Credit card application rejection may be a humiliating experience. More often, banks often turn down your application for a credit card without providing any definite reason, which confuses you. In case you are one of those who have been wondering why your application for a credit card has been rejected and have not figured out the reason for the same. Do not worry, and there are various ways you can fix this issue and place an application for a credit card again post fixing the problem.
Note that before discussing, one major reason for the rejection is your presence of name in the CIBIL defaulters list. Having your name on the CIBIL defaulters list reduces the issuer’s confidence in you, which may discourage them from providing you with a loan. And in case you are looking to avail a loan or credit card for your company, then along with your credit score, your company CIBIL score is even checked.
Let’s go through the major reasons for the credit card application rejection –
Low credit score –
Basically, your credit score decides how your credit card application would fare. Many credit monitoring services compute and decide your credit score at nominal fees. Before zeroing on the suitable credit card that you intend to apply for, ensure to figure out the minimum credit score that is required and if the credit score mitigates the eligibility criteria. If in case the credit score is low, you can undertake measures like repaying your existing debts to ameliorate your credit score. In the case you get any incorrect info in your report, you can simply highlight it to the credit bureau and get the same corrected and then place an application for a credit card again.
High existing debt –
A lender can turn down your application for a credit card even if your credit score is good. This is because the issuers factor in your DTI, i.e., your debt-to-income ratio, before rejecting or accepting your credit card request. This ratio assists you in figuring out whether you will be able to make the debt repayment within the determined time frame.
Many online instruments can assist you in analyzing this ratio and help decide your potential to repay your debts. In simpler terms, the higher your debt, the riskier it would be to get your credit card application approved by the respective issuer. Thus, in such scenarios, there are higher chances of rejection.
The applicant is very young –
While age is looked upon as just a number, banks do take such numbers seriously. Issuers require your age to be at least 18 or more with the required number of income before they can provide you with the credit card of your choice. Issuers stringently adopt this rule as they cannot take any kind of legal action against any minor defaulters. While few banks may allow parents to become the co-applicant of the minor applicant, others do not allow this. Make sure to check with your issuer before filling up the credit card application form.
Low income –
A credit card issuer can turn down your application that does not mitigate the minimum income needs. Again, this factor is analyzed to decide your potential to repay your monthly payment promptly, irrespective of your score. Every bank provides distinct credit cards that are ideal for various lifestyles and income groups. Do your research and compare the cards before filling up the final application.
Your occupation and employer reputation can even determine whether your application will be approved or rejected.
Incorrect or missing information –
Availing of a new credit card appears exciting but do not commit the mistake while filling up the application. Lending money in any form comes with huge bank risk; hence they take every application seriously and ensure to scan the same carefully before coming to a decision. Every application goes through various rounds of scrutiny.
Thus, make sure that you fill up all the details perfectly and showcase your honesty to lower the chances of availing rejected. Besides this, avoid filling up any false information or detail.
Limited or no credit history –
You may think that not holding a credit history can boost your credit score. However, this situation is not ideal for banks. Inadequate experience with credit management reflects your lack of credibility. In such a case, it becomes impossible for you to gauge how you would manage your debt or make the payments. Thus, you might go for a beginner credit card or maintain a good, trustworthy account with the issuer to build faith.
What to do if your credit card application is turned down?
In-depth research and caution lower your credit card rejection chances. Firstly, if your credit card application is rejected owing to any error or missing info. Consult the bank representation and request an evaluation. In case your credit card application was turned down owing to a poor credit score. Work hard on ameliorating it by taking the required measures. You may also try and determine the exact reason to get all your doubts cleared. Reapply for the same credit card with confidence. You can even consider consulting a financial advisor for this. Showing the financial advisor that you are a viable. And credible individual can boost your chances of availing your credit card faster.
Credit card application rejection hurts, particularly if you think that your credit health is good. Whether the issuer rejected your application because you were too young or had a lot of debts. Try to analyze the reason and work upon it to solve it. Before you place the application for a credit card the next time. Analyze if you require another credit card. Whether you can keep up with making your payments over the long term. Besides keeping your game of credit score up, try, and build up a good harmony with the issuer. By showing your repayment consistency and credibility.