10 Reasons You Were Rejected for Credit

If you’ve never been rejected for credit, count yourself fortunate. Somewhere between 25 – 35% of most credit card applications are typically approved, “depending upon the pricing value proposition and other factors,” according to Robert Hammer, president of R.K. Hammer and Associates, a consultant to the card industry.

That means one out of every three or four applicants may be getting a rejection letter. With some issuers, the approval rate may be a mere 10% or so.

Image: Avenue G

If you’re not turned down for credit, you may be told instead that you didn’t qualify for the best rate. Either way, if a credit score (or credit-based insurance score) was used in the decision-making process, you must be told the main factors that contributed to your score.

Deciphering those reasons can be maddening though. “What do you mean I have no recent revolving balances?” Or, “So it says my account balances are too high. What does ‘too high’ mean anyway?”

Here’s a guide to some of the main reasons you may be turned down — and what you can do about them.

Keep in mind these are just some of the factors that may be used to evaluate your credit. Not all of them will apply in all situations, and there may be variations on these as well.

[Free Resource: Check your credit score and report card for free before applying for a credit card]

Reason 1: Proportion of balances to credit limits is too high on bank revolving or other revolving accounts »

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• Bill

  It seems almost impossible to be approved, there are soo many hoops you have to jump thru and I am beginning to feel as if they are looking for reasons NOT to approve you rather than doing anything to help an individual! It seems like such a racket that you don’t have much control over, yet it has all the control over your life! Just doesn’t seem fair!

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• Be-Be Gee

  What’s all this about why you’re rejected – each reason is sometimes contradicting the other – to much credit, not enough credit, to recent inquiries, not enough recent balances. All the lenders play games and pick & choose who they want to approved and deny. A lender gives you a $5,000 limit, but penalizes you if use the limit, by lowering your credit score. If you dont want the consumer to use that amount don’t grant that amount. But I thought it was given as as option to use as long as you’re making at least mimimum payments on-time. Knowing this, what do you do not use the cards and then you;re penalize againg for not using (no history of payments)

• http://M.S.N. michal flansburg

  IT all boils down too this and what america was based on Trust , we have no more trust just more greed, too many hard working americans are being taken advantage of and its gotta stop. We working americans can pullout of these hard times if given a chance ie a little bit of credit. sincerly yours michael

• tran

  I have perfect rating on Discovercard, I pay off ALL balance each month with them for 3 years, I paid on time 100% with them for 3 years. When I asked DISCOVERCARD for a credit increase, they promtly denied me because they said I have a low credit score…based on TransUnion, Experian, Equifax credit report. WTF????

  • 2007 Brittney

    They can that having skikky crdit, and yes its bull. I used to buy everything cash until i applied for a credit card and found out i had no credit. I had to prove to discover i had 100k in the bank for them to give me a tiny $1,500 credit card.

• Lisa Marie Walsh

  I don’t have any credit or current revolving accounts and I got denied because %balance on revolving accounts too high? Why or how is that possible? My credit score was 635 was or is that bad?

  • http://www.credit.com/ Credit.com Credit Experts

    Lisa —
    If you have no revolving accounts, it is hard to understand how the credit utilization on them could be too high. As for your score, it will depend on the scale used. In many commonly used models, it would be considered “fair” — good enough for some cards but not others. Because applying for credit results in a small, temporary drop in your score, we recommend applying only for cards you’re relatively confident you’ll be approved for. Different cards are marketed to people in various score ranges. A credit card comparison tool like this one can help you identify the cards you’re likely to qualify for.

• catdogme

  I want to transfer my balances over to a 0% balance transfer card so I can pay my debt down faster, but when I apply, they all say my balances are too high. THAT’S WHAT I AM TRYING TO FIX!!! I have no late payments on anything, etc. etc. I pay as much as I can but the interest is making it REALLY SLOW. What can I do?

  • http://www.credit.com/ Credit.com Credit Experts

    One possibility is to call your current card issuers and request a rate reduction. It may not help, but it can’t hurt. And you can check your free credit score, which also contains information on the factors that are responsible for it — and a guide for what you need to do to improve. your scores. Also be aware that applying for cards, whether you are approved or not, can cause a small, temporary drop in your scores. So you want to be relatively confident that your application will be approved. Also, know that the balance transfer cards do not allow you to transfer cards from the same issuer.