment history
being between age 18 and 21
Review your credit history
If you’re rejected because of your credit score, you have the right to request a free copy of the credit report used by the lender within 60 days. Review the report and look for errors. If you think your rejection was based on an inaccuracy, you can dispute the charges with the bureau.
See if your application can be reconsidered
If you’re dealing with a major lender, you have the option of calling their reconsideration line, which connects you to a company representative who could potentially reverse the rejection. There are no guarantees, but if you plead your case as a responsible potential customer, they might be convinced. Maybe. If this fails, your next option is improving your credit score.
Improving your credit score
The fastest way to improve your credit score is paying down debt on your existing credit accounts. Make on-time payments, pay off your balances and avoid maxing out your credit cards (remaining 30% below your overall credit limit is ideal). If you’re having trouble paying off a credit card balance, consider transferring your balance to an 0% APR card if possible, so that you at least stop accruing interest while you get a handle on your debts.
If you have a limited credit history, other tips for building credit include asking your landlord to report your rent payments or adding yourself as an “authorized user” under an existing account (a lot of younger people “piggyback” on their parents credit, as an example).
And sometimes you just have to wait. “Hard inquiries”—inquiries stemming from applications for new lines of credit—last for two years, and having over five inquiries at any one time negatively affects your credit score. Creditors get nervous if you open too many credit cards at one time.
Find credit cards that are right for you
Getting rejected for a particular card doesn’t stop you from applying for other cards. Once you know your credit score, either from your adverse action letter or from looking it up directly through the credit bureaus, you can hunt for credit cards that cater to users within your range.
A high tier card (like Chase Sapphire Reserve or Capital One Venture) will likely remain elusive until your income increases or your credit score is generally in the “excellent” tier, or over 720. Most people fall in the credit range of “Good” (690 to 719) or “Fair” (630 to 689). In these ranges you can still get a wide variety of cards, but they will generally have lower credit limits (often $1,500 to $5,000), a high APR (over 22%), and won’t offer many of the perks of the higher tier cards. On the plus side, most of these cards don’t have annual fees.
If you have bad credit (a score below 629), you might want to look into a secured credit card. This card may not feel like “credit,” as it requires a cash deposit equal to your spending limit. But remember that transactions using these cards will be your first step towards improving your credit score (which usually takes at least six months). Good examples include the Capital One Secured Mastercard, Credit One Bank Visa, Discover It Secured, and Open Sky Secured Visa.
If you get rejected for a credit card, it’s time to pause, assess, and rebuild. It may take some time, but if you make a plan and stick to it, you’ll have the credit score (and card) you’re aiming for.
This post has been updated to include more recent data and new information.