What to do if your application for a secured credit card is denied

You have several options to work toward secured card eligibility.

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Getting denied for a secured credit card doesn’t feel great, especially if you’ve recently been rejected for an unsecured card. Your application may have been denied for a handful of reasons. Instead of letting the rejection get you down, it’s best to identify why you were denied and take action to remedy the situation before your next application. Here’s how you can get back on track toward opening a new secured credit card.

Find out why your application was denied

You’re legally entitled to know exactly why your application was rejected. Within seven to 10 days of a rejected application, you should receive an adverse action letter from the issuer, which explains the reasoning behind your denial. This letter is the key to understanding exactly why you were denied, as you can use it to make changes that will increase your chances of approval. Once you receive this letter:

  1. Read the letter in full to understand why your application was rejected. This could be one or a combination of reasons ranging from poor credit history or a history of bankruptcy to a simple error on your application.
  2. Your next step is to check your credit reports with Experian, TransUnion and Equifax to see where you stand. You can request one credit report from each bureau per year.
  3. Once you’ve received your credit reports, take your time to examine them for any errors that may have caused your application to be rejected. If you see an error on any of these reports, you can dispute the issue with each credit agency. Visit our guide to correcting a mistake on your credit report for more information on the steps you need to take.

Why your secured credit card application might have been denied

While there are many reasons why your application could have been denied, here are a few of the most common causes:

  • Poor credit score. Credit card issuers often require a minimum credit score to verify your ability to pay your bills.
  • History of missed payments. If your credit score shows a history of missed payments, the issuer may be skeptical that your bills will be paid on time.
  • A credit card balance that is unpaid for six months or longer. If you have a history of unpaid balances, credit card issuers may be unwilling to risk losing money if it were to happen again.
  • Outstanding loans. Outstanding loans may be a sign that you are unable to pay off debts, which can be a red flag to some issuers.
  • Inadequate income. Issuers want to make sure that you are able to pay your bill. If you have inadequate income, they may doubt that ability.
  • Spotty employment history. Just like inadequate income, a spotty employment history may be a sign that you might not be able to pay your bill.
  • Error on your application. This could be as minor as a spelling error or a wrong phone number. Always check to make sure all of your information is correct before submitting your application.
  • Error on your credit report. Your application may also be rejected due to errors on your credit report, which can be resolved by contacting the relevant credit bureau.
  • Security deposit. Sometimes, the reason for a denied application may prove as simple as failure to pay the security deposit.
  • Too many applications or inquiries. Too many credit card applications or inquiries in a short period can decrease your credit score or indicate that you are relying too heavily on credit.
  • Bankruptcy. Some issuers may see bankruptcy as a sign that you are unable to pay bills and could be unwilling to take that risk.
  • Credit card is not eligible in your state. Every state has different laws and regulations surrounding credit cards, meaning that not all cards are available in every state.

Improve your credit before reapplying for a card

Building a positive credit score is an ongoing, long-term commitment, but that doesn’t mean you can’t make an impact now. There are a number of ways you can start building your credit score:

  • Pay your bills on time. This includes secured credit cards, utility bills, phone bills and more.
  • Take your time between credit card applications. Applying for too many cards at once can reduce your credit score. If your application gets rejected, take a moment to understand why, then spend a few months working on your credit score before applying for others.
  • Budget. Creating a monthly budget can help you understand where your money is going and help ensure your bills are paid on time. It can also decrease your debt-to-income ratio and reduce outstanding debts.
  • Pay off outstanding debts. Outstanding loans and other debts can decrease your credit score. Paying off outstanding debts or bills can help you gradually build your credit score over time.
  • Avoid too many credit inquiries. Applying for credit cards, mortgages, loans or other similar financial products can temporarily reduce your credit score. While your score will likely return to where it once was, spacing out credit inquiries can prevent it from dropping in the first place.
  • Maintain low balances. If you already have a credit card, try to maintain a low balance. Doing so can make it easier to pay bills and indicate that you’re a responsible borrower. A debt-to-income ratio (DTI) of 30% is ideal, so try to keep your balance as close to that number as possible.
  • Avoid closing unused accounts. Having only newer accounts on your credit report can result in a lower score. Lenders and credit card issuers like to see a long history of credit in your report.
  • Consolidate your debt. Consolidating several loans into one can streamline your payments and help you save money on fees.
  • Manage your credit report. Some credit reporting bureaus offer services that notify you when there’s a change to your report. These services could be helpful in staying on top of your overall financial well-being.
  • Apply or reapply for a secured credit card. While you might have initially been denied for a secured credit card, doing a few of the steps above may just bolster your credit score enough for eligibility. You might also consider applying for a secured credit card that doesn’t require a credit check.

How long should you wait before reapplying for a secured credit card?

Most credit card issuers suggest waiting about six months to reapply after being denied for a credit card application. Instead of rushing to fill out another application, take your time to build your credit over the next few months. Doing so can increase your chances of getting the best secured credit card possible.

However, there is no definite timeline. The six-month rule is just a suggestion, as the ideal timeframe may vary depending on your current credit score, the required score for the new card you want and a handful of other factors. If you have a low credit score, you may need to wait longer, as it could take a while to build enough credit to be approved. On the other hand, if your credit score wasn’t too far below the required minimum, you might be able to get approved within three months.

If you feel your application was wrongly rejected, you can also call an issuer’s reconsideration line before applying for other options.

Maybe you were denied because you simply applied for the wrong card. Some secured credit cards have easier approval rates than others. You can increase your chances of approval by finding the right secured credit card for your financial situation. Here are a few secured credit cards with easier approval rates.

Capital One® Secured Mastercard®

Capital One® Secured Mastercard®
See offer

Pros

  • Bad credit is okay
  • No annual fee
  • Mastercard and travel benefits

Cons

  • High APR
  • High late fees
  • No unresolved bankruptcy

Green Dot primor® Visa® Gold Secured Credit Card

Green Dot primor® Visa® Gold Secured Credit Card
Apply now

Pros

  • No hard credit check
  • The card reports to all three major credit bureaus — TransUnion, Experian and Equifax. This makes it easy to build your credit with responsible use and on-time payments.
  • Low APR: 9.99% fixed on purchases

Cons

  • $49 annual fee
  • High fees for late payments, returned payments and additional cards
  • Credit limit increase fee

Digital Federal Credit Union DCU Visa® Platinum Secured Credit Card

DCU Visa® Platinum Secured Credit Card

Pros

  • Easy approval, soft credit check
  • Low APR: 13% variable for purchases, balance transfers and cash advances
  • No annual, balance transfer, cash advance or foreign transaction fees

Cons

  • Must join the Digital Federal Credit Union
  • No rewards

OpenSky® Secured Visa® Credit Card

OpenSky® Secured Visa® Credit Card
Apply now

Pros

  • No credit check
  • 18.89% variable APR

Cons

  • No rewards
  • $35 annual fee
  • Up to $38 late fee

Compare secured credit cards

Name Product Filter values Minimum deposit required Purchase APR Annual fee Recommended minimum credit score
Citi® Secured Mastercard®
Starting at $200
22.49% variable
$0
580
A no annual fee secured card for people who are new to credit or have limited credit history with a fair to average credit score.
OpenSky® Secured Visa® Credit Card
Starting at $200
18.89% variable
$35
300
A secured Visa® credit card that helps you build your credit quickly.
Applied Bank® Secured Visa® Gold Preferred® Credit Card
Starting at $200
9.99% fixed
$48
300
No credit check is required for this secured card. Make a deposit of at least $200 to open this card and get a low 9.99% fixed APR on purchases.
CardMatch™ from creditcards.com
See terms
See issuer's website
See terms
300
Use the CardMatch tool to find cards you're likely to qualify for with your credit score, without a hard pull on your credit.
First Progress Platinum Elite MasterCard® Secured Credit Card
Starting at $200
19.99% variable
$29
300
Build your credit with all three major credit bureaus.

Compare up to 4 providers

Alternatives to secured cards for building credit

In addition to the everyday tweaks for improving and maintaining credit listed above, there are also other avenues for building credit aside from secured cards.

Credit unions

Your local credit union can offer a few opportunities for credit-building. These can include
credit builder loans. These unique “loans” don’t actually provide you with money to use. Instead, the amount you borrow is held in a savings account which you pay off over time, helping to build your credit.
Share-secured loans. A mix of a credit-builder loan and a secured card. You can deposit money into a credit union saving account and borrow against the total.

Personal loans

Though not ideal, paying back on a personal loan can help boost your score. You might try this option only if you also need money for a certain expense.

Secured cards that don’t check credit

While not exactly an alternative to a secured card, there are a few secured cards out there that don’t check your credit score for qualification. These can be helpful if you know you are in strong financial health, credit score aside.

Other options if you need money now

If you’re in a pinch and need a way to cover expenses, secured credit cards aren’t your only option. Here are two other payment methods you may want to consider:

  • Prepaid Visa and debit cards: Prepaid Visa and debit cards will require payment up front, but they provide a flexible and secure payment method for a low cost. You can use the card for purchases at any retailer, service provider or even online.
  • Loans: If you need money right now, you could consider applying for a personal loan through a bank or credit union. You’ll likely need to provide collateral in the form of assets or equity, but personal loans can provide quick access to funds.

Bottom line

Getting denied for a secured credit might sting, but it’s not the end of the world. There are a number of ways you can move forward, and whether that includes improving your credit score or finding a card that works for you, it all starts with your adverse action letter.

Once you’re ready to apply again, explore the secured credit cards out there to find the product that’s right for you.

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