Credit card application rejected? Here’s why
A friend tells you about this particular credit card and you are wowed by its benefits—a 10% cashback at your favourite supermarket is something irresistible, you think. You quickly apply for the same card. But then you get an email stating that your application has been rejected. But why was your application rejected? Here are some likely scenarios that often lead to credit card application rejections:
Applied for the wrong credit card
All credit cards come with their own minimum income requirements which must be met in order to seal their approval. Hence, closely scrutinise all the eligibility requirements (like income requirement, age requirement, etc.) attached to a credit card before applying for it.
Your credit score is low
You may meet all the eligibility requirements but your credit score is lower than 750. A good credit score is a sign of your creditworthiness, and always works in your favour when you apply for any kind of credit (like credit card, personal loan, home loan, etc.), not just to ensure you get an approval but that you get it with favourable repayment terms like lower interest rates. If your credit score is low, work towards improving it by clearing all your existing dues (loan repayments, credit card payments, etc.) and try never to miss a single repayment again. Disciplined repayments and maintaining a Credit Utilisation Ratio lower than 30% are sure-shot ways to pull your credit score up.
You erred in your application
Ensure all the details related to your credentials and important documents are correctly filled in the application form. It’s better to apply online to ensure that you don’t miss out on filling in important details. Make sure you have necessary documents such as address proof, salary statement, bank statement and ITR documents.
Your residence is in a non-serviceable area
It is not uncommon for banks to reject a credit card application if the applicant’s residence doesn’t fall in their service ambit. That being said, it’s unlikely that you won’t find a few banks that don’t operate in your area. It’s wiser if you stick to those while choosing a credit card.
Look at your requirements
Compare all your options and try to go for a card that maximises the value of your most preferred spends. But check for the riders too (like minimum spend requirement to avail the desired benefits, annual fee, etc.). Never breach your monthly budget by overspending on your credit card just to get extra reward points or maximum cashback. This may lead to an accumulation of debt.
Avoid too many applications
An application rejection doesn’t mean you will quickly apply for all the other available card options. If your first application was declined due to your poor credit score, you’re likely to face rejection for other cards too. And this may sink your credit score deeper. So, wait for your next credit card application until your credit score is improved.
Add-on credit cards
If any of your family members use a credit card, you can check with them whether they can get an add-on card for you that is linked to their card account and credit limit. Add-on cards come with the same benefits as the principal card, but they should be used responsibly so that it doesn’t cause any discomfort to the primary cardholder.
Source:- financialexpress
