My credit score is 678, I was turned down by Capital One because of "insufficient income". What to do?

By , CardRatings Contributor

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Q: My credit score is 678, I have no other credit cards except a gas card that I pay off each month, recently went through a divorce, and was turned down by Capital One because of "insufficient income". What to do?

A: Due to recent credit card reform, you personally must demonstrate sufficient income in order to qualify for a credit card. By law, credit card issuers can no longer take your entire household income into consideration when evaluating a credit card application. That's what they did in the past, however, and that's how you may have been able to previously qualify for credit when you were married to your ex-spouse.

But as of October 2011, a provision of the Credit CARD Act of 2009 kicked in, making it far more difficult for those with limited incomes and non-working spouses/ex-spouses to qualify for credit on their own. That's because you are now required to show that your own specific income - not the income of a spouse or any one else that may live with you - will be used to repay any credit card charges you make.

The reason the Federal Reserve issued this new mandate is simple: the feds are trying to decrease the risk of defaults in the marketplace. From their perspective, they want to ensure that only truly "qualified" borrowers obtain credit.

From your perspective, of course, that probably stinks. But all isn't lost, and you have two choices for dealing with this situation.

Your best option, since you are now presumably living on your own and without your former spouse, is to re-apply for a credit card with a relatively low credit limit for which you could be accepted, based on your income. Comparison shop for the best credit card deals based on your credit profile and spending habits.

If you still get denied for a traditional unsecured credit card, your other option is to seek a secured credit card, which is a credit card for those with limited credit. You would simply have to put a certain amount on deposit, say $500, and then at a minimum that same amount ($500) would be your credit limit on the secured card account.


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