Does getting denied for a credit card hurt your credit score?
Key takeaways
- Applying for a credit card temporarily hurts your credit score, but credit card denials don’t affect your score.
- New credit requests account may only drop your score by a few points for about a year, but avoid applying to many cards at once so you don’t appear risky to lenders.
- For the best approval odds, know your credit score, focus on cards with a suitable recommended credit range and see if you can prequalify before applying.
Applying for a credit card is generally a hassle-free process, but getting denied could be a problem in some cases — especially if you already didn’t have the best credit score. Getting rejected doesn’t hurt your credit, but the hard credit inquiry from applying can temporarily ding your score.
This is an important side effect to consider since the slight drop could affect the outcome of your next credit check, such as for a credit limit increase, loan, job application, insurance rate assessment or another credit card application. However, a single credit application probably won’t make or break these opportunities unless you’re already straddling the edge between a fair and good credit score or a fair and bad credit score.
To help you prepare for your next credit card application, here is some more key information about how applying affects your credit score, why applications are often denied and how to boost your approval odds.
Does getting denied for a credit card hurt your credit score?
A denied credit card application is likely to cause a slight drop in your credit score — but not because your credit request got declined. Credit bureaus don’t keep track of declined credit requests, but they do keep track of your credit inquiry requests. There are two kinds of credit inquiries: hard credit checks and soft credit checks. Soft credit inquiries don’t affect your credit score, and they’re usually done when you are applying for a job or trying to get preapproved for a credit card or loan. Hard credit inquiries occur before a lender makes a final decision on your credit application, and these are one of the five factors that affect your credit score.
“New credit” requests account for 10 percent of your FICO credit score so your credit score will likely drop by a few points every time you apply for a new credit card. This happens whether your credit request is approved or declined. A single credit inquiry won’t tank your credit score, but multiple credit inquiries in a short period of time may suggest that you are a risky borrower or churning cards solely for the sign-up bonus.
Reasons you can be denied a credit card
There are a variety of reasons you might be denied a credit card, some of which have easy solutions, while others might take more time to fix. Those reasons can include:
Lack of credit history
Your credit history makes up 15 percent of your FICO credit score. If you don’t have much of a credit history yet, it might be hard to apply for new lines of credit — unless you choose a credit card built for limited credit history.
If you want to establish credit history and become eligible for more credit options, consider opening up a secured credit card or becoming an authorized user. Secured credit cards are designed for individuals with low no credit history or a low credit score, but you’ll need to provide a security deposit to back your credit line (typically at least $200). Becoming an authorized user is another great alternative to kickstart your credit history because you could enjoy the perks of a top-shelf credit card without needing to qualify with your own credit profile. However, the unsecured starter cards with the best rewards and lowest rates and fees tend to be student credit cards if you’re eligible.
Low or insufficient credit score
Most credit cards are designed for people within a certain credit range. There are credit cards for people with bad credit, fair/average credit, good credit and excellent credit. If your credit score isn’t high enough for the credit card you’re applying for, your application might be denied.
If your credit card application is declined due to a low or insufficient credit score, you’re not alone. Before you apply for another credit card, check your credit score so you know where exactly you fall within the FICO and VantageScore credit score ranges.
Irresponsible card usage
Lenders like to see a history of responsible credit card usage before offering you new credit. If you’ve missed too many credit card payments, for example, a lender might deny your credit card application. Your application might also be declined if you don’t pay your monthly credit card bills on time — or if you regularly max out your credit cards.
Errors on your credit report
In some cases, your credit card application might get declined not because of anything you did wrong, but because of an error on your credit report. This error could be as simple as an outdated address, or as complicated as a history of missed payments that actually belongs to someone with a similar name. This is why it’s important to review your credit reports regularly and dispute any errors you find.
How to improve your chances of approval
A credit card denial isn’t permanent. You can reapply for the same card or apply for a similar one later on — but first, you should try to raise your approval odds by following these tips:
See if you prequalify first
Being prequalified or preapproved for a credit card can give you confidence when you’re gauging your approval odds, and it won’t hurt your credit score since it involves a soft credit check. Some issuers let you submit basic financial and personal information on their website for a general prequalification estimate. You can check if you’re prequalified for certain cards through third-party services like Bankrate’s CardMatch tool, as well.
Issuers may also independently conduct a more thorough soft credit check to send you a preapproved offer in the mail. These mail offers could include targeted sign-up bonuses that are higher than what the issuer lists on their website. Preapproval may indicate higher approval odds than a prequalification, but it’s important to know that neither guarantees that the issuer will approve you for the card.
Review your Adverse Action Letter
The best way to learn why your credit card application was denied — and how you can prevent a credit card denial going forward — is to review your Adverse Action Notice. Thanks to the laws under the Fair Credit Reporting Act, credit card issuers have 30 days to explain why your application was denied, though in most cases your letter will arrive much sooner.
Your Adverse Action Notice might arrive via mail, email or both. Use the information provided in the letter to prevent future credit card denials. If you were denied due to a low credit score, for example, work on improving your credit score before your next credit card application.
Request your credit report
If you haven’t reviewed your credit report in the last few months, it’s time to request your credit report and review it closely. Make sure all of the information, from your name and address to your history of credit card payments, is accurate. If you find errors on your credit report, dispute them as soon as possible. Equifax, Experian and TransUnion all offer easy online dispute forms to help you get the process started.
Don’t reapply right away
Although you might be tempted to reapply for credit right away, remember that multiple hard credit inquiries within a short period can bring down your credit score — and potentially make it more difficult for you to acquire new lines of credit. Before you apply for a new credit card, look for a card that’s a good match for your current credit history and credit score. That way, your application will be more likely to be accepted.
Take steps to improve your score or build credit
If you can improve your credit score or build your credit history before applying for a new credit card, you’ll be better off. The quickest way to improve your score is to practice responsible credit usage on your existing credit accounts. Make on-time payments, pay off your balances in full whenever possible and avoid maxing out your credit cards to keep your credit utilization low.
Based on the current credit card climate, do what you can to shore up your chances of approval before you apply. Half of Americans (50 percent) who’ve applied to loans and other financial products have been denied since the Fed began raising interest rates in March 2022 — with credit card applications denied the most, according to Bankrate’s 2024 Credit Denials Survey. These tight credit approval standards may loosen up if the Fed rate continues to decrease like it has since September 2024, but it may still be a tight market until these decreases add up to a more substantial rate drop.
The bottom line
A credit card rejection may not necessarily affect your credit score, but the initial application does. Hard inquiries are inevitable when it comes to applying for new credit cards, but with time your score will recover. If you put a pause on applying for credit and take the necessary steps to improve your credit, your credit score should rebound in no time.
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