Credit cards have become an essential part of our lives, and we cannot deny that they have modernised lending in India. With a credit card, you can borrow money up to the pre-approved credit limit that the bank has set, allowing for a cashless transaction. As a result, if your savings are low, you may still make purchases using a credit card.
Even though you would believe yourself to be a relatively strong prospect, not all credit card applications are immediately approved. Your acceptance might depend on a variety of criteria, and being rejected is frequently only a temporary setback rather than a permanent obstacle.
Understanding the factors that led to the denial of your application will help you take proper actions to get your application accepted the next time you submit it. Here are five major reasons why your credit card application might get rejected.
Your income level does not meet the lender’s requirements
There are several lenders who are willing to offer qualified consumers credit cards, and that too with greater credit limits. However, it is crucial that your income supports your claim and that your repayment ability is enough. At the time of application, the applicant must meet the requirements for eligibility based on income and provide proof of income in the form of Form 16, salary slips, income tax returns, etc. If you do not satisfy the lender's stipulated income standards, your application might be turned down.
Your credit history is limited
Although some issuers of major credit cards may approve applicants with a little credit history, many want to have a consistent history before granting approval. You may not have a long enough credit history to qualify even if you are a highly conscientious client. If so, keep paying your bills on time and use other wise credit practices to continue establishing your credit history.
Your credit score does not fulfill the criteria
One of the crucial factors taken into account when deciding whether to approve or deny a credit card application is the credit score. It is also referred to as CIBIL score and has a range of 300 to 900. An applicant for a loan or credit card with a low credit score has inadequate debt management. To increase your eligibility for a credit card, you need to have a strong credit score of above 700.
You have multiple credit cards in your name
There is a great likelihood that a person's credit application will be denied if they have several credit cards in their name. Only candidates who have a low debt-to-income ratio are seen favorably by all lenders. The lender will not be persuaded of the borrower's creditworthiness if there is a substantial income outflow as a result of owning several credit cards. Borrowers that often switch cards or transfer their credit card balances are not preferred by lenders.
Your credit card application is filled out incorrectly
Even if it appears to be a minor issue, errors on the application form might result in a credit card application being declined. Many candidates make mistakes when filling out the application form, such as forgetting to include some facts or typing them incorrectly. This is why applying for a credit card online is preferable since online credit card applications remind the applicant to complete any necessary fields that have been left out.
There is no set period of time that you must wait for before reapplying for a credit card after your initial application has been rejected because each person's circumstances are unique. Generally, it is advised to give yourself six months between credit card applications.
On the other hand, you could require some time to repair your credit if you were turned down because your credit scores were too low to qualify for the card you desired. While there are no fast cures for your financial situation, properly managing your budget and credit profile might help you become more creditworthy.