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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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