Why was I denied a no-credit-check secured card?

Opening Credits with Eric Sandberg

Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” She writes “Opening Credits,” a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.

Ask Erica a question, or see if your question has already been answered in the Opening Credits answer archive.

I applied for a no-credit-check secured card, but was turned down. Why?

There are three reasons why you may have been denied a no-credit-check secured card, but to be absolutely sure, call the issuer to find out why your application was rejected:
  1. Your income was deemed insufficient
  2. The card issuer requires that you are a U.S. resident
  3. You abused a card account in the past with the same issuer
Expert Q&A

Check out all the answers from our credit card experts.

Dear Opening Credits,
I do not have a credit score due to no credit in the past five to six years. I wanted to apply for a secured credit card to try to get my scores back. When I applied for a no-credit-check card, I was denied. Can you help me? – Lisa

Dear Lisa,
When you were rejected for the account, you should have received notification from the issuer listing the reasons why you were denied. If, for some reason, you did not receive any type of communication, call the issuer to find out why your application was turned down.

Secured credit cards that do not require credit checks can be wonderful options for people who do not have an established credit history or want to avoid the hard inquiry credit score ding to an already fragile credit score. They’re more accessible than unsecured credit cards or secured products that do require a decent credit rating. However, even issuers that don’t assess a person’s past borrowing behavior have qualification standards that must be met before they approve a credit card application.

It could be insufficient income

Foremost is an income stream. If you don’t have the means to repay the debt you can get into with a credit card, you’ll be denied. The amount you bring in each month needs to exceed the total of your monthly expenses. This way the credit card issuer will be confident you’ll be able to meet your payments.

But isn’t that what the security deposit is for? No. While the issuer would have the right to pull cash from the funds held in deposit, they don’t want to do that. The issuer will only take that kind of action if you fell significantly behind on your payments, which is not an ideal situation for you or for them.

Therefore, if the information on your application indicated you did not have enough money coming in to support the card’s payments, that could be a likely reason you were rejected. The antidote is to make yourself attractive to a credit issuer by getting a job that brings in more than enough money to cover your bills. When you do, work for at least a few months before submitting another credit card application.

Some issuers require U.S. citizenship

Other reasons you might have been denied for a no-credit-check credit card include not being a U.S. citizen or permanent U.S. resident (some, like the OpenSky Secured Visa card, require it).

Not all credit card issuers demand citizenship, though. Many will grant accounts to working residents who have an Individual Taxpayer Identification Number in lieu of a Social Security number.

You have a bad history with a particular issuer

Some issuers also shy away from applicants who have had an account with them in the past that was not handled responsibly. Or, perhaps the issuer limits the amount of applications within a certain time frame. Again, it’s hard to know without getting the information directly from the issuer.

If you have a poor past with a specific credit issuer, just move on to another card issuer when you are in a better financial position. There are many banks, credit unions and credit issuers to choose from.

Another option to rebuild credit

Still another way to build a credit history is to piggyback on someone else’s account. A friend or relative might be willing to add you as an authorized user to a well-managed card account, and if so, that person’s credit card history would appear on your credit reports. This arrangement will work to your benefit when the credit card is kept in good standing.

Over time, you would appear to be a good credit risk, and at that point you could try for a credit card in your own name. You could go for an account that checks credit ratings or not, however a secured account is still an ideal way to begin.

When you do have your own credit card, use it in exactly the right way: Charge a little once a month, then pay your bill on time and in full. Easy, right? It is if you’re dedicated to the process. Then that data will be reflected on your credit reports, and your credit rating will be heading in the right direction. Up.

See related: Authorized users: 3 common scenarios for sharing a card account


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Updated: 11-16-2018