A credit card is not only a convenient tool to make everyday purchases, but you can also benefit from added perks like cash back, travel insurance, and exclusive deals and discounts. Moreover, a credit card can help you build credit, which is an important part of your financial profile when applying for loans, mortgages, and other credit products.
Unfortunately, not everyone can qualify for a credit card. Generally, there are certain credit and income requirements you have to meet. So what can you do if your credit card application is denied?
What Can You Do If Your Credit Card Application Is Declined?
If your credit card application was declined, there are a few things you should do, including the following:
1. Find Out Why You Were Declined
Call the credit card issuer to learn why your credit card application was denied. If you learn why you were denied, you can work on fixing those issues before trying to reapply.
For example, if you were declined because your income did not meet the requirements, you can look for a credit card with lower income requirements.
2. Check Your Credit Report And Credit Score
Credit health is a major reason for denial, so checking your credit score and report is important. It’ll not only help you understand where you stand, but you can check your credit report for any errors.
Even minor errors such as a misspelling or an incorrect address can unfairly pull your credit score down. Moreover, you can look into what may be causing your credit score to fall, for example, missed payments
3. Don’t Apply For Another Card Right Away
Every credit card application will result in a hard pull on your credit file, which may temporarily impact your credit score. Banks may deem this as “credit hungry” behaviour, flagging you as a high-risk applicant desperate for a credit card due to multiple applications.
As such, wait before reapplying for a credit card and improve your credit in the meantime. Take what you’ve learned from reviewing your credit score so that you don’t make the same mistakes moving forward.
Note: Multiple credit inquiries for the same type of loan (ex: a mortgage), within a certain period (14-45 days) is counted as a single inquiry. This rule does not apply to credit cards.
Reasons Your Credit Card Application May Be Declined
There are a variety of reasons your application may have been denied. It could be due to one or more of the reasons listed below.
You Don’t Meet The Income Requirements
Most credit cards have an income requirement, particularly premium credit cards that have exclusive perks. In general, these credit cards require an individual income of $60,000 or a household income of $120,000.
As such, if you apply for these credit cards with an income far below the requirement, you may be declined.
Inconsistent income can also lead to a credit card rejection. If you’re self-employed or a freelancer, you may be deemed too risky for a bank to approve your credit card application. This is why it’s important to provide documentation of consistent income if you’re self-employed.
Low Credit Score
Most credit cards will require a credit check when you apply. Depending on the card you apply for, you may require excellent credit to qualify.
Credit scores are three digits used to determine how well you manage borrowed money. If you do not meet monthly payments for loans, past credit cards, etc., this can negatively affect your credit rating.
No Credit History
If you’re a student or a newcomer with no credit history, it makes it difficult for banks and other credit card issuers to understand how well you manage borrowed money.
As such, if you apply for a premium card, you’re likely to be declined. However, if you apply for credit cards that are specifically designed for students and newcomers, you’ll have a higher chance of qualifying.
Many credit cards will have a requirement that says “no bankruptcy in the past 7 years”. If you’ve recently been bankrupted, be sure 7 years have passed before you apply for a credit card.
Too Many Credit Applications
If you’ve applied for multiple credit cards within a short period, you may be labelled as a “red flag”. Those who apply for too many credit products within a short span may be seen as desperate for new credit and as someone who may be borrowing too much money at once.
You Have Too Much Debt
If you already have too much debt on current credit cards or other loans, you may be flagged as someone unable to make monthly payments. Debt is not typically measured by how much is owed, but the amount of debt relative to your total income.
You Don’t Meet The Age Requirements
You must be either 18 or 19 to legally obtain a credit card in Canada. Applicants in Ontario, Quebec, Manitoba, Alberta, Prince Edward Island and Saskatchewan must be at least 18 years old. Applicants in British Columbia, Newfoundland and Labrador, New Brunswick, Nova Scotia, Northwest Territories, Nunavut and Yukon must be at least 19 years old.
You Churn Credit Cards
“Churning” credit cards refers to someone who applies for credit cards to receive sign-up bonuses, only to cancel their credit card shortly after. Banks can see this history if you have a large number of closed accounts and may flag you as a credit card churner.
Credit Cards You Can Get With A Low-Income
Income can be a huge barrier for some Canadians. Thankfully, there are credit cards that have no low or very low-income requirements.
|Minimum Income Requirement
|Tangerine Money-Back Credit Card
|No income requirement
|Capital One Low Rate Guaranteed Mastercard
|No income requirement
|Scotiabank® Scene+™ Visa* Card
Credit Cards You Can Get With A Low Credit Score
If you have a low or no credit history, you can apply for a secured credit card. These credit cards work just like a regular credit card except you have to provide a security deposit.
These cards guarantee approval, so long as you can provide the minimum deposit. They’re also a great way to build credit. Once your credit is strong, you can apply for a premium credit card.
|Minimum Credit Limit
|Neo Secured Credit
|Capital One Guaranteed Secured Mastercard®
|$75 or $300
|Home Trust Secured Visa
|$0 or $59
Can You Get A Credit Card While On CPP?
Those who have a pension may have a challenge while applying for a credit card, as banks generally have minimum income requirements for those applying for a credit card. If you’re a senior you could apply for a low-income credit card, but you may miss out on the perks that come with premium cards.
You can also apply for credit cards that have the option of being approved based on your assets instead of income. This is a good option for seniors who have a significant amount of savings, but a lower income after retirement.
Tips For Seniors Wanting A Credit Card
- If you’re a senior, consider applying for a credit card before retiring to take advantage of your current income.
- If you already have a credit card, you can request that the bank increase your credit limit before retiring.
- Individuals can qualify based on household income. If a senior is retired and lives with family members who are not retired, they can apply based on the household income.
Getting a credit card may seem overwhelming, especially with numerous requirements, but don’t be discouraged by this or be concerned by having your credit card application denied. There are many credit cards available in Canada, some have high requirements while others have little to none.