If you've been denied for credit, you're not alone.
About 24% of Americans without a credit card say that not qualifying is the primary reason they don't have a card, according to a survey of about 2,200 U.S. adults that CNBC Select performed in conjunction with Morning Consult in May 2019.
It's a bit worrisome that nearly than one in four Americans can't get approved for a credit card — especially considering the push toward a cashless society. However, there are actions you can take to increase the chances you qualify for a credit card.
Below, CNBC Select lists common reasons you may be denied for a credit card and how you can improve your approval odds.
Reasons you may be denied for a credit card
Insufficient credit history
If you have a short or nonexistent credit history, you may not qualify for a credit card. This can be frustrating if you're looking to build credit, but there are still options available, such as secured cards, credit-builder loans and becoming an authorized user.
Low income or unemployed
If you don't have a substantial source of income — or none at all — you may struggle to be approved for a credit card.
Missed payments
Having poor payment history is an indicator that you may not be able to repay the credit lenders extend.
You're carrying debt
Lenders may not look favorably upon applicants who are carrying debt. If you carry a balance month-to-month, it indicates to lenders that they may not be paid right away and you could default.
Too many credit inquiries
If you have too many inquiries on your credit report, especially within a short period of time, lenders may be hesitant to grant you credit. Since there's no specific number of inquiries that's considered too many, simply try to limit new inquiries.
Don't meet age requirements
The CARD Act of 2009 prohibits card issuers from extending credit to applicants under 21, unless the applicants apply with a co-signer or show proof of independent income. If you don't meet these requirements, ask a family member to add you as an authorized user to their card until you're able to open your own account.
There are errors on your credit report
Having unauthorized accounts on your credit report or other errors, can hurt your approval chances. Check you credit report for free at AnnualCreditReport.com and dispute any errors you find.
How to improve your approval chances for a credit card
Become an authorized user
A simple and liability-free way to build credit is to have a family member or friend add you to their credit card account as an authorized user. You'll be able to use the card like any other card to make purchases and won't be responsible for paying the bill. Before becoming an authorized user, just make sure the family member or friend has good credit so you can piggyback off positive, not negative, credit. (And make sure you practice responsible habits as well, so you don't negatively impact their credit.)
Pay off debt
Work toward eliminating any existing debt you carry month-to-month. Some options to pay off debt include opening a personal loan or asking a family member or friend for a loan. Once you build credit, you can consider a balance transfer credit card.
Improve payment history
Payment history is the most important factor of your credit score, comprising a whopping 35% of FICO Scores. As a result, it's key you make on-time payments every month. If you struggle to make on-time payments, consider adjusting your spending or setting up autopay for at least the minimum due. This ensures you avoid late payment fees, high penalty interest rates and negative information on your credit report.
Check your credit score and report
There are dozens of free credit score services available today, so there's no excuse not to check. Plus, no harm is done to your credit. You should check your credit score on a monthly basis, and before you apply for credit know which products you may qualify for. In addition, you should review your credit report at AnnualCreditReport.com. Each year, you receive one free report from each major credit bureau (Experian, Equifax and TransUnion). We recommend spacing out one report every four months.
Apply for a secured credit card
Credit newbies or people with less than stellar credit scores may have better chances at qualifying for a secured credit card, such as the Discover it® Secured Credit Card, compared to regular credit cards. A secured card is a great way to build credit and can be used just like an unsecured (regular) card in that you receive a credit limit, can incur interest charges and may even earn rewards. You have to make a security deposit in order to receive a line of credit for secured cards. (Check out CNBC Select's roundup of the top secured cards here.)
Be patient
Improving credit takes time and you won't see changes happen overnight. As long as you consistently practice responsible credit behavior, you should be on the road to good credit.
Don't miss:Here's how being denied for a credit card impacts your credit score
For rates and fees of the Discover it® Secured Credit Card, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
Common reasons applicants are denied credit cards include low credit scores, no credit history, inadequate ratio of income vs. expenses, and not meeting minimum age requirements. There are alternatives to standard credit cards to consider if you keep getting denied for credit cards.
What percent of Americans don't have a credit card? ›
Fifty-five percent of consumers use debit cards versus credit cards (47 percent), digital wallets/online payments (43 percent), cash (28 percent), direct debit (28 percent) and prepaid cards/vouchers (17 percent), according to data from Statista.
Why don t poor people have credit cards? ›
Credit card companies want reassurance that cardholders can pay their bills, and too low an income could bring that ability into question. If you have a lower income, you can improve your chances of getting approved for a credit card by doing what you can to boost your credit score.
Why don't I qualify for any credit cards? ›
If you don't have a substantial source of income — or none at all — you may struggle to be approved for a credit card. Having poor payment history is an indicator that you may not be able to repay the credit lenders extend. Lenders may not look favorably upon applicants who are carrying debt.
Is it bad to have no credit cards? ›
It's completely acceptable to avoid getting a credit card. Consumers can pay entirely with cash, check or debit card and still build a positive credit history through other types of loans.
What credit card is the easiest to get? ›
NerdWallet's Easiest Credit Cards to Get of June 2024
- OpenSky® Plus Secured Visa® Credit Card: Best for No credit check and no bank account required.
- Chime Secured Credit Builder Visa® Credit Card: Best for No credit check + flexibility and guardrails.
- Mission Lane Visa® Credit Card: Best for Unsecured card for bad credit.
Visa. Visa credit cards are accepted in more than 200 countries and territories around the world, with more than 4.2 billion Visa cards currently in use worldwide.
How many people have $50,000 in credit card debt? ›
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?
How many people in the US have no credit? ›
According to the U.S. Government Accountability Office, as many as 45 million Americans are “credit invisible,” meaning they have no credit history. In most cases, this means they've never had any data reported to one of the three credit bureaus.
Do billionaires use credit cards? ›
What Credit Card Do the Super Rich Use? The super rich use a variety of different credit cards, many of which have strict requirements to obtain, such as invitation only or a high minimum net worth. Such cards include the American Express Centurion (Black Card) and the JP Morgan Chase Reserve.
The fancier the credit card, the larger the subsidy. Payment methods are correlated with income: lower income people are more likely to use cash, pre-paid or debit, while higher income use credit cards.
Why do rich people have bad credit? ›
Since income is not one of the five factors that determine a credit score, the wealthy are just as likely to have a low credit score as the people with lower income. The rich can miss payments, rely too heavily on credit, and open too many new accounts, all of which may lower their credit score.
Who cannot get a credit card? ›
10 possible reasons why your credit card application was denied
- You have low credit scores. ...
- There are too many inquiries on your credit reports. ...
- You have high outstanding debt. ...
- Your credit history is limited. ...
- You have insufficient income. ...
- You're too young to apply. ...
- There's a charge-off on your credit reports.
The lender might have concerns about your income or your ability to pay bills on time, or might not be able to approve you if you're currently in bankruptcy or recently filed for bankruptcy.
Why is it so hard to get a credit card? ›
You Have High Debt
The more debt you have, the harder it can be to keep up with all of your monthly payments. And because credit card issuers prioritize on-time payments, having too much debt relative to your income can hurt your odds of getting a new credit card.
Is it hard to get approved for a credit card with no credit? ›
It's possible to get a credit card with no credit. You might consider applying for a secured credit card, student credit card or retail store credit card to help establish and build your credit.
Why is my credit score so low when I don't have a credit card? ›
Your credit score could be low when you have no credit card because your credit report includes a missed payment from a loan or a debt in collections. Any derogatory mark on your credit report can cause a low score when you have limited credit history, which may be the case if you don't have a credit card.
How to get a credit card if I don't have a credit score? ›
Key takeaways. You can still get approved for a credit card without a credit history. In fact, there are credit cards designed for people with no credit, such as secured cards and student cards. You'll want to pay attention to features like fees and interest rates when shopping for your first credit card.
Can you have a good credit score and still get denied? ›
In some cases, credit card issuers may choose to reject your application even if you have a good or excellent credit score.
