Why was I declined for a credit card?
If you've been turned down for credit there are steps you can take to find out why and help improve your credit score
Being turned down for a credit card can be frustrating - and worrying - especially if you’re unsure why you’ve been rejected. Should you reapply for a different card straightaway or try and find out where the problem lies and address it?
We explain some of the reasons your application might have been unsuccessful and what you can do about it.
How do lenders decide who is eligible for credit?
When you apply for a credit card, lenders will run a check on your credit rating. Card providers then use your credit score to determine whether they are prepared to accept your application and lend to you – and at what interest rate.
Several factors can affect your credit score, including your payment history, the length of your credit history and whether you’re registered on the electoral roll (this is the list you need to be on to vote in elections).
Other things have an impact, such as how much of your available credit you’re currently using and whether you have made multiple applications for new credit in a short period of time. This can often be a red flag of concern to potential lenders because it looks like you are desperately searching for credit and may not be in a stable financial position.
But try not to get too anxious about the situation. Just because a particular lender turns you down for a credit card doesn't necessarily mean others will. All lenders have their own individual criteria - and some are stricter than others.
Why was I refused credit?
It can be stressful and inconvenient being turned down for credit – particularly if you need the cash for something urgent. But it can help to investigate and find out exactly why you were refused.
Your credit application may have been rejected due to a range of factors, including:
A poor credit rating: If you regularly miss repayments or go over your credit limit, this can have an adverse effect on your credit rating. The lower your credit rating, the more likely you are to be refused credit when you apply
A limited credit history: If you haven’t previously taken out credit, or only rarely do so, your credit history will be thin. This means lenders won’t have enough information to judge whether you’d be a good applicant, so they’ll be more likely to reject your application
Your employment history: Lenders also consider your employment status and history when making their decision. If you’ve changed jobs frequently or aren’t earning enough, your lender may see you as a higher risk applicant
Bankruptcies and CCJs: If you have any bankruptcies or County Court Judgements (CCJs) on your credit file within the last seven years, these will indicate to lenders that you’ve had financial difficulties. Providers could see you as a risky applicant, so you’re likely to be refused credit if you apply
Mistakes on your application: Even small mistakes, such as giving the wrong name or address on a credit card application, could be enough for the lender to refuse you credit. This is why it’s so important to thoroughly check your application over before submitting it and request any mistakes be corrected
Identity theft: If your credit report is in good shape and your application was in order, you may want to consider the possibility of identity fraud or theft. If you think this may be the case, you should contact your bank or lender as well as Action Fraud, the UK’s National Fraud and Cyber Crime Reporting Centre
Lender’s policies: Different lenders will have different criteria when it comes to lending. For example, some lenders will have higher income requirements than others. Generally, credit builder cards which are designed to help you step up your credit score are easier to get, as their lending criteria won’t be as strict as other credit cards
Why was I refused credit with a good credit score?
If you have a good credit score and have been turned down for credit, it’s worth investigating the reason. Ultimately the lender is the only one to know why your application was declined, but it may be possible to get to the bottom of the problem. There could be a number of reasons why you were refused:
Employment status: It could be that your employment status indicates that you might not meet the lenders’ affordability criteria, perhaps if you’ve changed jobs and the information supplied looks inconsistent. Check if they have a minimum income requirement and that your earnings exceed it.
Application error: If you made an error on your application - and even a small slip can lead to an automatic rejection – this could be the reason for the refusal.
Financial connections: Another reason might be that you have a financial link to someone who has a poor credit rating. This can lead the provider to see you as more of a risk. You will be linked financially to anyone you share a financial account with – such as a joint bank or credit card account, or a joint loan or mortgage.
Large debt: You could be turned down if you have a high amount of existing debt even if you have an excellent credit score and no previous problems in repaying any of it.
Will being declined affect my credit score?
Not directly, but it will go down as a hard inquiry and frequent applications can lower your credit score in the short term because each application – whether successful or not – represents a debt that you’ve tried to take on.
Debt is a risk factor that could affect your ability to make repayments, and the higher the risk the less likely you are to be accepted.
How long does refused credit stay on file?
Two years. All enquiries for credit are removed from credit reports after two years, although credit rating agencies do not record whether an application for credit is refused or accepted.
Should I apply again if I'm refused credit?
If your application for a credit card is rejected first check your credit report to see if there is an obvious reason why.
Where possible take steps to correct any issues, or at least understand why you aren’t likely to be successful until your score improves.
Making more applications and getting further rejections can have a cumulative effect and further damage your credit rating.
The good news is if you use MoneySuperMarket to apply for a card, our Eligibility Checker tool will show you the cards you’re most likely to be approved for without doing a hard credit check. This means you’ll see what cards you’re most likely to be able to get and protect your credit score.
How can I improve my chances of being approved for credit?
There are several ways you can increase your chance of being accepted for credit. Some are quick and easy and others may take more time or thought. For example:
Fix errors on your credit report
Register on the electoral roll
Be employed in paid work for a good length of time
Increase your income
Don’t miss bill payments
Only use a low percentage of the available credit you already have (known as credit utilisation)
Build your credit rating with a credit builder credit card
Are there easier credit cards to get approved for?
Yes, a credit builder credit card is designed for people with a low credit rating. They usually offer low credit limits, typically only a few hundred pounds to begin with, and charge higher interest rates. Used responsibly this type of card can help prove your creditworthiness and raise your credit score.
What are my alternatives to a credit card?
If you’ve been refused credit, there are options you can consider:
Buy Now Pay Later: If you would like some breathing space when it comes to making payments then Buy Now Pay Later could be an option. This payment method allows you to buy goods and services on credit and pay for them later. Buy Now Pay Later tends to be offered by online retailers and popular payment providers include PayPal, Klarna and Clearpay.
However, if you choose to use Buy Now Pay Later, it is important to make sure you have money to cover the payments. If you miss payments or make them late you can face charges and end up spending far more than if you paid outright.
Bad credit loans: If your credit score is getting in the way of you getting a credit card then a bad credit loan could be for you. These loans are designed for people with bad credit. But they will typically have much higher interest rates and you’ll only be able to borrow a small amount. Paying back your loan in full and on time could help to improve your credit score.
Guarantor loans: This is a loan designed for people with bad credit. Guarantor loans work by someone - usually a close family member or friend – promising to pay off a debt for you if you can’t. Your guarantor is legally responsible for paying off your loan if you’re unable to do so.
Your guarantor will also have to meet certain criteria concerning their age, employment status and credit history. Think carefully before entering this arrangement because if your guarantor has to pay your debts this could negatively impact your relationship with them.
Borrowing from family and friends: If you’ve been refused credit, you could also consider borrowing from family and friends. When you borrow from family and friends, you won’t have to undergo a credit check and may not even have to pay any interest. However, when borrowing from loved ones, you should always think about how it could affect your relationship for the worst if you’re unable to make payments.
What can I do if I’m struggling to pay off debts?
It is not recommended to borrow money to pay off debt you already owe. If you’re finding it hard to keep up with your bills and living expenses, then, if possible, you should think about how you can lower these costs.
Reducing household costs
If you’re finding it difficult to keep up with household costs, MoneySuperMarket can help you find cheap broadband deals to bring your broadband bill down. We can also help you save with mobile phone deals. If your credit is making a difficult to get a phone contract, we also have a range of bad credit phone contracts for you to compare.
Being in debt can be a very stressful time. If you are experiencing financial difficulties there are free services available to you.
There are free debt charities such as National Debtline and StepChange which can help you come up with a debt management plan.
Other helpful guides
Compare credit builder cards with MoneySuperMarket
If you’re looking for a credit builder credit card, you’ll find great deals when you compare using our eligibility checker. Searching this way won't further harm your credit score.
Just tell us a little about yourself and your finances, including your income and employment status, and we’ll show you a list of credit cards suited to you – plus your chances of being accepted for each deal. That way you can apply with greater confidence.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this service. Instead we are usually paid a fee by the lenders, but the size of that payment doesn’t affect how we show products to customers.