Does Getting Denied For a Credit Card Hurt Your Credit Score

A credit score or CIBIL score is a 3-digit number and is one of the major aspects that is considered when an individual applies for any kind of loan or credit card. An individual is granted financial assistance only if he/she holds a good score, i.e., any score above 700. The credit card issuers go through the detailed statement of your credit history before taking any decision on your credit card request. You will get approved for a credit card if you have a good credit score but your application will be denied if you do not have a good credit score or any score below 700. People might get a credit card below the score of 700 but that will be a basic credit card that will not provide you with any major benefit apart from rewarding you with reward points or cash back. Now, whenever you place a request for a credit card, the card issuer will request the Credit Card Bureau for your credit score. This is known as a hard inquiry and your credit score gets deducted every time such type of inquiry that takes place. But the question that arises here is that does getting denied for a credit card hurts your credit score.

The credit card issuer checks your credit history to get a knowledge of how you handle your credits like on-time payments, missed payments, etc, and how many other credit accounts you have. Checking a credit report is one of the best methods to get all such information about the individual.

How do these applications affect an individual’s credit score?

The Credit Information Bureau Limited determines an individual’s credit score and informs them of the card issuer whenever they ask for it. When an applicant places a credit card request with the bank, the bank requests the credit score from the CIBIL to know about an individual’s creditworthiness, his other credit cards, his payment pattern, etc. Such type of inquiry is known as a hard inquiry and whenever such type of inquiry is conducted, an individual’s credit score gets reduced by a few points. Although a single inquiry would not cost you many points multiple inquiries would lead to a significant fall in your credit score. Now upon inquiry, if you have a good credit score, you will be approved for your credit card request but will be denied if you do not have a good credit score.

Does getting denied for a credit card hurt your credit score

When a credit card applicant places a request for a credit card, there are both the chances that he might either get approved for a credit card or his application might be rejected. Now credit card application gets rejected not just because of a single reason but multiple reasons.

Bad Credit Score

It is one of the major reasons why your credit card application can face a denial. Having a low credit score portrays a bad image in front of the credit card issuers and hence they fear of issuing you a credit card.

Suggested Read: 7 Ways to Increase Your Credit Score

Owning multiple credit cards

If an individual owns numerous credit cards, the chances are very high that his application for a credit card might get rejected. Owning multiple credit cards shows a very high dependency on credit and the card issuer will not be convinced of your creditworthiness.

Low Income

The applicant has to meet the income eligibility criteria to get approved of a particular credit card. There are various lenders who are ready to give high credit limit credit cards to the eligible customers but for that, the applicant should have sufficient income so that the lender gets satisfied that you will repay the amount that you will use through the credit card. Your application will be rejected if you do not meet the income requirements.

These above-mentioned are a few reasons why your application might get rejected but these rejections will surely have an impact on your credit score, not that great but yes, it will impact. This is because every time you will apply for a new type of credit, the lender will conduct a hard inquiry on your credit report. When such frequent hard inquiries will be conducted, it will have a significant impact on your credit score (in a negative way). But such an impact on your credit score will not last for more than a few months.

Ways to improve chances of approval

Now if you very passionately want to have a credit card, you have to have a good credit score for which you will have to take care of a few points –

• Keep checking your account’s net banking so that you are aware of any pre-approved or pre-qualified credit card offers in your account. If you have any of such offers in your account, no hard inquiries will be conducted if you apply through such a process.
• Pay your credit card bills well in time, i.e., before the due date and you should also take care that you pay the full amount due on your credit card. This should be your regular routine to have and maintain a good credit score.
• Another way in which you can improve your credit score is to keep your Credit utilization ratio below 30%. The more the utilization, the more dependent you are on credit and the lower will be the credit score.

Bottom Line

Applying for a credit card can be exciting as you might be attracted to the amazing welcome benefits and generous reward points that the credit cards offer but as easy as it sounds, it is quite difficult to get a credit card, especially when you have a bad credit score. You may get rejected for a credit card even if you have a good credit score. This is because you already might have multiple credit cards. Now when you desperately want a credit card, you would place multiple requests with different-different card issuers but that will have a negative impact on your credit score because they all will conduct a hard inquiry and hard inquiry leads to a drop in your credit score. Hence, place a request with one issuer and if you get rejected, work on your credit score and income and then apply for a new credit card.