With the multiple options available in the Indian financial market today, it is very easy to apply for a credit card. You can apply online for a credit card from the convenience of your home or office. There are also pre-approved credit card options available to customers.
However, even if it is a pre-approved credit card or not, the lender undertakes a certain approval process before issuing a credit card to the applicant. Every lender takes various factors into account before deciding whether to accept or reject a credit card application.
Most lenders reject credit card applications if the applicant has bad credit scores. Credit score is one of them most important factors behind the acceptance or rejection of credit cards as well as other loans. Most institutions have a standard credit score rate for considering the creditworthiness of the customer, i.e., whether he/she is reliable in terms of repayment of the credit availed from them.
Usually, a good credit score or CIBIL score would be 750+. The CIBIL score will be negatively affected if:
If you do not have a loan history, this also affects the credit card application since there is no track records to evaluate your creditworthiness.
There are various lenders who are readily available to provide credit cards to eligible customers, that too with higher credit limits. However, it is very important that your repayment capacity is satisfactory and your income backs up your claim. The income eligibility criteria has to be met and the applicant also has to submit income documents such as Form 16, Salary Slips, Income Tax Returns, etc., at the time of application. Your application will be rejected if you do not meet the income requirements specified by the lender.
Occupation is another important factor considered by the credit card companies while issuing a credit card. Some credit card applications may be rejected due to the employment of the applicant, even if they fulfill the minimum criteria required. Reputation of the company is a factor considered while evaluating the repayment capacity of an applicant. An unstable work history also would affect the approval of your credit card application negatively.
Even though this might seem like a minor issue, making mistakes on the application form can end up in a credit card application getting rejected. Many applicants make this error while filling the application form such as - missing crucial information, entering wrong details, etc. This is why it is better to apply online for a credit card since online credit card applications prompt the applicant to fill any mandatory field that has been omitted.
If an individual has several credit cards in his/her name, then the chances that his/her credit application being declined is high. All lenders consider applicants to be reliable only if they have a good debt-to-income ratio. If the income outflow is high due to having multiple credit cards, then the lender will not be convinced of the creditworthiness of the borrower. Lenders do not prefer borrowers who frequently transfer the balance on their credit cards or change cards frequently.
Almost all lenders make a physical verification of the applicant and his/her address - both residential and official. Hence it is important that when the representatives of the company visit the location to verify their home and office address nothing goes wrong. It is very important that the address you have specified in the credit card application is accurate.
Thus, these reasons can attribute to the rejection of your credit card applications. Lenders do not necessarily disclose the reason behind rejecting a credit card application. Other than these specific reasons, an applicant should also note the terms and conditions laid down by the credit card issuer before applying for a credit card.
If your CIBIL Score is poor then you should make sure that you pay all your dues in a timely manner, keep good balance on your credit card and limit new applications for other cards, in order to secure a better decision with regard to your credit card application.
While submitting your income eligibility details also include the income you receive from other sources since this will increase your chances of approval of the credit card application.
Another measure would be to get a secured credit card. In order to get a secured credit card, you will have to open a fixed deposit account with the Bank of your choice and this makes sure that the repayment on the credit extended will be guaranteed. Secured credit cards are similar to unsecured credit cards and with a secured card, you can improve your credit score gradually. By paying the dues on time, you can build your CIBIL score and upgrade to an unsecured credit card soon.
You can fix the problem of not having a credit history till now by taking out an unsecured personal loan of low value that you can repay quickly and which is low interest as well. Once you start paying your Equated Monthly Instalments (EMIs) on time, you will be on the road to building your credit card history and building up your CIBIL score.
If the application has been rejected on the basis of unstable employment or low income, you can apply for a secured credit card. This card will be issued to you against a fixed deposit. This service will, in turn, reduce the risk of default in payment to the lender.
You should immediately ask for a free copy of your credit report when you application gets rejected. Study the report to understand how you can improve your credit score before you reapply for a credit card.
It is okay if you have loans with multiple lenders. However, if you have not paid off these loans, your application will be rejected.
If you have defaulted or been late in paying off your loan EMIs, it can negatively impact your credit score and credit history. This would also affect any future loan or credit card applications you make. The only way to fix this would be to pay your EMIs on time. If it is too large an amount to pay back, you could negotiate with the bank to extend your tenure so that your EMI amount is lowered enough for you to pay back comfortably.
If you have too many credit cards, you may not get favorable results when you apply for another one anew. It is better to instead request one of your existing credit card’s credit limit to be increased if you need to have more credit in hand.
The best thing to do in such cases is to work with an employer for at least a period of one year or more, in which case you will have a better chance of getting your application approved.
Adverse Action Letter” from the bank stating the reasons for rejection of your application. Make sure to read this letter carefully so that you will know what to do in order to avoid rejection of any future application.
Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.