My credit score is 847! Why was I denied a card?

When the Wells Fargo Active Cash® Card came out, it was a no-brainer for me. A sign-up bonus of $200 cash rewards for spending $1,000 in the first three months plus unlimited, 2% cash rewards on purchases? Yes, please.

I assumed my 847 credit score would lead to an instant approval, so I was already planning what big purchases I would make with my card.

Imagine my reaction when I got an email saying I was denied and that a letter would follow. Let’s just say I practically had to pick up my chin from my keyboard. To add insult to injury, my credit score dropped two points due to the hard inquiry.

About a week later I got the explanation letter, which listed the reason I was denied as “Ratio of credit bureau trades with a balance greater than zero (We look at the ratio of open and closed credit accounts that have a balance greater than zero in the last six months).”

Apparently, because I never carry a balance on my accounts – a major contributor to my high credit score – the issuer didn’t want to give me a card. Perhaps the bank thought it wouldn’t make any money from me in interest charges. Or did Wells Fargo assume I was card churning to get the bonus?

After this happened, I became very interested in all of the reasons someone with a high credit score could possibly be denied more credit. Here’s how to find out why you might not be granted credit even if you’re a responsible borrower.

A high score doesn’t guarantee approval

A high credit score can help you achieve many financial goals, but you may be surprised that it doesn’t guarantee you automatic approval for every credit card you want.

Experts say a FICO score of at least 700 can qualify you for just about any card on the market. And a score in the high 700s can help you get the lowest interest rates and the sweetest rewards.

But like mortgage lenders, card issuers don’t just look at your credit score and stamp “approved” or “denied” in red ink on your application. They also consider your income level, review your credit report for any past missteps and evaluate how you’re using credit at the time you apply for the new card.

Although rare, a consumer with a stellar credit score can still get an unexpected denial letter. Here are five reasons why your high score might not get you your new favorite card.

1. You missed payments or filed for bankruptcy in the past

Payment history is the most important factor in FICO’s traditional credit scoring model, accounting for 35% of your score. A 30-day delinquency can cost you more than 80 points, while declaring bankruptcy can slash your score by as many as 240 points.

Negative items can be costly, but their credit score impact fades over time and they don’t stay on your credit report forever. Missed payments usually fall off after seven years and bankruptcies go away after seven or 10 years, depending on the type.

Nevertheless, a past mistake can stand between you and your card of choice, even if your score has recovered. Entrepreneur and skincare blogger Diane Elizabeth said she was instantly rejected for a credit card even though her credit score was above 750.

“That took me by surprise because I have purchased houses and cars without any issue, but I couldn’t get a small line of credit,” she said. “That seemed odd to me.”

Elizabeth later discovered she had two late card payments within the past five years that occurred due to a glitch in her bank’s autopay feature. The bank corrected the errors, and she was able to get the negative items removed from her credit report. She reapplied for and received the card for which she was initially rejected.

Many issuers also ask if you’ve ever filed for bankruptcy when you apply for a card, and some may hold a “yes” against you even if it happened long ago.

“Regardless of whether or not it falls off [your credit report], if you say yes, there are issuers that will close you out right there,” said Greg Weed, director of card performance research at Phoenix Marketing International.

See related: How to deal with creditors when you can’t pay

2. You’re overextended or inexperienced

Credit utilization accounts for 30% of your score under FICO’s model, but it is possible to have a good score even if your debt-to-limit ratio is a bit high. However, a card issuer may still balk at granting you a new account. After all, a high balance makes it more likely you’ll miss a payment in the future.

Issuers may also stop short of approving you for a card if you haven’t been using credit for very long. Lenders tend to feel more secure with potential borrowers who have a long history of on-time payments. You only need a credit history of six months to get a FICO score, but that still may not be long enough to get a credit card.

Both issues have been roadblocks for Jaimyn Chang, SEO director at GALE in New York City.

“They cited my limited credit history and high balances as deciding factors,” Chang said. “My credit history was only two years old and I was using about 50% of my total available credit.”

But a “no” from one issuer doesn’t necessarily mean you can’t get a card from another, even if you’re new to credit and your debt-to-limit ratio is high. After striking out with Citi, Chang applied for a retail card from the Gap and was approved for a $5,000 line of credit.

See related: How long does a late payment stay on your credit report?

3. You don’t make enough money

Your income level does not affect your credit score, but it’s a critical part of any lender’s or issuer’s evaluation of your creditworthiness. If your income is below average or irregular, an issuer may hold back out of fear you won’t be able to pay back what you owe.

“If the income is too low to sustain on-time payments of balances carried or the balance amount is too high relative to income, then a denied application is possible,” Weed said. “I do not know of a magic formula, but if your income is less than $50,000 and you have high balances, a denial is quite possible.”

“If the income is too low to sustain on-time payments of balances carried, or the balances are too high relative to income, then a denied application is possible.”

4. Someone stole your identity

An unnoticed fraudulent account on your credit report can also make you look like a bigger credit risk than you are, particularly if the bogus credit line is maxed out, unpaid or there are a number of them. A card issuer can’t distinguish between authentic or fraudulent accounts.

That’s why it’s important to review your credit reports semi-annually (you can pull one from each of the big three credit bureaus for free every week through April 2022 at AnnualCreditReport.com) and go over it carefully. If you find accounts that don’t belong to you, dispute them.

Know that issuers are required by law to provide you with reasons why you were denied credit. If you were rejected due to high credit utilization, too many accounts or accounts in arrears, it’s time to check your credit report for potential fraud if you know that none of those behaviors can be attributed to you.

5. The issuer thinks you’re a card churner

Some issuers shun potential borrowers who appear to sign up for cards and ditch them soon after they earn bonus rewards. For example, Chase denies many of its cards to applicants who have opened five or more accounts from any bank or issuer within the past 24 months – a practice informally known as the “5/24” rule.

Additionally, Bank of America is rumored to limit customers to no more than two of its cards in two months, three cards in 12 months and four cards in 24 months. Other issuers such as Citi and American Express also have restrictions designed to cut down on the number of times cardholders can get their welcome bonuses.

Dan Mahoney, president of True Square Financial in Atlanta, said “card churning” rules have nothing to do with your risk of missing a payment while juggling many card accounts, but rather your lack of loyalty to a specific card.

“It reflects the bank’s belief that customers who frequently open new cards are less profitable because they tend to move on to the next hot product after a few months,” he said.

Denied a card? Look for areas of improvement

If you plan to apply for a credit card but fear your high credit score won’t be enough to get a “yes,” take a broad look at your financial picture.

Are there any specific areas that could cause an issuer to shy away from granting you credit? Past credit mistakes and low income are hard to improve on right away, but using too much credit or applying for cards too often are red flags that you can eliminate with some discipline.

If you’ve adjusted your credit habits and still can’t get approved, perhaps it’s just not the right time for a new card. Your high score is evidence that you’re managing your credit responsibly.

See related: Find and apply for a credit card that’s right for you