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Being denied for a credit card is never a good feeling. I remember back when I was a college student and was so excited to apply for credit cards, and then ended up being disappointed when I’d get rejected for cards. I took it personally, not to mention that it’s not fun to miss out on
great credit card offers. Fortunately nowadays I rarely get denied for credit cards, even though I have over two dozen credit cards. That’s thanks to the fact that I have a more established credit history, and also understand how actions impact my credit score, from
opening card accounts to closing card accounts. Readers often present me with situations and ask what I think their odds of approval for a particular card are. While I’m happy to give my best guess, perhaps the biggest question should be whether it
actually matters. What’s the real impact on your credit score when you’re denied for a credit card? How are credit scores calculated?For some context, first let me post a quick refresher of how your credit score is calculated (if you already know this, by all means skip this section). Your credit score is made up of the following components:
Your takeaway here should be that if you make your payments on-time, don’t utilize too much of your credit, and keep your average account age fairly old, that’s 80% of your credit score right there. That’s what should matter most. How is your credit impacted when applying for a credit card?The only immediate impact on your credit score of applying for a credit card is that there’s a new inquiry on your credit report. 10% of your credit score is made up of your requests for new credit, so this is the aspect of your credit score that would be impacted by a credit card application. Generally speaking, you can expect that on average your score will be dinged by two to three points for every inquiry. However:
What happens to your credit score if you’re denied for a card?Applying for a credit card results in an inquiry on your credit score, but does the impact of that differ depending on whether you’re approved or denied? Well, the good news is that there’s no real “penalty” for being denied for a card. It’s not like the card issuer puts a note on your credit report that you’re not credit-worthy, or anything. Rather the credit report just reflects the inquiry, but doesn’t show the account having been opened, and that’s not a big deal at all. That would be no different than if you applied for a card, were approved, and then decided you didn’t want the card. So the good news is that you can be denied for quite a few cards over your lifetime, and it shouldn’t have a major negative impact on your credit score. Should you just apply for cards and see what happens?As I mentioned above, the context for all of this is that I’m often asked by readers what I think their approval odds are for a particular card. My advice is generally to not be overly-cautious when applying for cards, but also don’t apply recklessly. The way I view it:
Bottom lineWhile getting rejected for anything in life isn’t fun, the good news is that getting denied for a credit card isn’t nearly as bad as you may assume. The only thing that really happens is that an inquiry shows on your credit report, and that could temporarily ding your score a few points. Unless you’re right at the cusp of having an excellent credit score, the impact of that should be negligible. In general I encourage people with excellent credit to apply for cards even if they’re not sure they’ll get approved, though be realistic and smart about it. If you’re straight out of school, start with an Amex card rather than a Chase card. If your credit score isn’t amazing, maybe be a little more conservative than if you have an excellent credit score. Hopefully this answers questions many may have about being denied for credit cards. Meet Ben Schlappig, OMAAT Founder
Does a declined credit card affect credit?Having a credit card transaction declined does not affect your credit. It can be embarrassing, especially if you don't have another way to pay. But the declination won't be reflected in your credit score.
What happens if a credit card denied me?Getting denied for a credit card does not affect your credit, so you don't have to worry about that. However, you might see a slight drop in your credit score due to the hard credit inquiry associated with your credit card application.
How much does your credit score go down when you apply for a credit card?While the exact impact may vary from case to case, generally speaking, you can expect your score to drop by about five points each time you apply for a new credit card.
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