What to do if you’re denied a secured credit card

While secured credit cards are usually easier to qualify for than traditional unsecured credit cards, issuers might turn down applicants who don’t meet certain requirements. Learn why you might have been denied a secured credit card and how to improve your credit before reapplying.

What you’ll learn:

• Credit card issuers judge secured credit card applications based on factors like applicants’ creditworthiness, income and more.

• If you’ve been denied a secured credit card, improving your credit scores could help improve your chances of approval if you reapply.

When it comes to secured credit card applications, every issuer sets its own criteria for approval. But one thing is consistent: If you’re denied a credit card, issuers are required to explain why with an adverse action notice.

Here are some of the reasons a card issuer may turn down an applicant for a secured credit card:

• Lack of credit history: While secured credit cards are designed for people building credit, card issuers may still set minimum requirements. 

• Low credit score: You might have an established credit history but have scores that don’t meet the issuer’s credit score requirements.

• Negative information on your credit reports: You might not qualify for a secured card if you’re currently going through bankruptcy, have previously charged off credit accounts or have missed credit card payments. 

• No verified income: Lenders are required to check your ability to pay before opening a credit line for you. If you don’t have income or don’t earn enough to cover the monthly bill, the card issuer might deny your application.

Keep in mind that you’ll need enough money to cover any required secured card deposit. Without that, you likely won’t be able to proceed with opening the account, even if you are approved.

If you’ve been denied a secured credit card, you may want to consider other ways to build your credit.

If you’ve been denied a secured card, immediately applying for other cards could set you back further. That’s because if you apply for multiple credit cards and loans over a short period of time it could send the wrong signal to lenders and issuers. For example, applying for lots of credit in a short period of time could signal to lenders that you’re not using your credit responsibly.

Plus, applying for new credit usually triggers a hard inquiry, which can lower your credit scores.

If you have a trusted friend or relative with good credit, they might be willing to add you to their credit card account as an authorized user. You could get your own card, and some issuers, including Capital One, provide online account access.

If the card issuer reports authorized user account activity to the credit bureaus, responsible credit habits could help you build credit. Negative actions like missed payments could affect both the primary cardholder and the authorized user.

Credit-builder loans work a little differently than other loans. Instead of receiving money up front, the lender puts it into a savings account for you. Then, as you make payments, the lender reports your account activity to the credit bureaus. Once you’ve made all the payments on time, you should get access to the money in the savings account.

Keep in mind that there may be fees to open a credit-builder loan. And if you miss a payment, your lender could report it to the credit bureaus, which could hurt your credit scores.

If you’re trying to improve your credit before reapplying for a secured credit card, regularly monitoring your credit can help you keep track of your progress. 

One way to monitor your credit is to use CreditWise from Capital One. It’s free for everyone, even if you’re not a Capital One cardholder. And using it won’t affect your credit scores.

Checking your credit reports can also help. Visit AnnualCreditReport.com to learn how to get free copies of your credit reports from all three major credit bureaus.

Being denied a secured credit card doesn’t mean you’ve run out of options. You could consider whether becoming an authorized user is an option or whether a credit-builder loan is the right choice.

If you think it’s time to reapply for a credit card, you can first check to see if you’re pre-approved. Checking won’t affect your credit scores. And it can give you more confidence about whether your application will be approved.