Ugh! Why was my credit card application rejected?
Credit card rejection can be a real confidence crusher. You’re told about the benefits of using a credit card, like improving your credit score so you can be approved for loans in the future. But your credit history – or lack thereof – might be holding you back.
If you’re getting denied and don’t know why, there could be a number of factors at play, such as your debt-to-income ratio and information in your credit report. Knowing the potential roadblocks in your quest for credit can better prepare you for the next application. Read on to find out what could be standing between you and that approval.
Income and debt-to-income ratio
When you apply for a credit card, your application may include a field for your income or household income. This helps lenders figure out whether you’ll have enough money coming in to repay your debt. But what they won’t ask you for is your debt-to-income (DTI) ratio, which compares your debt against your gross income and is represented as a percentage. To calculate it, divide your debt by your income and multiply by 100: debt / income x 100 = your DTI percentage.
It’s important to have an idea of your DTI ratio because lenders take it into account when deciding whether or not to approve you for a credit card. A low DTI shows that you have the capacity to manage debt and take on more if you need it.
Existing credit
The number of credit cards you have can also affect your eligibility for a new one. It’s OK to have multiple credit cards and loans on file, but if any balances are a little too close for comfort to their credit limit, it can mess up your credit utilization ratio – which is your total debt compared to your available credit.
Pay your bills on time, keep your balances low, and don’t apply for too many credit products at once. Whether or not you’re approved, each application is considered a hard hit by the credit bureaus, which ultimately affects your credit score.
One way to avoid a hard hit is Quick Check®. You can find out if you’re pre-approved for a credit card before you apply without triggering an inquiry on your credit report.
Application typos and inaccuracies
Don’t rely on auto-fill when completing your application. Take your time. Discrepancies and incomplete data when entering information like your date of birth or address can negatively impact your chances of approval.
How to improve your chances of getting approved for a credit card
1. Keep existing balances low: show lenders you can manage your current debt.
2. Cool it on applying for a credit card for a while. Focus on smashing your existing debt first.
If you aren’t sure what’s impacting your credit score, you can request a free copy of your credit report from Equifax and Transunion.
You’ve got this! Check out the 4 moves you can make to increase your credit score.
* If Quick Check pre-approves a card, you can be sure we’ll approve your application, except in limited circumstances. Some of the reasons we may not approve your application, among others, include:
a. There’s been a change in your credit file information, personal information or financial status from the time you receive your Quick Check results to the time you apply for one of our credit cards.
b. You’re not at least the age of majority in the province or territory you live in.
c. Your application is flagged for fraud prevention.
d. You have an existing Capital One account.
e. You’ve applied for a Capital One account in the last 30 days or had an account with us that was not in good standing in the last year. In good standing means not past due, over limit, fraudulent, restricted, or part of a consumer credit counselling program or bankruptcy.
In some cases, we may not be able to open an account for you even though your application was approved. This can happen if we’re unable to verify your identity, or you don’t provide the required security funds if you’re approved for a Secured Mastercard®.