You are disturbed by a sales call one lazy afternoon. The lady on the other end is trying hard to sell you credit cards, you are least interested in. The moment you are about to cut the call, she starts telling you about the discounts, cash backs and reward points you can avail, with a credit card. You decide to try it out and apply for it.
After completing all the formalities, while you are waiting for the credit card to be dispatched to you, you get a message that your application is denied. You have no idea why.
If you are thinking of applying for a credit card or have been denied one, you may want to know the reasons. Let’s take a look:
1. Your credit score is low
Your credit score mirrors your creditworthiness. Therefore, a lender considers it a vital factor before processing your credit card application. An ideal credit score to avail a credit card is 700-750 and above. A lender might reject your credit card application if your credit score is lower than this.
Before you apply, ensure you reach the minimum credit score required for it, while the ideal score is 900.
2. Your loan balances are too high
Lenders generally hesitate to approve credit card applications if your loan balances are too high. It indicates you are unable to repay your loan dues and eventually the credit card bills.
Moreover, having multiple loans, or over utilising your card limit may also lead to your application being denied as it may indicate you are credit hungry.
To avoid this, pay off your loan balances as much as you can before you apply for a card. Also, do not max out your card limit and utilise the credit card within 30% of the total credit card limit.
3. Your occupation or your low income
Before approving a credit card application, lenders ensure their money is safe. For that, they may consider your occupation and income to look at your repayment capacity. For this, while processing your application, the lender may ask you for your income documents like Income Tax return, salary slips, etc., to know about your work and income. An unstable work history or a low income may be an unfavourable indication. If you have a low income, it may indicate you face problems in repaying the bill. This could be a reason for your credit card application rejection.
4. Incorrect application form
Lenders may conduct background verification from the credentials you give before approval. Therefore, if your application is not accurate or misses out vital information, they may reject it.
Be careful while you fill the form and double check before you submit it. Alternatively, opt for filling
the form online. It highlights if the information has been omitted and that could prevent mistakes in filling it up.
To sum up
A lender may or may not give you the reason for denying you a credit card. Thus, it is necessary to be careful about these particulars before you apply for a credit card. Moreover, once lenders have checked on your credentials and details, they may want to make physical verification of your address by visiting it. Ensure you provide your accurate
address so that your location verification does not come into your approval process.