I have a high credit score but still rejected

Submitting a credit card application and receiving notice that you're denied is a disappointment, especially if your credit score drops after applying. 

However, the reason your score decreases after getting denied has nothing to do with the lender's decision to reject your application (and the same goes for credit approvals).

Instead, the lender's inquiry into your credit history is what may have hurt your credit score. Below, Select reviews how applying for credit impacts your credit score, why you may be denied and how to increase your approval odds.

How does applying for a credit card affect your credit?

When you apply for new credit, the lender will typically perform a credit check. This often results in a hard inquiry into your credit history, which means the lender pulls your credit report from one of the main three credit bureaus — Experian, Equifax or TransUnion.

Hard inquiries appear on the credit report pulled by the lender. For example, if you apply for the Apple Card, your TransUnion credit report will be accessed, according to Apple's website. This will cause an inquiry to appear on your TransUnion report (not your Equifax or Experian reports) and may result in a temporary decrease in your credit score.

The drop in your credit score is often insignificant and roughly 5 points. The impact decreases over time despite inquiries remaining on your credit report for two years.

Why you may be denied for a credit card and how to increase approval odds

If you're denied for a credit card, it's not the end of the world — you still have options. You should review the reason(s) why you were rejected and take the appropriate actions to fix any issues.

Below are some reasons you may be denied for a credit card and how to improve your approval odds.

Short or insufficient credit history

If you lack a credit file and are considered "credit invisible," you'll find it difficult to be approved for credit cards that require a credit history and perform hard inquiries.

How to improve it: Work on building credit by becoming an authorized user on someone else's card or consider applying for cards that don't require a credit history, such as the Petal® 2 "Cash Back, No Fees" Visa® Credit Card (be aware that if you do have a credit history, that does factor into the credit decision).

Secured cards, such as the Capital One Platinum Secured Credit Card, also typically provide better qualification odds for credit newbies and can be used just like an unsecured card, but require a refundable security deposit in order to receive a line of credit.

Too many inquiries

Submitting several credit applications within a short period of time may cause lenders to consider you a risk. Plus your credit score may drop with each new inquiry. While one inquiry won't make or break your credit score, multiple inquiries can add up and be the difference between fair credit and good credit.

How to fix it: Limit new applications as needed. There's no specific number of inquiries that's considered too many, but a good rule of thumb is to wait at least six months between applications and to only apply when you have a real need for new credit.

Missed or late payments

Payment history is the most important factor of your credit score, which makes it essential to pay every bill on time. Late or missed payments have a significant negative impact on your credit score and can be the reason you're denied.

How to fix it: Set up autopay for at least the minimum payment so your account is kept current. However, aim to pay the balance in full by your due date to avoid carrying a balance and incurring late fees. You can also consider opening a credit card with no late fees, such as the Apple Card.

Credit card debt

Carrying a balance month-to-month results in a high credit utilization rate, which is the percentage of credit you're using. This is the second-most important factor of your credit score. A high balance may pose you as a risk to lenders and result in rejected applications.

How to fix it: Aim to maintain a utilization rate as low as possible, preferably 10% or less. Make a plan to pay off your debt faster by using a balance transfer card that offers no interest for up to 21 months. For example, the Citi Simplicity® Card offers a 0% introductory APR for the first 21 months on balance transfers from date of first transfer (after 16.99% - 27.74% variable; balance transfers must be completed within four months of account opening). There is an introductory balance transfer fee of 3% or $5, whichever is greater for transfers completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

Information about the Apple Card and the Capital One Platinum Secured Mastercard has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Petal 2 Visa Credit Card issued by WebBank.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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