Getting declined for a credit card has only a minimal direct effect on your credit report. However, there can be numerous indirect effects. If you can't get a credit card, the reasons are likely already lurking in your credit history. If you analyze what is in your report and take steps to improve it, you can raise your credit score and increase your chances of getting a credit card in the future.
When you apply for a credit card, the creditor pulls your credit report to help it make a decision. Credit requests appear on your credit report for two years. Credit inquiries affect your score for the first year, but each one makes it drop by a few points. This is true whether your request is granted or denied. If you continually apply for new credit, you will continue to shave a few points off your credit score.
Your amount of debt counts for 30 percent of your credit score, and credit utilization is part of this calculation. All other things being equal, the higher your credit utilization is, the lower your credit score. Raising your credit line can lower your credit utilization percentage, so getting access to new credit and higher credit lines can improve your score. So naturally, getting denied could have the opposite impact.
Length of Credit History
Every time you get a new credit card, it shortens the average life of your credit history. An indirect benefit of the denial is you avoid shortening your credit life and damaging your score. The length of your credit history counts for 15 percent of your credit score.
The rejection should be a warning sign that lenders think you might be overextended. To avoid future declines, clean up your credit report. Make all debt payments on time, as that counts for 35 percent of your credit score. Reduce the amount of outstanding debt you have and you can improve an additional 30 percent of your score. Use time to your advantage. Every month you wait to apply again adds length to your credit history and distances you from recent credit inquiries.
After receiving a Bachelor of Arts in English from UCLA, John Csiszar earned a Certified Financial Planner designation and served 18 years as an investment adviser. Csiszar has served as a technical writer for various financial firms and has extensive experience writing for online publications.