Does Getting Denied for a Credit Card Hurt Your Scores?

Published on Dec 26, 2013 06:00 am

Getting denied for credit might be inconvenient, frustrating or embarrassing, but one thing it isn’t is harmful to your credit score. Denials usually reflect on the lender’s standards and on how your credit lines up with them. Once they happen, though, they go away. The fact that you applied at all, however, could have ramifications.

Does a denied credit card show up on my credit report?Your credit report is made up of data on all your accounts, current and past, that were active within a set period of time. When you get denied for a credit card, an account doesn’t get opened. Therefore, there’s nothing to put on your credit report about the account you applied for because it never existed. The only thing that will show up on your credit report is a record of the inquiry that the creditor made into your credit. The decision to deny you for credit does not appear.

What is a credit inquiry?When you apply for credit and the creditor makes an inquiry, regardless of whether or not it grants the account, that inquiry goes onto your credit report. Inquiries related to opening new accounts, as opposed to the inquiry that happens when you view your credit report, may also affect your credit scores.

How do credit inquiries impact my credit?Inquiries come in two types — hard and soft. Soft inquiries won’t impact your scores, but hard inquiries, which are the type that occur when you apply for a loan or credit card, will. Your credit scores could be impacted if you have too many inquiries in a short time frame.

If you were recently denied credit, you have a right to know why the creditor made that decision. According the Federal Trade Commission (FTC), you are also eligible to receive a free credit report from each of the three nationwide credit reporting agencies every 12 months. Understanding how lenders interpret your potential risk based on the factors included in your credit report is an important step to monitoring your credit scores.

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About the Author
Solomon Poretsky has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Poretsky holds a Bachelor of Arts in political science from Columbia University.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc.  © 2013 ConsumerInfo.com, Inc.  All rights reserved.

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