Credit Card Approval Insights

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Credit Card Approval Insights

Each week, we receive dozens of questions about applying for loans and credit card. The most common question involves why a member was declined even though their credit score appeared high enough for approval based on the credit scores of other members who were approved recently. With so much confusion, we thought it would be helpful to dig into the data and answer the question in more detail.

The first thing consumers should understand is that the underwriting process, the rules that determine whether a consumer gets approved or declined for a credit card, is the secret sauce of credit card companies that determines the profitability of each cardholder, the credit card portfolio, and in many cases the entire business. The underwriting process is responsible for the amount of risk credit card companies take on and how well they can predict the performance of consumers they approve to become cardholders. A difference of a 5% customer charge-off rate to a 10% customer charge off rate in a credit card portfolio can be worth hundreds of millions of dollars to the credit card issuers. As such, you can imagine lots of money is spent refining the logic of the underwriting process, testing new logic, and protecting that logic from competitors.

With so much to gain and so much to lose for credit card companies, it's easy to understand that a credit score alone is not sufficient to determine approvals or declines for credit cards. So, what other factors are used to determine which consumers will be approved and which will be declined? To answer that question, we spoke to an anonymous credit card statistician who has built these formulas for the past 15 years. He shared there are 6 other leading factors, in addition to credit score, that will determine a consumer's likelihood to be approved for a credit card.

  • Credit Card Utilization. Just like with your credit score, the amount of available credit you use can have an impact on your credit card approval. Simply put, if your existing credit cards are maxed out, you may be more risky than someone who has the same exact credit score who is not maxed out.
  • Recent Hard Inquiries. In many respects, you can think of recent inquiries as a sign of desperation which we can all agree is probably a bad risk for any lender to take on. If you have several recent inquiries, it suggests that you either didn't get the credit you requested (denied, a negative factor) or you did get the credit and it wasn't enough to meet your needs (another negative factor).
  • Age of Oldest Trade. The ability to maintain accounts in good standing speaks volumes about the borrower. Lenders like to see a long history of open accounts, which in many cases means more than 2 or 3 years. While you can argue 2-3 years is a strong indicator of creditworthiness, it is still a short time frame from a lender's point of view. In those 2 or 3 years, you probably haven't been laid off, gone through a recession, or experienced many major life events. On the other hand, if you have 10 years of credit history and maintained your accounts, it says a lot about your level of responsibility and financial management. On a side note, if a consumer has few accounts or a very short length of credit history, it is often called a "thin file."
  • Number of 30-Day Delinquencies. Fool me once, shame on you, fool me twice, shame on me. That, in many ways, is how lenders feel about delinquencies. If you have a habit of paying late regardless of your score, be prepared to suffer the consequences when it comes to credit approval. Delinquencies, even minor ones, are a red flag for lenders. That is why you should ALWAYS pay bills on time.
  • Presence of a Mortgage. Owning a home can actually help you when it comes to underwriting. Mortgages denote stability and suggest that your credit is strong enough to support a high dollar loan. This metric is often a tie-breaker type criterion, so don't get a mortgage just to improve your underwriting probability.
  • Presence of an Installment Loan. Just like a mortgage, installment loans demonstrate the breadth of experience you have with accessing and managing credit. Often, experience with more than just credit cards is seen as beneficial in the eyes of a lender. Installment loans show a level of planning not displayed in credit cards since installment loans have a fixed monthly payment which often require more discipline and budgeting, both of which are often a plus.

This list isn't intended to be inclusive of all the decisioning criteria as the process and models can be quite complicated. Instead, we hope the list sheds some light on the other components that go into approving consumers' loans and/or credit card applications.

When you see the Credit Karma credit card approval score data, also consider how lenders will view you across these metrics as well before you apply. If you barely make the average credit score for approvals, consider applying for a card with a lower credit score requirement. We hope this article helps shed more light on the credit approval engine.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

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2 Contributions
150 People Helped

Helpful to 149 out of 162 people

Two of my hard  iquiries are from applying for Credit Karma's recommendations. It makes me leary of applying for anymore of them.

Reply by
Roseyk

2 Contributions
73 People Helped
Helpful to 72 out of 75 people

Same here.  I applied for two credit cards based on a "very good" chance that I would be approved and I was declined.  My score over 700!  Now I have to wait two years to get this removed.  I did my own research and I was instantly approved for a Venture One for 7500.00!   Do your own research!

Reply by
Melachrino

2 Contributions
35 People Helped
Helpful to 35 out of 40 people

And same here only more ridiculous. My TransUnion score is 778! (or it was until this latest inquiry it may drop now) I also fell for the "very good" odds nonsense. Declined! So signing up for a service that was supposed to help with my credit has instead done harm.

Reply by
mvd1267

1 Contribution
35 People Helped
Helpful to 35 out of 46 people

Enter Your Reply Credit Karma's recommendations are lies. They mislead people. They give false information. I believe a class action suit should be filed against this company. They are telling people that their chances are very good at getting a certain card when they are obviously not very good. This is flat out lying. Credit Karma needs to be stopped. I filed my complaint yesterday with the Better Business Bureau. I an going to try and get my inquiries removed. At the very least, I will cost Credit Karma money by having to send a Lawyer to court.

Reply by
Deeejay133

4 Contributions
20 People Helped
Helpful to 2 out of 2 people

I have found that if you call the creditor (Bank, or other financial institution) on the phone prior to applying, the majority of them can give you some insight as to their base qualifications.  Provide them with your financial information, credit scores, and your credit history.  Some of the information they are capable of providing, in most cases, may help you decide whether or not to even apply to begin with.  I am just like you, as I HATE hard inquiries on my history, especially if you are declilned.  Good luck to you.

I have also found out,  that "none" of the financial institutions will provide you their credit scoring model used.  I don't see what the big secret is all about...... 

Reply by
pcornell34

2 Contributions
1 Person Helped
Helpful to 1 out of 1 people

I applied for a card.that was recommended .. Was declined 3 times..my credit score was 700 now it's 650.. It hurt your credit score big time.Not applying for that card again..it sucks!!

Reply by
Buildinganew

4 Contributions
23 People Helped

Enter Your Reply

Folks, one thing we have to keep in mind is that these are odds, not guarantees.  While it's probably more likely an applicant is to be denied a credit card that CK suggested favorable odds for approval than would an applicant be approved for a card they had very poor odds for, exceptions will apply.  As such, there's a margin of error on either end. 

A very important part of this "odds" game is that many commenters are referring to their credit score.  While CK uses your credit score and compares it to other applicants who received a particular credit card you're viewing, what you have to realize is the credit score you have, here, on CK, is a Vantage Score.  Most credit card companies use your FICO score.  These are not the same thing, and there can be considerable difference between them.  For instance, my Vantage score, here, on CK, is around 640, for both TU and EQ.  However, I know my TU FICO score is in the low 700s.  That's a significant difference at 60+ points.  So be cautious when assuming too much from your credit score on here.  My mother's score was in the low-to-mid 600s on here, but when I had her check her FICO, it was in the upper 500s.  That's a significant difference.

Reply by
Howudoinralph

3 Contributions
2 People Helped

IM ABSOLUTELY DONE WITH CREDIT KARMA'S " RECOMENDATIONS" ON CREDIT CARDS.....TOTAL BULL****...i smell a rat the size of new hampsire 

Reply by
edlisia45

3 Contributions
2 People Helped

what make's no sense to me is my sister was able to get the capitol 1 silver and she has pooer credit than me they approve her and deny me am I missing something her?

2 Contributions
127 People Helped

Helpful to 24 out of 27 people

My credit is undergoing some major disputes and I think I should wait until the reports and scores are corrected. Do you agree? Credit card companies only look at the negative submissions and do not take into account that they may be incorrect. Agreed?

Reply by
ridersgirl06

1 Contribution
10 People Helped
Helpful to 10 out of 11 people

Never rely on Credit Karma for scores or anything I can tell you right now that I pay for my credit score with USAA since I bank with them and my score is different than this one also it takes a while if you're credit card limit increases for it to show.

4 Contributions
23 People Helped

Helpful to 6 out of 6 people

Folks, one thing we have to keep in mind is that these are odds, not guarantees.  While it's probably more likely an applicant is to be denied a credit card that CK suggested favorable odds for approval than would an applicant be approved for a card they had very poor odds for, exceptions will apply.  As such, there's a margin of error on either end. 

A very important part of this "odds" game is that many commenters are referring to their credit score.  While CK uses your credit score and compares it to other applicants who received a particular credit card you're viewing, what you have to realize is the credit score you have, here, on CK, is a Vantage Score.  Most credit card companies use your FICO score.  These are not the same thing, and there can be considerable difference between them.  For instance, my Vantage score, here, on CK, is around 640, for both TU and EQ.  However, I know my TU FICO score is in the low 700s.  That's a significant difference at 60+ points.  So be cautious when assuming too much from your credit score on here.  My mother's score was in the low-to-mid 600s on here, but when I had her check her FICO, it was in the upper 500s.  That's a significant difference.

2 Contributions
13 People Helped

Helpful to 11 out of 11 people

Question, does or is it a plus or a negitve to be disabled or retired? Should I put my net on the gross income line? Or do they work that out?

Top Contributor
48 Contributions
279 People Helped

Helpful to 50 out of 57 people

         You wrote about the”6 other leading factors", how about giving some insight into past credit history with a financial institution.      If someone had a credit card 10 years ago and defaulted on the card, will a card issuer give someone a second chance?  The negative information is no longer on the credit report but how harshly is a credit card company going to hold the past debt against you? (I would think they would have a very long memory when it comes to who defaulted on then)  Does a person have any hope of getting a second chance?  Can a credit card issuer legally hold 10 year old negative information against you?

Reply by
pacoreed

3 Contributions
37 People Helped
Helpful to 35 out of 40 people

I know you submitted your question a while ago but, I defaulted with CapOne and they charged it off. That was over 7yrs ago. Now I have three CapOne cards, so yes they do forget!

Top Contributor

Reply by
Customer151

27 Contributions
94 People Helped
Helpful to 28 out of 31 people

Credit issuers often give second chances. i got one with exxon, discover, citi, and chase.

Reply by
gibby7333

1 Contribution
33 People Helped
Helpful to 33 out of 41 people

Enter Your ReplyI file bankruptcy chapter 7 back into thousand 11 I filed on capital one on two cards a year ago I was approved for capital one card with a $4000 limitit was a quick silver MasterCard when I recently went to apply for a quick silver visa I was denied and told that because I file bankruptcy I would not be approved however the lady did tell me the reason why is because it's harder to get a visa then it is a MasterCard and MasterCard is ran by a different department then the visa. So to answer your question yes if you filed on the credit card you can get approved again to me the master code seem a lot easier to get no matter what and my capital one MasterCard was at 0% for one year with cashback the great card I love it you might give it a shot. 

Reply by
Brian6069

2 Contributions
1909 People Helped
Helpful to 4 out of 4 people

I have a bad past with a few companies and recently got new cards with the same companies from the past. So, yes. In my experience with credit card companies, most will give you another shot but there has to be time in between without recent damage to your credit. 

Reply by
Biffimul45

1 Contribution
0 People Helped

As far as I know there cant be anything older than 7 years on any report regardless of who creates it, Experian, Equifax, etc. But Equifax is known to be extremely difficult with removing outdated or incorrect info - so keep a close eye on all of your details not just thevscore, cuz Ive had an ongoing dispute with them now for 5 months and its the same circle of bullsh** each time I communicate with anyone there. In the meantime my Equifax is 160 points lower than the other two common reports, and lower than it actually should be, so potential creditors are being led to believe that I have two accounts in collections. Yet, when you go to the next page to see what the collection accounts are - it then says I have ZERO collections, which is correct. So they are ALL backwards and screwing us all equally unless we're all like my go**** husband with his freakin 804 score. Id like to knife him every time he reminds me of it - while Im bottom-feeding in the low to mid 600's still at age 45 because of my shopping compulsion. But hey - someones gotta be willing to support my habit, so any suggestions on where to get a major card in a high $$$ range with a 660-680 score? None of the $500 or $300 limit cards tho, those are nothing but trouble, I mean what can you possibly do with $500 in more than one shopping trip? Not much...but I think Im screwed so any suggestions would be GREATLY appreciated ๐Ÿ’ƒ๐Ÿผ

Reply by
bpoland58

7 Contributions
6 People Helped
Helpful to 1 out of 1 people

I got a card with Capital One this year and had 3 charge offs with them due to a very bad car accident in 2008. 0% initial rate, 500 limit raised to 750 after 5 months. Current rate is high at 22.

7 Contributions
64 People Helped

Helpful to 33 out of 38 people

KrisKris89, there's no specific number of cards that you should or shouldn't have. The number of cards you have are far less important than how you use the cards you do have.

I would very strongly suggest that you don't close any of your credit card accounts, as others have suggested. This would ultimately hurt your score, significantly. Any credit card account you close will automatically lower your total credit limit, which will raise your utilization rate, and consequently lower your credit score. Even if you have cards that you don't use very much, keep them open and continue to use them every now and then for small purchases.

Also, do not get rid of your store/retail cards. With responsible use, they are just as useful in helping to improve your score as any other card would.

Top Contributor

Reply by
hulkamaniac69

105 Contributions
520 People Helped
Helpful to 26 out of 26 people

Unless the card is issued by First Premier in which case paying exhorbitant fees makes no sense just to keep the card active on your credit file...

1 Contribution
31 People Helped

Helpful to 31 out of 35 people

I was taught a great lesson from my father. You will have friends girlfriends ,boyfriends family etc:, THAT WILL LOVE YOU AND HURT YOU...... but the only friend you will have that can buy you clothes,vacations cars houses etc: is your good credit. TAKE GOOD CARE OF IT AND IT WILL GIVE YOU EVERTHING YOU WANT...

1 Contribution
14 People Helped

Helpful to 14 out of 14 people

My Experian score is 642 and my Transunion score is at 476. Anything I can do to get a secured card? I messed up my credit as a youngster but I'm looking to make it right.

Reply by
mccccc

8 Contributions
6 People Helped
Helpful to 3 out of 3 people

Enter Your ReplyHow did you get your Experian score? CREDIT KARMA doesn't have it.

4 Contributions
421 People Helped

Helpful to 419 out of 436 people

Good credit is some luck mixed w/hard work. I was almost fifty and had never had a CC in my life. I just renewed my first card after four years, have ten active accounts, dumped three, a credit score well over 750 and have my sights set on 800.

By the way I haven't been gainfully employed for the entire millennium. I constantly lie about an annual salary, yet I've paid every card on time. I've had to shuffle them around so everybody snags a piece of the action and the better ones are used more often.

I originally talked a store into approving a CC for me because I bought from them and they had a record of my purchases. I applied for a lot of cards w/no fees early on. I kept records and asked for credit limit increase every six months.

If I was denied I told them it would be a cold day in hell before I would use their card again and to mark that down in my file. I'd stop using the card and call them six months later and offer them the option to reconsider.

I'm a bum w/40K of credit, but I pay statements in full, early, I read articles, such as this one, in order to form a strategy and I stick to my game plan. I'm done w/shopping for new CCs for a while and have shifted my focus to Store cards where I shop.

Pay your statements when they come in, before they are due. It isn't worth waiting and risking being late. You're already playing on their dime, so appreciate the luxury by being responsible.

Suck it up, sacrifice and save a little bit. If you don't have a savings account all hope is lost. If you can't put some money into a savings account on a regular basis then you don't deserve credit.

Your not worthy! Get a clue. If you're living paycheck to paycheck out of only a checking account/debit card then why would you want credit?

To obtain credit you need to demonstrate proof of some financial discipline. When you receive your first 500, 1000 or 2000 dollar card spend 5-10% every month on neccessities and nothing more. Create the illusion that you don't need the card and keep the utilization low.

After your first card you'll become blitzed w/offers. Accept only those w/no fee and only use up to ten percent of the limit. You need a history of using only a little bit of what's available.

As you continue to demonstrate restraint you will be duly rewarded and you will reinforce the habit ingraining the admirable trait within your personality.

Good Luck.

Reply by
diegosconza

1 Contribution
2 People Helped
Helpful to 2 out of 2 people

Thank you very much!!

Top Contributor

Reply by
BungalowMo

110 Contributions
780 People Helped
Helpful to 123 out of 130 people

Well said Nickster!  The only thing I'd like to add is going to the "Opt Out" website & print out that form & send it in.  You will receive NO offers in the mail.  Most are simply hoping you apply, when in reality, their "pre approvals" are bull.  Get that junk out of your mail box, go to the Creditboards website & check out their (gotta create username) credit pulls database.

If you REALLY want to know what your chances are, the detailed information on there is great.  I have checked there every time before I applied anywhere for the last 5 years.

I'll never app without it!

Reply by
hanaleikanai

5 Contributions
24 People Helped
Helpful to 18 out of 26 people

Lve it thanks for the advice. DKYMG

1 Contribution
0 People Helped

Best respnse ever!!! Thank you for having the cahones to be straight forward!!! Because of your advice and honesty i have decided to "suck it up..Sacrifice and save a little"!!  i will wait until the money is saved to even attempt to apply to one!! thanks for the kick in the rear end and the slap to the back of the head!!! My finances sincerley thank you ......and so does my husband!!! 

Reply by
goldie716

1 Contribution
0 People Helped

Excellent feedback

Reply by
Debit1234

1 Contribution
0 People Helped

excellent advise!!!

Reply by
rocnmel20

1 Contribution
0 People Helped

That was some very straightforward, insightful and useful information. You should consider writing a book on this topic.

Reply by
alibradiva

2 Contributions
5 People Helped
Helpful to 4 out of 4 people

Thanks for the  advise.  My goal is to pay my credit cards dwn, and out. I am going at them one by one.  Now I am understand the system. 

2 Contributions
2 People Helped

Helpful to 1 out of 1 people

People,

The major issue as always is this scam called Hard Inquiry's !! I own my own Bussiness and have to maintain a number of Credit accounts for numerous facits of my Company, Fuel Cards, Financing equipment, Insurance quotes to obtain Lower rates each year, Tire accounts around the Country (USA), Air Line card, employee expence cards, Vehicles, This list goes on, But, You get the drift of situation with INGUIRY Scam, Should not even be considered !!!!!!

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