A credit card is very useful in case of emergencies or when you are low on cash. It gives you the freedom to spend even when you don’t have sufficient balance in your account. All you need is remaining credit limit which can be utilized.
No matter how beneficial it is to have a credit card, it is not easy to get an approval for your credit card. All the banks and non banking financial institutions which offer credit cards to their customers follow a procedure for approving your application and also considers a lot of factors for this.
When people apply for a credit card and their application is rejected, they keep wondering about the reason but cannot find one. There may be many reasons behind the rejection and you must be aware of those reasons so that you can avoid those situations and increase the chances for approval of your credit card application. Here are a few reasons why credit card issuers may decline your credit card application:
- Age: Age of a person is an important factor for approval or rejection of his/her credit card application. Most of the banks need the applicant to be at least 18 years old(in some cases the minimum age required is 21 years old).
- Lender’s profile: Every lender or credit card issuer has their own norms or rules to decide if you are eligible for a credit card or not. If you do not meet their requirements, they will directly reject your application.
- Location verification: There are chances that some representatives from the bank may visit the location that you have mentioned in the application form and if they find that the address mentioned in the form is incorrect, they will surely reject your credit card application.
- Your current address in defaulter’s list: When you shift to a new place for job or other reasons and stay there on rent, there are some chances that the address where you are staying currently is in defaulter’s list. This factor is also going to reduce your chances of getting your application approved.
- Low income: The minimum income that you should have to apply for a credit card differs in different banks. So before applying, you should always check this requirement.
- Credit score and credit history: Credit scores and credit history play an important role in deciding if your application will be approved or rejected by the bank. Having bad credit score and very limited credit history will badly affect your application. Limited credit history doesn’t allow the bank to decide if you are capable of repayments or not.
- No borrowing history: If you have never borrowed anything from the banks, it means that they have no proof of whether you can regularly repay the money or not. This may also result in rejection of your credit card application. You can tackle with this problem by taking a small loan and regularly repaying it on time.
- High loan balance: If you have a huge loan balance unpaid, it is better to pay it before applying for a credit card. Such situations can reduce the chances of approval of your credit card application.
- Too many credit cards: If you already have a large number of credit cards and still applying for one, the banks are going to get an impression that you are a credit hungry person and that reduces the approval chances of the application.
- Charge-off on your existing credit card: A charge-off is a balance amount on your credit card which is unpaid for the last six months or more. This leaves an impression on the banks that you are not capable of repaying the loans and are not worthy of a new credit card.
- High credit card balance: If you have any credit card balance on any of your existing credit cards, repay it as soon as possible, otherwise your credit card application is more prone to be rejected.
- Inquiries on credit report: Whenever you apply for a credit card or loan, the bank registers an inquiry on your credit report. That means that if you have a large number of inquiries, you have applied for a lot of loans and credit cards which leaves a bad impression on the banks and gets your application rejected.
- Employment period or stability: Not being stable with your employment can result into rejection of your credit card application. Also the banks require that you have worked with your current employer for a minimum period that the bank has fixed(different in case of each bank).
- Incomplete or wrong details in your application form: While filling the application form, you should make sure that you have filled all the mandatory details and also that you filled them correctly. Leaving a required detail will result into rejection of your application. It is better to fill the form online because it does allow you to submit a form until and unless it is completely filled, thus reducing the chances of incomplete form submission.
By taking care of all the above mentioned factors, you can reduce the chances of your credit card application rejection.