Can you get Denied for a Secured Credit Card: Read Reasons

Credit card debt is conventionally unsecured. A secured credit card is granted to someone with a damaged or no credit score at all. In this regard, secured credit cards are used to build credit score and therefore they’re easy to get but you can still get denied for a secured credit card if the creditor deems you too risky for debt. 

What is a Secured Credit Card?

A secured credit card is a kind of credit card whose credit limit is backed with a collateral that you deposit. In this sense, if you fail to pay your credit debt and default, your creditor would cash-in on the collateral to cover for the debt. It sounds like a secured credit card shouldn’t be hard to get despite your credit score/health since you cover for any potential debt default preemptively but the truth is a little more complicated than that. 

Why Can You be Denied a Secured Credit Card?

Creditors profit from the interest and transaction fees they charge on credit cards so it does not make sense for them to issue credit cards to individuals they believe are reasonably likely to default based on their credit history. It stands true for unsecured credit cards and also for secured credit cards even though the debt is covered by collateral. 

It is simply a matter of efficiency. The intention of most individuals getting a secured credit card is to repair or build their credit and naturally transition to unsecured credit cards with higher credit limits because if it wasn’t, they’d simply opt for debit cards. Creditors know this so if they believe you have what it takes to repair/build your credit and switch to an unsecured credit card, they’d likely approve your application. 

On the other hand, if they believe you’re likely to default, there’s a reasonable chance the application does not get approved because although they don’t incur a loss in case of a potential default on a secured credit account, they don’t get to profit either. The decision is made based on your credit report and your application might be rejected if you do not have a good enough credit report. 

Potential Reasons For Rejection of Application

Assuming that the reason for the rejection of your card is not incorrectly or incompletely filled application (in which case you can dispute your application and get it approved in virtually all cases) the most common reasons creditors reject the applications for credit cards (secured as well as unsecured) include the following: 

Unverifiable Income

Although credit issuers usually don’t verify your income claims, sometimes they can ask for evidence such as tax returns documents. The requirement for income verification becomes all the more likely when getting a secured credit card since it is required to repair or build credit. 

Negative Items

Your application is also likely to be denied if you have negative items on your credit card. For instance, if you’re currently going through a bankruptcy or had a recent debt discharge due to bankruptcy, it would count as a negative item on your report. 

No Demonstrable Ability to Pay Debt

Your application might also get rejected if you have a consistent history of repetitively bad credit practices (extremely low credit score) or if your income is too low for you to be not too credit-risky. 

Insufficient Collateral Funds

Assuming that your credit reputation is in good shape, if you fail to cover the collateral required for the specific card you’re applying for, your application would not be approved.

What to Do If You’re Denied a Secured Credit Card?

If your application is denied, the creditor would send you an Adverse Action Letter which would explain the reasons your application was not approved. The letter will also explain your rights as a consumer. For instance, the ability to get a free copy of your credit report. 

If the reason for the rejection of your application was credit score, the letter will include it, the date it was gathered and how it was generated. It goes without saying that you’d need to check out the reasons why you were denied the card and start working on those problems if you plan to use a credit card in the future. 

But what are the alternatives to a secured credit card if you need to build/repair credit, turns out, secured credit cards aren’t the only game in town. 



One of the surest ways to get your hands on a credit card if you’re out of all other options is to get a cosigner for your credit card application. The cosigner in this case, takes all the legal responsibility of your debt obligation on your credit line if you fail to pay your credit debt yourself. 

Through cosigning, you’d be getting an unsecured credit card. However, your cosigner needs to have a relatively high credit score and good credit history if you want to improve the chances of your application getting approved.

Become an Authorized User 

You can also become an authorized user on someone else’s credit card. The ultimate responsibility of debt repayment falls on the original user but the authorized user can also contribute to repayments as well as spend which are reported on the authorized user’s own credit report.

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Habib Ur Rehman
Habib Ur Rehman
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