Credit card applications can get rejected for multiple reasons; these reasons may not be as big as you think. Getting a credit card has become relatively easy as so many choices are available, it may sometimes get difficult for you to choose the right credit card.
Many reasons can be associated with the rejection of a credit card application. Some of the common reasons for rejection of a credit card application are listed below:
1. High Loan Balances
If one has a lot of on-going debt, it reduces the chances of getting a credit card. As the loan balance is high, issuers hesitate to provide credit cards due to fear of deferred payments.
- Current debts are high as compared to income
- Lower down the existing debts
- Make timely payments
2. Debt Utilization is Too High
If you have a high debt utilization which means you are using all or most of the debt limit available. You have high chances of getting rejected for a credit card.
- Maxed out credit cards
- More than 30-40% usage of debt utilization
- Keep your debt utilization between 30-40%
3. Limited Credit History
Credit History refers to the record of repayment of debt. There is a chance that credit card application may get denied if one has no or very little experience with credit cards or any other means of credits.
- Limited credit history (refers to little or low amounts of repayment records)
- Lack of experience with credit
- Gain hands-on experience with credit utilization and management. This can be done by taking short term loans, buying retail store cards etc
- Do not close accounts that are proof of your credit history
4. Error in Credit Card Application Form
This is one of the most common blunders committed by many people. Some minor errors in the detail or missing out vital information from the form may lead to rejection of the application.
- Missing information in the form
- Incorrect details filled in the form
- Make sure all the details are filled
- Tally the details with the original document
- Double check your form before submitting
5. Job Duration
If you keep changing jobs and have not been long enough (duration varies with the bank) on the current job, there are high chances that your credit application may get denied.
- Job Hopping
- Periods of unemployment
- Stable job
- Jobs duration can be increased by waiting patiently
6. Recent Deferred Payments
The recency of the deferred payment plays a vital role in the rejection of the credit card application. The more recent the event the greater the chances of rejection of the application.
E.g. A 60-day late payment of debt 4 months ago is more likely to affect your credit card application than if the same thing had happened 4 years ago.
- Recent delinquent payments
- Bad payment history
- Improve your credit report
- Do not indulge in delinquent payment habits
7. Poor Credit report
If you have had a bad credit history that can be reflected through your credit report the chances of getting a credit card for you are really steep.
- Bad credit history
- Mark on the Credit Report
- Bounced Cheques
- Improve payments
- Always check your account before signing a cheque.
Check the Mistakes that affect your Credit Report
8. Income too low
If your income does not meet the criteria set by the bank to issue the credit card your application tends to get rejected.
- Income is low
- Salary does not meet the eligibility criteria
- Find a bank that has a lesser eligibility criterion.
9. Specifying Credit Limit
Credit card limit is set on a variety of factors like the ability to pay, credit reports, income, debt, etc. There are chances that your credit card might get rejected if you specify a credit limit that does not match the bank’s credit limit for you.
- Credit limit specified on the form
- Credit limit specified does not match banks credit limit for you
- Do not specify a credit limit unless and until mandated in the form
Credit card applications get rejected due to the age of the applicant. At the age of 60, it is difficult to get a credit card as they will preview your debt paying capacity thoroughly and then analyse the request.
- Debt paying capacity in the near future
- Income of Applicant
- Regular income pattern will portray stability