Americans with six-figure incomes, little or no debt, and substantial savings are sometimes finding themselves turned down for credit cards or loans. The decisions are often made automatically, and applicants may not get much explanation.
The rejections point to a mismatch between careful financial habits and the way lenders assess risk. U.S. credit card balances have reached a record $1.29 trillion, up 67% since early 2021, according to the Federal Reserve Bank of New York. Meanwhile, the Consumer Financial Protection Bureau estimates that about 25 million adults have credit histories that are too limited or outdated to produce a standard score.
For people who rarely borrow, having little recent credit activity can make it harder for automated systems to assess them. In some cases, a debt-free history may leave lenders with less information to work with.
Jade Warshaw, co-host of “The Ramsey Show,” said lenders may not be deliberately targeting people who avoid debt, but they have little incentive to prioritize customers who don’t use their products. Warshaw and her husband paid off $460,000 in debt. She said credit scores are designed to help banks assess and earn money from borrowers, not to measure someone’s overall financial health.
Credit repair specialist Micah Smith said responsible, debt-free living can still create practical challenges because credit scoring works in ways many consumers don’t expect. She recalled being turned down for car financing as a young adult because lenders couldn’t find enough information about her credit history.
“The algorithms are looking for movement,” Smith said, explaining that income itself is not part of a credit score. A person can earn a high salary and still have a limited credit history that doesn’t reflect their broader financial circumstances.
A 2025 study from PYMNTS Intelligence and the Federal Reserve found that credit worries and unexpected denials are increasingly affecting households earning more than $100,000. Limited credit histories and a narrow mix of borrowing may contribute to the problem. It can affect applications for starter credit cards, car loans, and mortgages.
Warshaw noted that FICO’s predecessor was founded in 1956 to analyze credit risk, not personal wealth. In her view, consumers have come to treat a high score as proof of financial success, even though the two aren’t the same. Someone can be careful with money and still have a low score, she said.
Smith also urged caution with buy-now-pay-later services, some of which have begun reporting to credit bureaus. Opening several short-term installment accounts can lower the average age of a person’s credit history and make their file appear less consistent. Each account may be opened, paid off, and then closed, she said, which can weigh on scores.
Warshaw, whose financial advice follows Dave Ramsey’s debt-averse approach, views credit scores as a measure of a person’s relationship with debt rather than a measure of success. She encourages people to avoid credit cards, arguing that they can make overspending easier and lead to other forms of borrowing.
She pointed to research linking credit card use with other consumer debt, including personal loans, auto loans, and mortgages. Even people who intend to pay their cards in full each month can run into trouble, she said, particularly as household debt continues to rise.
Smith agreed that being debt-free is worthwhile, but said having no credit history at all can create costly obstacles when renting a home, joining a co-op, or running a small business. She said credit can open doors that cash alone may not, and recalled using card points and cash-back rewards to cover more than $9,000 in travel expenses on a recent trip to Las Vegas.
The two experts recommend different approaches. Smith advises responsible consumers to keep cards open, make modest purchases, and pay them off regularly. She said that small reported balances can help maintain a FICO score. Warshaw, by contrast, recommends avoiding debt and building an emergency fund covering three to six months of expenses before investing for the future.
