Why You Could Be Denied an American Express Card -- Even if Your Credit Score Is Over 800

The most commonly used credit scoring model in the U.S. is FICO, an abbreviation for Fair Isaac Corporation. Given that FICO® Scores range from 300 to 850, it's natural to assume that anyone with a score greater than 800 would easily qualify for an American Express card. However, that's not the case. 

Here's why you could find your American Express card application denied, even with an impressively high credit score. 

Your income is too low

Let's say you've managed credit like a pro but have recently been laid off or accepted a lower-paying job. Despite paying bills on time for years, the card issuer may be concerned about your ability to make regular payments due to your income. Your credit score remains impressive, but income concerns are too much to overlook. 

If you're denied credit for any reason, the Equal Credit Opportunity Act (ECOA) requires that the creditor sends you an "adverse action notice" explaining the reason. If the stated reason has to do with income, the good news is that you can apply again once your income has increased, existing bills have decreased, or a combination of both. 

Your income is difficult to verify

As any small business owner can tell you, it's not always easy to convince a lender that you earn enough money to make regular payments. This is especially true if your business is new or you earn irregular income. If the amount of income that hits your checking account each month varies by too much, American Express could deny your credit application. 

Your debt-to-income ratio is concerning

Creditors across the board want to know how much you spend each month compared to how much you earn. You don't necessarily have to make a lot of money to be in a good position, though. 

For example, a person with a monthly income of $4,000 who only carries $1,000 in fixed monthly expenses has a debt-to-income (DTI) ratio of 25% ($1,000 ÷ $4,000 = 0.25). Let's say someone earns $10,000 a month but spends a lot to cover the cost of housing, transportation, and existing credit card debt. Their monthly payments amount to $5,000 a month, giving them a DTI of 50%. 

American Express is likely to find a DTI of 50% much more concerning than a DTI of 25% and may worry that the person with the higher DTI won't have enough money left over at the end of the month to make new credit card payments. 

You've applied for too much credit

As you'll see in the table below, the category "new credit" accounts for 10% of your total FICO® Score. In short, the creditor's eyebrows shoot up when it sees you've recently applied for multiple lines of credit. It's comparable to how you might feel if you're on a dating app and find out that the person you plan to see is dating many other people. Since there's no way to know what all that dating will lead to, the safe bet is to cancel the date.

American Express doesn't have to believe it's the only credit you've applied for recently, but it does need assurance that you're not about to get in over your head financially. 

The bottom line question

Before granting credit, lenders want to know whether you will be able to repay a loan or make regular payments on a revolving line of credit, such as a credit card. A credit score provides lenders with a peek at how well you've managed debt in the past. 

While FICO carefully guards its precise formula for assigning a credit score, it shares a rough idea of how it's calculated:

How you handle a credit card denial from American Express will depend on the reason the company gives for denying your application. For example, if it's due to how much of your available credit you're using (amounts owed), you know it's time to pay down some of those balances. If it's due to frequently applying for new credit, you'll need to give the credit applications a rest for a while. 

How long American Express has to provide an adverse action notice

According to the ECOA, credit card issuers are generally required to provide an adverse action notice within the following time frame:

• 30 days after receiving a completed application
• 30 days after taking adverse action on an incomplete application
• 30 days after taking adverse action on an existing account 

No matter which American Express card you hope to qualify for, it helps to know that more than your credit score influences the final decision.