Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
  • Reasons for Denial of Loan or Credit Card

    Applying for a loan or credit card is very easy, but getting the application approved is not. Banks and financial situations consider multiple factors and conduct various checks on applicants before they approve or reject any application. They want to be sure of the individual who they are lending money to.

    Some of the reasons for denial of a loan or credit card are as follows:

    • No or Poor Credit History – Credit History plays an important role in the approval of loans or credit cards. Banks always check your credit history and score before they decide to provide you with a loan or credit card. Your credit history will have details about all your past debts and if it shows any problems related to repayment of any of these past debts such as delay or default, then your lender may choose to reject your application.
    • Below Minimum Age Limit – If applicants are below the minimum age limit, then it is very likely that banks will reject their credit card or loan application. For most credit cards in India, the minimum age requirement is 18 years. In fact, some banks insist on a co-applicant or co-borrower and ask for income proof from young applicants who are between 18 years and 21 years of age.
    • Loan on Credit Card
      Loan on Credit Card
    • Low Income – If you have a low income, it is very likely that your request for loan or credit card will be rejected by banks or lenders. Banks specify a minimum amount of income that you must earn to get a loan or credit card.
    • Work Issues – People with an unstable employment history may be denied loans and credit cards. Banks or lenders like applicants who are consistent with their jobs. Most banks require people to have a minimum experience of 1 or 2 years and an assurance from applicants that they will be working for their current employer for at least a period of 6 months.
    • Multiple EMI or Credit Cards – If you have too many EMIs and if you use more than 50% of your salary for repaying these EMIs, then banks or lenders may deny you a loan. Banks also tend to reject credit card application of people who have too many credit cards.
    • Negative Verification – After you apply for a loan or credit card, lenders verify your information. If this verification is negative, then your application might get rejected.
    • Negative Banking History – Banks and lenders will check your bank accounts to get an idea about how you manage your banking activities. If the result is negative, then you may be denied a loan or credit card. For example – If your lender sees that your salary is not being credited on time in your bank account or if your cheques are being bounced, then your application may be rejected.

    These are some of the common reasons because of which requests for loan or credit card are rejected by banks and financial institutions. In case of home loans, there are other factors such as legal verification and property valuation that can get loan applications rejected.

    Rejection of loan or credit cards can have a negative impact on your credit score and you might not get any loans or credit card in the future either. To prevent this, you must ensure that you pay your debts on time, have a stable employment and income, provide the correct documents and check the eligibility criteria of a product before applying for it.


    1. How can I improve my credit score if I plan to avail a loan or credit card in future?

      First of all, make sure that you clear all your outstanding credit card bills and EMIs on time. Once you do that, you can expect your credit score to improve. If you have a credit card, make sure to use it smartly and spend only which you can pay. You can apply for a secured loan where you will have to pledge a property as collateral. You can avail these types of loans at lower interest rates. Once you do that, make sure you pay back the EMI on time. This will improve your credit score.

    2. I have a work experience of 6 months. Should I apply for a credit card?

      It is recommended that you gain a considerable amount of work experience before applying for a credit card. Most banks prefer their customers have a work experience between 1 year and 2 years. Once you have gained a considerable amount of work experience, you can apply for a credit card.

    3. My monthly income is Rs.20,000. Should I apply for a credit card?

      You can apply for a credit card provided you can repay the bill on time. Before applying for one do compare various credit cards including the joining and the annual fee. There are cards where you are not required to pay any joining or annual fee. Once you have been issued a card, use it smartly and pay the bill on time. This will result in your credit score improving. The bank may offer the option of increasing your credit limit as well.

    4. I am a 17-year-old student. What can I do to apply for a credit card?

      You must be at least 18 years old to be eligible to apply for a credit card. In case you still want to apply for a credit card, you must have a guardian who will probably apply for a credit card on your behalf. There are add-on cards where a family member provided, he/she meets the eligibility criteria and holds a credit card can get an add-on card issued to you.

    5. Is it necessary for me to have a job to apply for a credit card?

      If you can show the bank that you will be able to repay the credit card bills on a timely basis then the bank may consider allowing you to opt for a credit card. Having a job shows the bank that you can repay the credit card bill or loan EMI on time. If you are not a salaried individual but a self-employed individual, you can still apply for a credit card.

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