Did you or someone you know recently get turned down for a new credit card in spite of having a strong credit score?
If you have a solid credit score, it stands to reason that you should appear as a strong candidate for lending. But sometimes there’s more to the decision for the credit card issuer than just your credit score.
Money expert Clark Howard addressed this issue with a listener on a recent episode of the Clark Howard Podcast.
In this article, we’ll take a look at Clark’s take on that denial and also dive a little deeper into reasons you could be experiencing a similarly frustrating result.
Ask Clark: Why Was I Denied a New Credit Card in Spite of a Strong Credit Score?
Listeners Mike and Jean from Nebraska wrote to Clark with concerns about a denial of their credit card application in spite of a strong credit score.
Question from Mick and Jean from Nebraska
“Recently, we applied for new credit card in my wife’s name and were denied the card. She has a credit score of 767, which to me merits acceptance. My score is even higher. The reasons they gave were: 1) few revolving accounts open long enough and 2) insufficient balance in deposits and investments with the bank. If a 767 credit score isn’t going to help me get a credit card, maybe I should just spend money like a drunken fool and enjoy myself.”
Clark’s response included a couple of possible reasons for why this could be happening to Mick and Jean at this point in time.
Response from Clark Howard
“OK, I’m going to mention two company names in this case. One is: Who knows if this is tied up in the Equifax boo-boo? We haven’t talked a lot about the most recent Equifax problems, but Equifax had an internal error that gave improper information to credit grantors, and it’s not clear how many millions of people are involved and how many different types of loan products it applies to. Equifax says it was principally about mortgages, which would not explain Equifax as being an angle on the problem you had with such a high score being approved for a credit card.
“Anyway, Chase was the bank you applied to. And Chase has some unusual criteria for granting credit cards. They use the revolving account average age, and then they said insufficient balance and deposits and investments with Chase. So they made a loyalty decision on you: that you were not into Chase for enough stuff to be somebody who they wanted to issue a card to. So I think that it could particularly be a Chase issue.
“Chase also has some internal criteria they use depending on whether you have, in the past or currently, applied for so many cards with Chase over a period of time. They will deny you just because they’ve decided you’re somebody whose profitability is not going to be enough for them.
“So I would not take the denial for this card to be because of an issue with your credit. I think it was a decision of Chase looking at your profile and saying, ‘You know what, we don’t want Mick and Jean.'”
Reasons You Might Be Denied a Credit Card
A good credit score will unlock access to many of the best credit cards on the market, but it’s not a guarantee for approval.
Sometimes a card issuer will make a decision to deny your application based on factors that have nothing to do with your credit score. A healthy credit score is just part of the picture to the company.
Here are some other factors that could cause you to be turned down on an application in spite of a good score:
- Income. If you were prompted to provide household income information on your credit card application, you may have provided a number that made the card issuer uncomfortable giving you access to debt.
- Market conditions. Remember, credit card issuers are in the risk management business. There may be nothing wrong with your credit profile. They may just be acting ultra-conservatively with new accounts out of fear. A recent example of this was card issuers canceling existing accounts and denying new ones during the height of the COVID-19 pandemic.
- Too many credit inquiries. Even if your score is high, you may have set off a “red flag” for some card issuers by applying for too many new credit accounts in a short period of time. As Clark mentioned, issuers may also have policies about the number of cards one customer can get.
- Existing debt. If you have a long list of debts on your credit report, card issuers may be hesitant to “pile on” with a new line of credit for fear that you may not be able to pay them.
Clark recommends setting up an account with Credit Karma to get free monitoring of your credit and also get some insight on credit cards that may give you a green light.
“If you haven’t done so yet, set up a Credit Karma account,” Clark says. “For free, you’ll be able to track what your status is with your credit, and they’ll tell you your likelihood to be approved for various cards from ‘excellent’ on down. So you’ll know what your standing is to get another credit card.”
If you’re considering applying for a new credit card, you’re not wrong to consider your credit score to be a good indicator of the likelihood of acceptance.
But it’s not the only factor involved.
If your application gets denied in spite of a score that should win approval, you may want to look over your recent financial activity to find a potential reason. If it’s something debt related, hopefully, you can devise a plan to eliminate that debt as soon as possible.
And remember, one company’s denial decision does not mean you won’t be accepted by another. So have a second card issuer in mind for a second application if Plan A doesn’t give you the green light.
Have you recently been denied for a credit card in spite of a good credit score? We’d love to hear what the card issuer told you and how you handled it in the Clark.com community.