Updated: Sep 01, 2023

Why You Did Not Get Approved for a Credit Card With a Good Credit Score

Credit card approval requires more than just a good credit score. Employment history, total debt, account history and income can cause you to be denied.
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Have you ever asked yourself “why am I not approved for a credit card” even if your credit score is high? Lenders take a huge number of factors into account when deciding whether or not to extend credit to a customer.

Many of these factors, including credit utilization, credit history, previous defaults, and more appear on your credit report.

When people apply for credit, they tend to assume that a good credit score is all they need, but sometimes that isn’t enough.

Credit card companies are mainly concerned with whether or not they will be paid back for the credit they extend, so they look at numerous factors outside your credit report.

Type of Employment and Employment History

Most credit card applications require that you disclose some financial information in addition to your personal information. This financial information can include your annual income, total assets, rent/mortgage payments, and your type of employment.

This is because credit card issuers want to make sure that you have the income to make the payments, making it a big factor in why you are not getting approved for credit cards.

They also want to make sure that your income is secure and consistent.

This means that people with irregular income, such as freelancers or people who work on commission can have trouble qualifying for a card, even if their credit is excellent.

For most people, so long as you enter a reasonable annual income for the job you select, the credit card company will not bother to verify that you are telling the truth.

If the job and income you list do not line up (such as saying you’re a student with a $100,000 a year income) or if the job typically has irregular pay, you will need to prove your income to the card issuer.

The easiest way to prove your income is to provide a copy of a paystub or offer letter with the offered wage to the credit card issuer, but freelancers, bloggers, real estate agents, and others with jobs that do not pay a regular wage can’t do that.

Often credit card issuers will request multiple years of tax return forms to prove that your income is at the level you claimed and that it is consistent.

This means that if you are just starting out on a job with an irregular income, getting a credit card can be quite difficult.

Things you can do to get around this hurdle are.

  • Apply for a secured credit card from a local bank or national issuer like Capital One to prove your trustworthiness before moving up to an unsecured card.
  • Submit copies of contracts with regular customers that prove that you will have access to income for a known period of time.
  • Use paystubs from a part time job to prove some of your income, and explain where the rest comes from. You may receive a lower limit, but this is enough for some lenders.
  • Try applying for a business card from an issuer like American Express. Business card issuers may be more understanding of irregular incomes.

Debt-to-Income Ratio

Another aspect of creditworthiness that relates to your income is your debt to income ratio, which plays a huge role in determining your creditworthiness.

Priyanka Prakash, a finance specialist at FitBiz loans, notes “you can bet that a bank will ask you about your income.

If you don't have a stable income that's high enough to afford the expected monthly payments, you'll either qualify for a lower credit limit or won't get approved.”

The higher your debt to income ratio the more thinly that income is stretched when it comes to paying bills.

Lenders use this information, in addition to the information you provide about your rent payments and other obligations to figure out how likely it is that you’ll have the money to pay back your loans.

Your debt to income ratio can even lead to someone being not approved for a secured credit card.

Unfortunately, this is a difficult thing to fix. Your main options are to increase your income or to pay off some of your debt. Finding a side job, or selling some assets to pay down debt, could help get your ratio to a more acceptable level.

Since companies ask you to self-report your income, you may be tempted to round it up or to exaggerate it in an attempt to improve your chances of getting approved, but this is something you should avoid doing.

Priyanka Prakash continues, “Lying on your credit report is (not only) illegal, but if the credit card company finds out you are lying about your income or other information on your application, you will likely be denied and possibly even barred from applying there again.”

Credit Limit with the Issuer

Most credit card issuers offer more than one type of card, each with its own benefits, drawbacks, and rewards. It is not uncommon to want multiple cards from the same issuer, but this can get your credit card application declined due to having too high a limit with one issuer.

As was stated before, credit card companies are mainly concerned with whether or not they will get paid back.

Which card or cards of theirs that you use does not affect this concern. When you apply for your first card with an issuer they will assign that card a credit limit, something that most people are familiar with.

When you apply for a second card with the same issuer, the company will take into account the credit limit of your other card, and decide whether or not they are willing to extend any further credit.

If the credit limit on the first card you opened is too high, they will deny your second application because they do not want to extend more credit, even if they would have approved the application otherwise.

When applying for a new card you aren’t sure you will qualify for, take into account how much credit that issuer has already extended to you.

A similar factor that some issuers, such as Chase, take note of is how many cards they’ve given you recently. Chase specifically will not give you more than five different cards in a two-year period.

Things you can do to avoid this problem include:

  • Contacting the card issuer and confirming the reason hey denied your application. Ask if they can move some of the credit limit from one of your existing cards to the new card you applied for. Many companies are more than happy to do this.
  • Don’t ask for an increased credit limit every chance you get. Higher limits are good to reduce your utilization and give your score a bump, but they can affect your chance of getting a new card from issuers you already have cards with.

History with the Issuer

The decision to extend credit is ultimately on based on trust. The card issuer needs to trust that you will pay back the money that they lend to you.

Your credit report is a numerical representation of how trustworthy lenders think you are.

Reducing people to number is impersonal, so having an existing relationship with the card issuer can have an effect. Just as having too much credit from a single company can reduce your odds, having a good relationship with the lender can improve them.

Similarly, a bad past relationship results in a bank marking you as permanently not approved for credit cards issued by them.

Jason Gross, the co-founder of Credit Bridge, a company that specializes in helping thin-filed borrowers that want to build their credit, observes, “no two banks make approval decisions exactly alike (but) If you apply for a credit card from a bank that you've borrowed from in the past, prior dealings can also factor into an approval decision.”

This is a phenomenon that many people have likely already seen, even if they have not recognized.

Once you received your first card from an issuer, such as Capital One or American Express, you may have noticed that you started to get offers for sign up bonuses on new cards from those issuers.

This is because those companies have the first-hand experience with the fact that you are a trustworthy borrower, and they want to keep you as a customer.

One place that a previous relationship can make a big impact is when you are applying for a credit card from your bank.

Banks are very interested in keeping long term customers because of how valuable each customer can be. One account holder who makes $60,000 a year can be worth as much as $500 a year to a bank, based on deposit accounts alone.

Offering a credit card to an account holder serves the bank by increasing customer retention as well as the income they bring in from that customer.

The best way to leverage relationships with card issuers are:

  • If you are trying to build credit, start by applying for a card with the bank you keep your deposit accounts at. They may be more willing to extend credit or work with you to find a good solution.
  • When targeting premium rewards cards that are just out of reach for your credit, find an issuer that has cards you like and apply for one of their easier to get cards. After some time, they will likely send you offers for their other cards, often with better sign up bonuses than normal.

Having an excellent credit score opens a lot of doors when it comes to getting the best deals on credit cards but sometimes it’s not enough.

Knowing the things outside of your credit report that affects your creditworthiness, and how to use them to your advantage can make it that much easier to get the best cards.