My credit score is excellent — so why was my card application denied?

If you think your good (or even excellent) credit score means your card application will be a slam dunk, don’t be so sure.

Issuers don’t look at just your score, but at your complete credit picture. So even the credit elite can get rejected for cards, for the following reasons:

pink_cotton_candy/E+/Getty Images

pink_cotton_candy/E+/Getty Images

1. Your credit history is too short: If you have no major wounds (like bankruptcies) in your credit history, you may be surprised how quickly you can achieve good to excellent credit.

“After a few years of credit history, you may not have a perfect FICO score, bit it could start to look pretty good,” says David Weliver, founding editor of personal finance site Money Under 30.

However, some issuers will want you to prove yourself a bit longer – and may reject your application because they want, say, five years of credit history and you have only three.

“Those super-prime card offers are the ones that are most likely to have stringent credit standards,” Weliver says.

2. You have too many credit inquiries: Credit applications may ding your score, but if was high enough to begin with, they may not tank it.

However, new credit applications in quick succession give issuers pause, as it makes you look “credit-hungry,” Weliver says. So the bank may choose to pass on you, even if your score is still strong.

3. It looks like you’ve been churning: Banks don’t like it when you sign up for a rewards card to collect the sign-up bonus and then cancel when it comes time to pay the annual fee. But some tolerate it more than others.

Chase has started cracking down on churners with what’s being called the “5/24 rule.” If you’ve opened five or more cards within the past 24 months (with any bank), Chase will reject you (for some of its products, increasingly more) no matter how great your credit is.

“Most churners do have excellent credit, so the 5/24 rule is Chase’s way to prevent churners from being approved for their cards,” says Patti Geroulis, co-writer and co-founder of The Travel Sisters blog. “Chase thinks that only churners apply for that many cards in 24 months.”

Even cards you’re an authorized user on count toward that five-card quota, “which is ironic because Chase encourages adding authorized users [on some cards] by giving an extra 5,000 points as a sign-up bonus for adding an authorized user,” Geroulis says.

Other issuers have anti-churning rules in place, but Chase’s 5/24 rule is more extreme, as it involves outright rejection. American Express, Geroulis notes, may deny you a sign-up bonus if you’ve gotten it on the same card in a past, but you’re still eligible for the card.

4. You have too many products with the same bank: Banks want your business. What they don’t want is to be left holding the debt bag if you decide to stop paying your balances.

“A bank will probably be happy if you have a loan and a couple cards with them,” Weliver says, “But at some point they’re going to say you have enough.”

If you’re denied a card you really want, you might call the reconsideration line and ask if you can move available credit from an existing card to the new one – or close an old card entirely.

5. Your income isn’t high enough:
Income has no direct bearing on your credit score, but it can influence an issuer’s decision to approve you.

On your application, you’ll be asked to disclose your income. If the issuer thinks it’s not high enough to cover your outstanding obligations and the new credit limit, it may reject your application.

“They’ll look at your credit report and say, ‘Ok you have a mortgage that has this payment, a car loan with this payment and two credit cards that could have, if you max them out, this minimum payment,’” Weliver says. “Based on the income you reported could you still afford more credit? If those numbers don’t add up, they’ll probably turn you down.”

True, some issuers may simply decide to approve you for the card and give you a lower credit line. Some premium cards, however, may have a minimum credit limit ($5,000 for example). If the issuer doesn’t think your income can support that minimum limit, you won’t get the card.

6. You’re using too much of your credit limits: High credit utilization (using up a lot of your credit limits) will eventually lower your score.

“But it’s possible to have a very good FICO score and still be close to maxing out on a card,” Weliver says.

The issuer may not be comfortable with that.

Even if you pay off all your balances in full each month, high balances may be reported to the credit bureaus – and, thus, displayed to the issuer – because balances are generally reported when your statement cuts each month.

“Let’s say you’re running a business and you put all your expenses on the card,” Weliver says. “Those high balances will still report to the credit bureaus, so it’ll look like you’re maxed out.”

The way around this problem? Pay your balances off several days before your statement cuts.

7. You made a late payment: Thrilled that your score has rebounded from a late payment six months ago? Your slip-up might still bar you from getting a card.

“They may have criteria where they won’t take anyone with a late payment in the past year,” Weliver says.

8. You’re on the issuer’s black list: Bankruptcies (depending on the type) fall off your credit report either seven or 10 years after you filed. Your issuer, however, may have a longer memory, if your debts with them were discharged in that bankruptcy and you never paid them.

Issuer blacklists due to bankruptcies have never been definitively proven, and certainly aren’t published. However, we’ve had plenty of reports from forum members who appear to have ended up on issuers’ blacklists.

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