Can You Be Denied A Secured Credit Card?

By Bruce Boswell •  Updated: 12/14/21 •  6 min read
Filed under: Credit Cards

When you apply for a credit card, you know that there is always a chance that you might get declined. After all, credit agencies look at your credit history prior to accepting you, so if you have any skeletons in your closet, your application might be declined. 

If you do have financial issues in your personal credit history, but still need a credit card, you might find yourself applying for a secured credit card instead. This is because there is a much lower chance of a secured credit card application being denied.

Can you be Denied a Secured Credit Card

So, you might find yourself seriously alarmed when you find out that your application for one of these credit cards has been declined. 

A lot of people are under the impression that all secured credit card applications are accepted, but this isn’t the case. In fact, it is a lot more common for these applications to be declined than you would expect. 

In this guide, we’ll be taking a look at what secured credit cards are, and why your application might be declined. So to find out more, keep on reading. 

What Is A Secured Credit Card?

But before we get into all that, let’s take a look at what a secured credit card is. Across all credit agencies, there are 2 broad categories of credit cards, they are: secured and unsecured credit cards. These categories are very similar to the categories that differentiate secured and unsecured loans from one another. 

The most common type of credit card is an unsecured one. These are the credit cards that you can apply for without a deposit, and they are offered by most banks.

With an unsecured credit card, you will be accepted/declined based on your credit score and credit history alone, so if you have a poor financial situation, this could impact whether, or not, you will be accepted. 

This is why a lot of people who know that they have a poor credit score will apply for secured credit cards. With a secured credit card, your application is backed by a cash deposit.

So, the bank will not only take your credit history and credit score into account, but the deposit that you are willing to put forward too.

This deposit is essentially collateral, so if you fail to make your scheduled repayments, the bank can just keep hold of your deposit. In essence, with a secured credit card, you become less of a financial risk for the bank, and so it is more likely that your application will be accepted. 

Can You Be Denied A Secured Credit Card?

As we have established, yes, you can be denied a secured credit card. A lot of people think that showing willingness to put down collateral will mean that your application is immediately approved, but this isn’t the case.

The bank/lender is under no obligation to accept you, so if they think you pose a financial risk to them, they will decline your application. 

But, this doesn’t mean that your secured credit card application will be automatically declined, just because you have a poor credit history. After all, the whole point of secured credit cards is to make them accessible for those who have struggled with their finances in the past.

So, if your application is declined, it is likely because your credit history isn’t just bad, it must be really bad

So what could lead to your secured credit application being declined? There are actually quite a few reasons why this could occur, so let’s take a look at some of the possible reasons why your application has been unsuccessful. 

Why Would You Be Declined A Secured Credit Card?

There are lots of possible reasons why your secured credit card application might be declined, and this is because every lender/bank will have different criteria for their applicants. But, a lot of these criteria are the same across most lenders.

So, here are some of the main reasons why your secured credit card application might be declined:

Insufficient Funds 

The deposit required for the credit card will differ depending on the type of card that you apply for. When the bank looks at your application, they will first look at your credit history, then move onto the deposit.

You might pass the first part of this, the bank will then look at whether, or not, you can pay the deposit. If you haven’t got the funds to cover this, then your application will be declined. 

No Verified Income

In order to apply for a credit card, you will need to have a verified income. This is because the bank will need to know that you will be able to repay the money that you are borrowing.

If you do not have a steady income, then you will not be able to cover the outgoing payments, and so your application may be declined. 

Negative Credit Score

Finally, you could be declined because your credit score is painfully low. A lot of lenders have a minimum credit score requirement, so if you do not meet this, your application might be declined.

Things that could cause your credit score to be this low include a current or previous bankruptcy, repossessions, and other financial problems like these. 

What To Do If Tou Get Denied?

If your application gets declined, then the first thing to remember is not to panic. Then you need to find out why you were declined, most banks will outline the specific reasons why your application was unsuccessful. So, look at these, and make changes going forward. 

Most of the time, it will be your credit score that has caused your application to be successful, so work to improve this. To do this, try to reduce your dependence on credit, begin to pay all your bills on time, and only apply for a credit card if you need it. 

Once your credit score has improved, there is a much higher chance of your application being accepted. If your application was declined because of insufficient funds, work to save this money before you reapply.

That way, there is a much greater chance of your application being accepted in the future. 

Bruce BoswellBruce Boswell

Bruce Boswell

Bruce Boswell enjoys researching and writing about all things related to investing and saving money. Whenever he has a chance, Bruce loves travelling all around the world with his wife and trying new foods.