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Understanding Student Credit Card Denials and Next Steps

Published July 17, 2024

6 min read

Table of contents

Key points about: Student credit card denials

There are a wide range of reasons why credit card companies might deny an application for a student credit card.
If your application for a student credit card was rejected, it’s important to determine the cause so that you can take appropriate follow-up steps.
There are various strategies you can follow to improve your odds of being approved in the future, like using a secured card to build credit.

Common reasons for student credit card denial

If your application for a student credit card is declined, there's no need to worry or lose hope. The key is to find out why it was rejected. Understanding the reason can guide you to make adjustments that could enhance your prospects for approval in future attempts.

Student credit cards are typically designed with students in mind, but approval is not guaranteed. There are various factors that could lead to a denial, such as:

Having a high debt-to-income ratio
Not earning sufficient income to cover potential credit card bills
Not having a credit history
Having a poor credit score
Having a history of missed or late payments

The good news is that federal regulations require credit card companies to clarify why your application was denied. This means you'll have a clear understanding of the reasoning behind the decision. Later in this guide, we'll delve into what actions you can take following this feedback.

Impact of student loans on credit card approvals

Can you be denied a credit card because of student loans? The answer depends on several factors, such as how your loans impact your overall debt-to-income ratio, as well as your history of missed or delinquent student loan payments. For example, card issuers might reject your application if your debt-to-income ratio suggests you may have too many obligations compared to your ability to repay. You may also be denied if your credit score is too low, which could occur if your credit score drops due to missing one or more student loan payments.

Impact of credit score on application outcomes for students

Many student card issuers are willing to approve applicants without established credit. For example, there is no credit score required to apply for a Discover It^® Student Chrome credit card.¹ However, if your credit score is low because of missed or defaulted payments on past loans or credit cards, your application is more likely to be rejected.

The role of income verification in credit approvals for students

If you are under the age of 21 when you apply for a credit card, the issuer may request and verify information about your income. If they decide that you might not be able to pay your credit card bills, your application could be denied. You don't necessarily need a high salary or a full-time job to apply. However, as a student, you do need to show that you have access to a steady income, such as money from a parent that is regularly deposited into your bank account or a part-time job.

Steps to take after you get a student credit card rejection

If your application was denied for a student credit card, there are actions you can take to improve your financial health—and with it, your likelihood of being approved in the future. After your application is turned down, two of the most important steps to follow are reviewing your rejection letter and checking your credit reports.

Step 1: Review the rejection letter

You don’t have to wonder why you got declined for a student credit card. Under federal law, the card issuer is required to transparently explain the reasoning in your rejection letter, also known as an adverse action letter. Be sure to read the letter carefully to learn why your application was denied. There may be corrective actions you can start taking right away, like working on reducing your debt-to-income ratio.

Step 2: Check credit reports

There may be an error on your credit report that caused or contributed to the denial of your application, such as missing or inaccurate information about a payment you made. You may also have been the victim of fraudulent activity, such as identity theft. To rule out these possibilities, it's wise to check your credit report for completeness and accuracy. You're entitled to one free annual copy of your credit report from each of the major credit bureaus whose websites also explain what to do if you locate an error on your report. Additionally, if you are denied for credit, your rejection letter will provide instructions on how to obtain a free copy of your credit report.

Preparing for future credit card applications

To reduce the chance of being denied for future credit cards or loans, it's important to have a thorough understanding of your financial situation. This is why reviewing your rejection letter and your free credit report is so beneficial. Additionally, choosing the right credit card before applying is important, as some cards have more demanding eligibility requirements than others. If you've been denied a student credit card, think about ways to build your credit history, such as making sure you pay all your bills promptly or using a secured card in a responsible manner.

Did you know?

Borrowers with little to no credit history or poor credit may struggle to qualify for an unsecured credit card. But credit card companies may have less requirements for secured cards because applicants provide a refundable security deposit. You may not even need a credit score to apply for a secured credit card. For example, there’s no credit score required to apply for a Discover it^® Secured Card.²

Learn More

Building a strong credit history

Student credit cards are often available even to people with limited or no credit history. However, if you've already been denied due to your lack of credit history, it may be a good idea to look into ways to start building your credit. Some ways you can build a strong credit history include obtaining a credit-builder loan, obtaining a secured credit card, becoming an authorized user, and reviewing your credit report for errors. For more tips on boosting your creditworthiness, learn about building a credit history with a secured credit card from Discover.

Timing and strategy for future applications

When you apply for a credit card, a "hard inquiry" is triggered that may temporarily lower your credit score. Therefore, it's wise to wait at least six months between applications. It's also a good idea to check if you're pre-approved for any credit cards. If you're pre-approved, it typically means the card issuer has already determined that you meet at least some of the eligibility criteria.

Finally, remember to consider a secured credit card, like the Discover It^® Secured Credit Card, as an alternative to student credit cards. Think of secured cards as training wheels for credit. They provide a safe space to practice responsible spending with a safety net (your deposit) while gradually building your creditworthiness.