Credit cards are one of the easiest ways to access funds these days, which can help you manage cash flow. You can choose from wide-ranging credit card types to meet your specific requirements. However, there are many criteria that can become a hurdle in getting approval.
Before issuing the card, every credit card issuer checks your financial background and credit history. If these parameters are not on point, there’s a possibility that your credit card application may get rejected. Find out more by understanding the reasons for rejection.
Why Your Credit Card Application May Get Rejected
To know why your credit card application may be rejected, look into these aspects and make the suggested changes.
Insufficient Income
Issuers require a minimum income to consider you eligible for the card. This limit varies for all issuers and depends on your location and employment type. Your application has a high chance of getting rejected if you don't satisfy the issuer’s minimum income criteria.
Solution: Check the requirements beforehand and shortlist cards with lenient criteria. If you are an employee, you can also ask your employer for a raise before applying. Alternatively, show your net combined income from different sources to boost your eligibility.
Poor Credit Score
Most financial institutions require 750 or above as your credit score to issue a credit card. Thus, it is important that you run a credit check before applying to ensure approval. This is because rejection of your application can hurt your score, further reducing your chances of getting the desired card.
Solution: Run a credit check before application and only apply if you have a sufficient score. If not, you can gradually boost eligibility by repaying your bills on time and clearing past dues on existing cards or loans. If you are new to credit, opt for a secure credit card to build a credit history.
Unstable Employment
An unstable job profile or short business vintage reduces your eligibility and increases the chances of rejection. This is because it indicates unstable income, which increases the issuer's default risk.
Solution: To overcome this situation, try to keep pace with your employment status and do not quit your job impulsively. You can wait to apply for a card after you gain sufficient work experience.
Irregular Credit History
You must pay your bills, especially your credit card bills or EMIs, on time to ensure a good credit history. This way, you can get acceptance quickly. Sometimes, issuers also reject the application due to a lack of credit history, indicating no experience in managing credit.
Solution: The solution is to pay your bills on time without fail. In case you can't pay your bill in full, at least pay the minimum dues. You should also know how to close a credit card account with a bad repayment record and build a better history with a secured card.
Existing Debts
If you have multiple loans or you have maxed out your credit cards, it shows that you rely heavily on external financing. This can raise a red flag for the financial institution and increase the chance of rejection.
Solution: Clear your debts if possible and wait a while before applying.
High Utilisation Ratio
If you have used more than 30% of your total available credit from a credit card, it can hurt your credit score. This is why you should use your limit judiciously and bring down this ratio.
Solution: Use your cards smartly but not using your limit in full. For loans, prepayment or foreclosure is a smart solution.
Too Many Credit Card Applications
If you apply for too many credit cards in a short span of time, your chances of getting rejected increase. Issuer sense the desperation for financial help, which indicates poor financial standing. Moreover, multiple hard inquiries from the issuer also drop your score temporarily, reducing your eligibility.
Solution: Shortlist a few credit cards, compare their features and charges and then apply for one that suits you the best.
Mistake in the Form
Your application may also be rejected if there’s a mistake in your application form. This can be the wrong mobile number, address, incorrect employment details, etc.
Solution: To avoid such a situation, crosscheck and verify your form before submitting it.
KYC Issues
KYC and documentation are essential parts of your application process. Thus, your application will get rejected if the issuer detects any discrepancy with your KYC.
Solution: Check everything twice before uploading online or submitting offline. Keep your original documents along with your self-attested copies. Ensure your name and address is the same across documents.
In conclusion, ensure you understand the eligibility measures correctly when applying for a credit card. If you want to avoid the hassles of excessive paperwork and a complicated application process, consider opting for a credit card. You can choose either a secure or an unsecured card and apply within minutes.
Apart from fast approval, it has several attractive features, like easy bill and rent payment options and 5X reward points on your top two spending categories each month. It also comes with a powerful app that makes it easier for you to track your monthly expenses. Apply online to get this premium metal credit card with lucrative seasonal discounts and a fuel surcharge waiver.
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