The Steps Banks Use to Process a Credit Card Application

Generally speaking, after you submit a credit card application online or by phone, the bank will respond to your application very quickly. If you submit a paper application at a bank branch, there may be an extra mailing step involved. The bank’s credit card application process can be summarized by the diagram below:

Let’s go through what each step means.

Internal Review

Before the bank pulls your credit report, it may first use your history with that bank to make a preliminary decision on whether you meet its application standards. This step is usually automated and completed in just a few seconds. There are several reasons for this step:

  • Checking for duplicate applications: If you submit multiple applications in one day, the system may automatically treat them as duplicate applications. Common examples include applying for a second Chase card in a short period using the same browser, or applying for a second AMEX card on the same day. Sometimes a duplicate application will go directly into processing status, depending on the bank’s policy.
  • Checking whether you are on the bank’s blacklist: If you previously failed to repay money owed to the bank or violated the bank’s terms, and the bank closed your account, your SSN may have been placed on the bank’s blacklist. In that case, your application may be denied immediately.
  • Making a preliminary approval decision: Some banks use a soft pull of your credit report at this stage, such as AMEX and Barclays. If you already have one of their credit cards and apply for a new one, they may first soft pull your credit report. This type of pull is visible only to you and does not affect your credit score. If your credit score and credit history meet their standards, the application moves to the next step; otherwise, it may be denied right away.
  • Checking whether the application information qualifies: If you disclose a prior bankruptcy on your application, or if the applicant does not live in a state the bank serves, the application may also be denied immediately.

If your application is denied at this step, the bank has not yet pulled your credit report, so the denial will not leave any record on your credit report, and your credit score will not change. Of course, the bank will still have an internal record of the denial. If you are unhappy with the result, you can still request reconsideration, which we discuss below.

Pulling Your Credit Report

After you pass the internal review, the bank will automatically pull your credit report. When it does, a record is added to your credit file, commonly known as a Hard Pull (HP). An HP has a negative impact on your credit score in the short term, and too many HPs may also cause other banks to deny your credit card applications. However, an HP disappears after two years and leaves no lasting trace.

There are three major US credit bureaus: Experian (EX), Equifax (EQ), and TransUnion (TU). A bank will usually pull your credit record from one or more of these bureaus. If it pulls EX, then the HP will appear only on your EX report; TU and EQ will not see it. So in the short term, your TU and EQ scores will not change, while your EX score may drop slightly. That is why banks that pull all three credit reports are especially unpopular: your score may be affected at all three bureaus. On the other hand, if the bank pulls only your EX report, while your previous HPs appear only on TU and EQ, then congratulations—the bank will not see those HP records.

Pulling a credit report is also automated and usually takes only a few seconds.

Automated Decisioning

We often see people talk about instant approval or instant denial, and those outcomes usually happen at this stage. Here, the bank’s automated system reviews your credit report from the previous step together with the information you entered on the application. Using the bank’s own scoring and decision models, it makes a decision and gives the final application result. The main factors include:

  • Whether you meet the basic application requirements: Each bank has different criteria. For example, when applying for certain Chase credit cards, the bank may check whether you trigger the 5/24 rule. Citi may check whether you applied for another Citi credit card within the last 7 days, or whether you have applied for more than 2 within 65 days. If so, the application may be denied directly.
  • Whether your credit score is high enough: Every bank uses its own model to calculate a score based on your payment history, recent HPs, new accounts, delinquencies, and credit history. If the score is above a certain threshold, you may be instantly approved. If it falls in the middle range, the application may be sent for manual review. If it is below another threshold, you may be instantly denied.
  • The information you entered on the application: The bank will also consider your income, rent expense, and source of income in making its decision.

This step usually takes between 10 and 50 seconds. So in most cases, within about a minute after you click submit, you will see one of three results: approved, declined, or processing (under review). As data processing and automated decision systems continue to improve, banks rely more and more on automated decisioning, which has reduced the need for many entry-level Credit Analysts.

Reconsideration

If your application is declined or goes into processing during the earlier steps, and you want to improve your chances or get a faster result, you can call the bank and ask for reconsideration of your credit card application. Your application will then be reviewed by a credit analyst. In general, the person reviewing your application at this stage has decision-making authority. They will look at your credit report and application history, ask you some related questions, and then give you a final decision. This usually takes about 3-20 minutes. For more on reconsideration and related tips, see:

My personal recommendation is to call for reconsideration no matter what result you get above, because speaking with a real person can improve your odds of approval. This is especially true for beginners—do not just sit and wait. If your credit report does not have any major red flags, there is a good chance your application can be approved through reconsideration.

Manual Review

This step is generally handled by a credit analyst, who reviews your application and credit report to decide whether to approve you. Compared with the automated review stage, this step adds more human judgment and does not focus only on your credit score and net income. Based on my own experience and reports from other users, I think the following factors matter most:

  • How you use your credit cards: They will look at your approximate monthly balances, whether you pay on time and in full, and whether your balances are reasonable relative to your income.
  • Your current credit lines compared with your income: If you already have other credit cards with the same bank and a substantial total credit limit, the bank may ask you to move part of that credit line to the new card.
  • Your recent credit report activity: They will look at how many HPs and new credit cards you have had over the past six months or one year, and then evaluate your overall risk profile.
  • Your history with the bank: If you already have a credit card with the bank, have held it for a long time, and have always paid on time, that will definitely help.
  • The stability of your employment and income: Having a steady job is a plus.

In short, this step is mostly a manual judgment call, so a lot depends on how the person reviewing your application evaluates your overall profile. It usually takes about 5 minutes, since trained analysts can often identify the key issues very quickly.

If you call for reconsideration and get a manual review on the spot, the analyst may directly confirm any unclear points with you. That is one reason reconsideration can improve your odds of approval. If you are not satisfied with the result of a manual review, you can call again for reconsideration. You will usually reach a different credit analyst, and because different analysts may focus on different factors, the second person may approve the application. You can also ask for a supervisor, in which case a senior analyst may handle your application.

Summary

The way banks process credit card applications is broadly similar across issuers. Once you understand how they evaluate applications, you will have a better sense of why you were approved for a card or why you were denied. That knowledge can definitely help with your future applications.