Reasons Why People Don't Get Approved for Credit Cards

by Karen Olivia Varnado
College students find it hard to obtain credit cards.

Obtaining credit card approval is not as easy today as it was in the past, even for people with a good credit score. Only 25 to 35 percent of credit card applications are approved, according to Gerri Detweiler, Director of Consumer Education for Credit.com in an article on the MSN Money website. Credit card companies have adopted stringent rules about approving credit after losing millions of dollars in charge offs in the recent past.

Underage Students

If you are a student who hasn't reached 21 years old, chances are likely you won't be approved for a credit card. The Credit Card Act of 2009 has made it hard for students under 21 who have no verifiable income to obtain a credit card. Students must have a co-signer who is over 21. This act protects college students from accumulating massive credit card debt. Young college students who want to obtain a credit card can ask a parent, guardian or spouse to co-sign the credit card application. If time permits, take on a part-time job that gives you verifiable income before applying for a credit card.

Recent Hard Inquiries

There are two types of credit inquiries: hard and soft. A soft inquiry occurs when you check your own credit report. It is not recorded. A hard inquiry occurs when a third party checks your credit report in response to a request for credit, such as occurs when you fill out a credit application. It displays on your credit report for two years. A large number of hard inquiries on your credit report within the past 12 months is viewed as a high risk factor and can cause your credit card application to be declined. One hard inquiry causes your credit score to decrease by as much as five points. When credit card companies see several recent inquiries, they presume that you are having difficulty being approved for credit and are a poor credit risk. The MyFICO website states "people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports."

Payment History

If you pay your bills after the due date and have 30-day delinquencies on your credit report, then your credit card application will probably be declined. Recent late payments are a signal that you are a credit risk. They have a greater negative effect on your credit score than delinquencies that occurred more than two years ago.

Credit Card Use

You can have a fair or good credit score but if all your credit cards have reached their maximum limit or are over their maximum limit, your credit card application will likely be declined. In addition, if all your credit is in credit cards and you do not have an installment loan, mortgage or car loan, this as a high risk factor. Traditional loans demonstrate responsibility, stability, planning and budgeting which lower your risk factor. Your credit card application may also be declined if you have no credit history at all, which makes it particularly difficult for a young person to qualify for his first credit card.

About the Author

Karen Olivia Varnado has been writing professionally since 2011. She has a BS in business administration with a minor in marketing, and is in the process of earning her MBA. She ran a small business from 1992 to 2006.

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