What to Do If You’re Denied a Credit Card

Even consumers with the best of credit scores get turned down for low interest credit cards from time to time. When you apply for a credit card, the credit card issuer will look at more than your credit history to decide whether to approve your application. For example, your income and other debt obligations are also used to decide whether you should get the credit card you applied for.

Adverse Action Letter

If your credit card application is denied in person or online, you probably won’t find out immediately why you were turned down. Instead, you’ll receive a letter in the mail (even if you made the application by mail) that explains why you were denied.

There are two different Federal laws that require credit card issuers to send these so-called adverse action notices. First, the Fair Credit Reporting Act says that you must be notified, in writing, if information in your credit report was the reason that you were denied. You are also given the opportunity to order a free copy of that credit report within 60 days of receiving the letter.

The second law is the Equal Credit Opportunity Act. Under the ECOA, creditors have to notify you within 30 days if you’re denied. The letter doesn’t have to include the specific reason(s) you were denied, but it does have to let you know how you can find out why you were denied.

You have the right to know why your credit card application was denied, whether you were denied based on your credit, income, or other factors.

Free Credit Report

Order the free copy of your credit report if you were denied because of information in your credit report. It could be that your credit report contained errors that led to your application being turned down. In that case, you can dispute the errors and resubmit your credit card application once your credit report has been cleared up.

Avoid applying for another credit card until you know exactly why your previous application was denied. Each time you apply for a credit card, an inquiry goes on your credit report. These inquiries add up and make other credit card issuers wary of giving you a credit card. When credit card issuers see a lot of inquiries on your credit report from a short period of time they think you’re either desperate for credit or taking on more credit cards than you can handle. Neither of these makes you a desirable credit card applicant.

Rebuild Your Credit Score

If your credit card application is denied because you need to improve your credit score, take a look at some credit repair resources to figure out how to get your credit back on track. In the meantime, you can apply for a secured credit card, which acts like a regular credit card but requires you to make a security deposit against the credit it. A secured credit card that reports to the major credit bureaus can help you rebuild your credit as long as you’re charging responsibly and making your payments on time.