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Swiping plastic is not only more secure than paying with cash, but it also helps you build credit.

According to the Federal Reserve Board, a whopping 82% of Americans owned a credit card in 2022. But not everyone breezes through the approval process—especially for the best credit cards on the market, which often require credit scores of 700 and above.

In 2023, one in five Americans was turned down for a credit card, according to the Federal Reserve Bank of New York. So, if you just received a rejection letter in the mail, you’re not alone. Here’s what you can do after your credit card application is denied.

Vault’s Viewpoint

• If you’re denied a credit card, you should receive an adverse action notice stating the reasons for the denial.
• Credit card rejections could be due to having too much debt, a low credit score, a thin credit file or other issues that make you a high-risk applicant.
• To increase your odds of credit card approval in the future, take steps such as disputing errors in your credit reports, improving your credit score and becoming an authorized user.

Reasons Why Your Credit Card Application Was Denied

The Fair Credit Reporting Act requires credit card issuers to tell you why your application was rejected through an adverse action notice—which you should receive around a week after your rejection. Here are a few common reasons for credit card rejections:

• Too much debt. Having a high credit utilization rate, which is calculated by dividing the total amount of revolving debt you have by the total amount of credit you’ve been extended, is a sign that you’re overextending yourself financially. Credit card issuers may deny your credit card application if this ratio is too high. And though there’s no strict rule on what constitutes too much debt, most experts recommend keeping your credit utilization ratio below 30%, though closer to 10% is even better.
• Poor credit score. Premium credit cards typically require applicants to have good or excellent credit, which means a FICO Score of 670 or higher. If you applied for a credit card even though your score didn’t meet their requirements, your application will most likely be denied.
• Thin credit file. Having a thin credit file means you lack information on your credit report. In this case, credit card issuers may avoid extending you credit since they can’t accurately determine your creditworthiness. Having a thin credit file is common among young adults who are new to credit or those who purposefully avoid credit.
• Negative account information. Negative account information, such as missed bill payments, bankruptcy, foreclosures and charge-offs, can all damage your credit and make credit card issuers reluctant to approve your application. In some cases, these negative items can stay on your credit reports for up to ten years.
• Too many recent credit applications. If you apply for multiple new lines of credit in a short period of time, credit card issuers could deny your application since they may see you as a high-risk borrower who’s in financial trouble. For example, the unofficial Chase 5/24 rule prohibits you from opening a new credit account if you’ve opened five credit cards in the past 24 months with any card issuer.
• Low income. While your income doesn’t directly impact your credit score, it’s a factor that credit card issuers consider when it comes to the approval of a line of credit and your credit limit. If your income doesn’t meet the credit card company’s minimum requirement, you may not qualify.

What to Do When Your Credit Card Application Is Denied

Receiving a credit card rejection letter in the mail can be frustrating and demoralizing. Here’s what you can do to turn the situation around and improve your chances of approval in the future.

Ask the Card issuer to Reconsider

If you think there was a mistake on your credit card application or that you have additional information that could influence the credit card issuer’s initial decision, contact their reconsideration line or customer service department team to plead your case. Your denial notice will typically include instructions you can follow to request that the credit card issuer reconsider your application.

Check Your Credit Reports

Federal law gives you the right to get a free copy of your credit report every 12 months from each of the three nationwide credit bureaus: Experian, Equifax and TransUnion. If you have not already done so, head to annualcreditreport.com to order copies of your credit report so you know where you stand in terms of your credit health.

As you review your credit reports, check for inaccurate information that may be negatively affecting your credit score. You can dispute these items with the credit bureaus and have them removed from your credit reports.

Apply Again in the Future

If you’ve been denied a credit card due to having too many recent hard inquiries or other negative items, you may just have to wait it out before applying for another credit card. Hard inquiries can stain your credit reports for up to two years, and other negative items like bankruptcies and late payments can stay even longer.

Boost Your Credit Score

Cards with generous welcome bonuses, cash-back rates and other attractive perks typically come with high credit score requirements. If you’re denied these cards due to a less-than-perfect credit score, don’t give up. Start by taking steps to boost your credit score.

The first step to bettering your creditworthiness is to understand the factors that affect your credit score:

• Payment history (35%)
• Amount owed (30%)
• Length of credit history (15%)
• Credit mix (10%)
• New credit (15%)

Here are a few ways to better your credit health and get approved for credit cards with favorable terms:

• Pay your bills on time and in full each month
• Keep your credit card balances low (ideally below 30% of your credit limit)
• Monitor your credit report regularly
• Limit your new credit applications
• Maintain a diverse mix of credit accounts
• Use your credit responsibly and avoid maxing out credit cards

Apply for a More Suitable Credit Card

Another option you have after receiving a rejection letter is to apply for a different credit card that may be better suited for your financial situation. For example, if you have a less-than-ideal credit score, consider looking into credit cards for those with bad credit or ones that have more lenient approval criteria to increase your chances of getting a credit card.

Become an Authorized User

Many card issuers and financial institutions may deny your credit card application if you have a limited credit history. One way to thicken your credit file is to become an authorized user on your family member’s credit card. This way, their full account history will be added to your credit reports. Just make sure they have good or excellent credit scores and have a history of managing their credit responsibly. Otherwise, you won’t benefit much from becoming an authorized user.

Consider Getting a Secured Credit Card

If you can’t get approved for a regular credit card, consider applying for a secured credit card. Secured credit cards require a security deposit—typically equal to your credit limit—to be made when you open the account. This deposit protects the issuer from losing money if you fail to pay your bills, which makes these secured credit cards easier to get if you have poor credit.