We found that bad credit is a major barrier to obtaining Unsecured Credit Cards, but there are other reasons why a credit card issuer can turn you down:
Below are 7 reasons why you may get rejected from obtaining an unsecured credit card:
1. Low income: To help ensure you can pay your credit card payments on time, the issuer may impose a minimum household income.
2. High debt: If your debt-to-income (DTI) ratio is too high (i.e., 36% or above), it could harm your chances of getting approved.
3. Too many cards: If you have more credit cards than the issuer will approve, some will reject your application.
4. Previous problems. If you previously held one of their cards and encountered issues, such as late payments, unpaid fees, collections, or charge-offs, they can deny your application.
5. Bankruptcy: While your bankruptcy case is still pending, most card issuers won’t approve your application. It is preferable to postpone applying until after the court has dismissed your case.
6. Unverifiable Information: If card issuers cannot confirm your identity or other important data elements, they won’t provide you with a card.
7. Failure To Pay Program Fee: A number of the cards we reviewed include a one-time program fee that must be paid in order to receive the card. If you fail to pay the charge by the due date, the issuer will revoke its approval (typically 30 to 60 days).
In the event that the issuer rejects your application after reviewing your credit reports or scores, it is required to give you an adverse action notice that includes the following information:
- The causes of your denial (and reason codes).
- Which credit bureau provided the information about your credit?
- How to get a free credit report within 60 days of getting a rejection for your application.
- How to challenge false or unreliable information on your credit report.
- A replica of the credit score that was utilized by the issuer to assess your application.
You could occasionally receive a credit card offer from an issuer with terms that are worse than what was promised. A Risk-Based Pricing Notice, which is comparable to an Adverse Action Notice, must be sent to you if this is the case.
If you get a notice, it will assist you to figure out what needs to be fixed before you apply again.