Getting denied for a credit card can be frustrating, especially if you were counting on the extra spending power, rewards or balance transfer to consolidate debt. You may also be curious about why you were denied, especially if it happens repeatedly.
Denied or not, you may wonder: Does applying for a credit card hurt your credit? This guide explains how credit card applications and denials can affect your credit score.
Key Takeaways:
- A credit card denial itself does not hurt your credit score, but the hard inquiry from the application may lower your score, usually by fewer than 5 points.
- Common reasons for being denied include a low credit score, high credit card balances, insufficient income and too many recent applications.
- You can improve your approval odds by checking your credit before applying, reducing debt and using prequalification tools that rely only on soft inquiries.
What Goes Into Your Credit Score?
To understand how credit card applications affect your credit, it helps to know how credit scores are calculated.
Most lenders use the FICO scoring model, which ranges from 300 to 850. A higher credit score makes it easier to qualify for loans and credit cards, and it may help you get more competitive rates.
FICO scores are based on five major factors:
- Payment history, which makes up the largest portion of your score. Lenders want to see that you consistently pay your bills on time. Late payments, collections and bankruptcies can lower your credit score significantly.
- Credit utilization or amounts owed, which measures how much of your available revolving credit you’re using. The lower your utilization, the better.
- Length of credit history, which speaks to how long your various accounts have been open, from credit cards to personal loans to mortgages, where long-standing accounts can help your score.
- Credit mix, which covers the types of accounts you have, such as credit cards, auto loans, mortgages and personal loans. Having a varied mix of credit can help your score.
- New credit inquiries, which look at recent credit applications and newly opened accounts. Each application may trigger a hard inquiry on your credit report, and repeated hard inquiries within a short period can temporarily lower your score.
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Does Applying For A Credit Card Hurt Credit?
Applying for a credit card can affect your credit score because most issuers perform a hard inquiry during the application process. A hard inquiry occurs when a lender requests your credit report to evaluate your application.
Hard inquiries typically stay on your credit report for two years, but they usually only affect your credit score for a year. A single hard inquiry will generally cause your credit score to drop by fewer than 5 points.
If you’re denied a credit card after applying, the denial itself should not cause any damage to your credit score. The only drop in your credit score following a denial should come from the hard inquiry.
How Multiple Credit Card Applications Affect Your Score
While a single credit card application (whether it’s denied or approved) typically won’t cause much credit score damage, be careful when applying for multiple cards within a short timeframe.
Doing so could cause a more substantial drop in your credit score because each application may generate a hard inquiry.
Also, if you apply for too many credit cards in a short period, it could signal to lenders that you may be taking on too much debt or struggling financially. A lender may be cautious about approving your application even if you’d normally qualify based on your credit score and other factors.
That said, scoring models sometimes treat multiple hard inquiries for certain loan types differently. For example, mortgage and auto loan inquiries made within a focused period (usually 14 to 45 days, depending on the scoring model used) are often treated as a single hard inquiry for credit scoring purposes.
Credit card applications generally don’t receive the same treatment, so it’s smart to wait at least six months between credit card applications.
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Why Do I Keep Getting Declined For A Credit Card?
If you’ve been denied a credit card multiple times, there may be an underlying issue. Here are some common reasons issuers deny applications.
Low Credit Score
There’s no universal minimum credit score required for a credit card. The score you need depends on the card you’re applying for, and each lender sets its own standards. If your credit score falls below the issuer’s preferred range, your application may be denied.
High Credit Utilization
Even if your credit score is decent, high credit utilization – carrying high balances relative to your credit limits – can make lenders nervous because it suggests that you may be relying heavily on borrowed money. A credit utilization rate above 30% could signal trouble for your credit score (and may be a red flag to lenders).
Insufficient Income
Credit card issuers evaluate your income to determine whether you can reasonably manage additional debt. If your reported income is too low relative to your financial commitments, an issuer may deny your application.
But just as there’s no such thing as a minimum credit score for a credit card, there’s also no such thing as a minimum income. Each lender makes its own determination.
Too Many Recent Applications
Applying for multiple credit cards in a short timeframe can lead to a rejected application, since lenders may worry that you’re taking on debt too quickly or that you’re experiencing financial strain.
Negative Information On Your Credit Report
Late payments, collections and bankruptcies can all serve as negative marks on your credit report. A credit card issuer may deny your application to limit its risk if it sees these things.
Limited Credit History
If you don’t have a lengthy credit history, a credit card issuer may not have enough information on your credit report to assess the risk of giving you a line of credit. You may be denied even if there’s no negative information on your credit report.
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What To Do When You’re Denied A Credit Card
If your credit card application is denied, it’s important to try to figure out why.
Review The Reason For Your Denial
Credit card issuers are required to provide an adverse action notice explaining the reason for the denial. You may receive the notification online, by email or through the mail. That notice typically includes the primary factors that influenced the lender’s decision. Once you know the reason behind your denial, you can take steps to address it before applying again.
Check Your Credit Reports
Mistakes on credit reports can happen. Reviewing your reports can help you identify inaccurate information that may be hurting your chances of approval.
You can request free credit reports from the major credit bureaus and dispute any errors you find. Make sure to check all three of your credit reports, since they’re not guaranteed to have the same information. The three reports to check are Experian, Equifax and TransUnion.
Call The Reconsideration Line
Some credit card issuers allow applicants to appeal denials through a reconsideration call. This can be especially helpful if:
- Your income recently increased.
- You already have a relationship with the issuer (for example, if it’s a bank and you have a checking or savings account there).
- There were unusual circumstances affecting your credit for a period of time, like an illness, injury or natural disaster.
In some cases, a representative may be able to overturn the denial.
Avoid Applying Again Immediately
Submitting another credit card application right away usually isn’t a good idea unless something substantial has changed, such as paying off a large chunk of credit card debt or seeing your income rise significantly. Additional applications may result in more hard inquiries and further reduce your chances of approval.
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How To Improve Your Chances Of Getting A Credit Card
If you’ve been denied a credit card, you can take practical steps to increase your odds of approval before applying again.
Boost Your Credit Score
Paying bills on time is a great way to improve your score over time. An even faster way to boost your score may be to pay down credit card balances to lower your credit utilization.
Limit New Applications
Spacing out credit card applications can help reduce the impact of hard inquiries. It can also help you avoid the additional scrutiny from lenders that results from having too many applications in a short period of time. It’s a good idea to wait at least six months between credit card applications.
Increase Your Income
A higher income could make it easier to get approved for a credit card.
Leave Older Accounts Open
A longer credit history could help your credit score because it tells lenders you’re a consistent borrower. It pays to keep old credit card accounts open, even if you don’t use them often. However, it’s worth noting that cards with a history of inactivity may be closed by the card issuer.
Consider Prequalification Tools
Many credit card issuers offer prequalification or preapproval tools that allow you to check your eligibility without affecting your credit score. These tools typically use soft inquiries instead of hard inquiries. Soft inquiries do not impact your credit score and could help you identify cards you’re more likely to qualify for before formally applying.
Prequalification does not guarantee that you’ll be approved, but it can reduce unnecessary hard inquiries and help you apply for new credit cards more strategically.
How Long Should You Wait To Apply For A Credit Card After Getting Denied?
There’s no universal waiting period after a denial, but waiting six months before applying again is a good idea. This gives you time to improve your credit profile and reduce the impact of recent hard inquiries.
If your denial stemmed from a serious issue, such as carrying high balances or a having a low credit score, it pays to wait as long as it takes to address the problem. Applying again without improving your financial situation may result in another denial and another hard inquiry.
Bottom Line: Does Applying For A Credit Card Hurt Credit?
Getting denied for a credit card can be discouraging, but the denial itself does not directly hurt your credit score. The primary impact comes from the hard inquiry that happens during the application process.
If you’ve been denied a credit card, take the time to understand the reason. Addressing the factors behind your denial could improve your chances of getting approved the next time around.
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Maurie Backman
Maurie Backman has more than a decade of experience covering personal finance topics that include mortgages, loans, retirement, Social Security, and investing. Prior to becoming a full-time writer, she worked in the financial industry as well as in product design and marketing. Maurie holds a bachelor's degree from Binghamton University, where she studied creative writing and finance. She was happy to combine her two areas of study into a career that allows her to educate consumers on a host of financial topics.
