Top Reasons for Credit Card Rejection

Getting your credit card application rejected can be troublesome and as well as confusing. It can be troublesome because you may want a credit card for a particular reason like travelling abroad or for a bigger credit limit and confusing because you may wonder what caused your card application to be rejected. Credit cards offer great convenience and ease but just like a loan is offered based on certain parameters and guidelines laid down by the financial institutions the same applies to credit cards. A credit card will be issued if the applicant meets the eligibility set by the credit card company else (as expected) the credit card application would be rejected. There are multiple reasons for a credit card being rejected and we look at few here.

Ø  A Poor Credit History: This is one of the most common reasons for rejection of an application. Getting credit cards for people with bad credit score can be a challenge. Any card issuer would look at the credit report of the applicant to assess his/her creditworthiness and judge if the applicant is a trustworthy candidate. Somebody who has defaulted in past, is late in making payments etc is likely to do so and the credit card company is less likely to trust him/her and their application is likely to be rejected.

Ø  Too Many Credit Cards: There is no number fixed by card issuers to define as too many cards. However if the card issuer finds out from your CIR that you already have too many cards issued in your name they may reject the application.  Too many cards reveal overdependence on credit, credit hungry behavior and the also there is high likelihood of default in case of temporary loss of income and the person falling in a debt trap. A card issuer may consider it to be risky credit behavior.

Ø  Not Meeting the Eligibility Criteria: Not meeting the eligibility criteria set by the bank is also one of the causes of an application being rejected. The eligibility criteria could be related to the income level, job duration, credit score etc. Thus before applying for a card an applicant should check the eligibility criteria set by the card issuer and also make a free CIBIL check online to ensure that chances of the application being rejected are minimal.

Ø  Not Filling the Card Application Properly: While this may appear like a silly reason and one may kick themselves if the application is rejected due to this reason but it is also a probable cause. Often card applications are long and may require a lot of information and signatures. Oversight, impatience or lack of requisite knowledge can cause improper filling of forms which can result in an application being rejected. Not signing properly or using different signatures at different places could also cause problem. While this is something that can be remedied by filling in the form again correctly but may involve loss of time and delay in getting a card issued.

Ø  There is Charge-off in Your Credit Report:

If there is a noting in your CIR which states that there was a credit card balance in the past which was not paid then it could spell trouble. Any credit card company is not likely to trust you; if you defaulted on credit card balances in the past then what is to say that it won’t happen again. In such a scenario getting a card could obviously be tough.

Ø  Already High Debt Burden: Even if you are paying your dues on time and comply with the other eligibility criteria set by the card company your card application could be still denied. This could be due to a high debt burden. If the card issuer feels that your debt to income ratio is high; meaning you have a high debt burden in comparison to your monthly income they can deny you a card. Additional debt in the form of a card could put you at risk of default. This is calculated putting your credit card balances and loan dues together as against your income.

Ø  Your Address Could be to Blame: Unlike in the past where most of us spent our entire lives living in the same house or even city this does not happen anymore. Due to job compulsions and the quest for better opportunities and lifestyle people often keep moving. Sometimes inadvertently you may land up at an address which is on a defaulter’s list and you may be unaware of this. Thus in such a situation you can bear the brunt without any fault of yours.

Hopefully the above discussion can help smoothen your process of getting a card issued and there is less likelihood of a card application being rejected. Credit card applications involve the card issuer asking for your CIR which is generates a hard enquiry and impacts the credit rating.