10 reasons why your credit card application has been declined
If your credit card application has been denied, it’s important to look into the reasons why. This can help you avoid applying for other credit cards where your application might be refused again. Read our guide – it also covers what to do next.
If your credit card application has been denied, it’s important to look into the reasons why. This can help you avoid applying for other credit cards where your application might be refused again. Read our guide – it also covers what to do next.
Why have I been refused a credit card?
There could be a number of reasons why your credit card application has been declined…
1. Your outstanding credit balance is too high
If you already have several outstanding loans and balances on credit cards, your card application could be refused because over-extending your credit could put you further into debt.
Credit card providers want to see you’re managing your credit effectively and that involves only using a portion of the credit that you have available.
It’s important to try to reduce your outstanding credit before applying for more credit cards. Otherwise, credit card providers might see this as a sign that you’re struggling to manage your money.
2. Unstable work history or your work income is too low
Credit card providers can favour applicants who have a stable job history. Your application could be declined if a provider thinks you might be unable to keep up with your monthly repayments, because you’re regularly out of work. Your application can also be rejected if your income is too low and providers aren’t confident that you can afford the repayments.
However, as flexible working contracts and self-employment increases, lenders are updating their policies to accommodate this.
3. You have a limited credit history
To be accepted for credit, you have to show you can effectively manage it, which is harder to prove if you haven’t had much (or any) experience of borrowing. You need at least one account that requires credit, open for six months, to generate a credit score. This is a figure used by lenders to assess the risk of lending to you.
You can show lenders that you can be trusted with credit by managing your payments on your utility bills, an overdraft (including an overdraft on a student account) or even a phone contract.
Once you’ve built up your credit file, you’re more likely to be accepted for a credit card in the future. To start with, a credit building card can be a good option to help you boost your credit score.
4. You’ve made late payments
A late payment will negatively impact your credit score and can increase the likelihood of your application being rejected. That’s because it implies to a lender that you’re less likely to pay on time in the future.
5. You’ve made too many applications for credit
Your application may have been rejected because you’ve made too many credit applications in a short space of time. Every time you apply for credit, the lender will carry out what’s called a ‘hard search’ on your credit file. This leaves a mark that other lenders can see. Multiple applications can suggest you’re struggling to manage your finances effectively.
6. The lender can’t confirm your identity
Credit providers normally use the electoral roll to verify your name and address, so make sure that you’re registered to vote.
7. You’re financially linked to someone with a poor credit history
If, in the past, you’ve applied for credit – like a mortgage – with someone else, you’ll be financially tied to that person on your credit report.
Even if you’re only applying for a credit card in your name, a lender may still investigate your financial partner’s credit history when considering your application. If they have a poor credit history, it could reflect badly on your own credit report and hinder your chances of being accepted.
8. Errors on your credit file
Your credit report holds information including your current and previous addresses, bank accounts and borrowing history. Sometimes incorrect information can find its way on to your report, whether down to carelessness, miscommunication or a technical glitch.
Something like a wrongly recorded missed payment can severely dent your chances of being approved for a new credit card, so it’s important to make sure the information held on your file is correct. You can check your credit report for free with the main credit reference agencies: Experian, Equifax and TransUnion.
If you spot any mistakes, report them to the credit reference agency. They must either remove the information within 28 days, or tell you why they think it’s correct. MoneyHelper also recommends talking directly to the lender responsible for providing the information you think is incorrect.
9. Mistakes on your application form
You can also be denied credit if you inadvertently enter incorrect information on your application. Even seemingly small mistakes, for example, not writing your address exactly as it’s shown on the electoral roll, can be enough for a lender to turn you down.
10. Bankruptcies or county court judgements
If you’ve had any bankruptcies or county court judgements (CCJs) recorded on your credit record within the past seven years, lenders will be alerted that you’ve got yourself into serious financial difficulties.
This makes you a very risky prospect in the eyes of providers, so you’re likely to be turned down for most credit cards.
Can I find out if I’ll be accepted for a credit card before I apply?
The final decision is always down to the individual lender, but you can get a good idea of the cards you’re likely to be accepted for with our credit card eligibility checker. It will show you the cards you’re likely to be accepted for before you apply, and won’t leave a mark on your credit report.
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
Frequently asked questions
Will a credit card rejection affect my credit score?
The rejection itself won’t hurt your score, because rejections aren’t recorded on your credit file. But every time you apply for credit, lenders run a detailed or ‘hard’ search, which leaves a mark on your credit report. A single application should see your credit score bounce back within a few months, but too many applications in a short space of time can severely impact your credit score.
How do I appeal against a credit card denial?
To appeal against a declined application, you’ll need to contact the lender. You’ll usually find details of how to appeal on their website.
How long should I wait to apply for a credit card after being denied?
It’s generally considered best to wait three to six months before reapplying. But the important thing is to try to improve your creditworthiness before applying again. For example, make sure you register on the electoral roll, reduce any outstanding debts and manage your accounts well.
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