Credit cards are the most common sources of finance which helps people to realize their desires. At times, they also provide the much needed support to tide over financial difficulties. However, at times people face a situation when their credit cards applications get rejected. What baffles many in such circumstances is the fact that even after repeated queries regarding the reason of such rejection, card issuers often do not explain these reasons to the credit card applicants.
This article explains some of the most common grounds on which card issuers reject credit card applications in India, along with tips on how to overcome these hurdles.
Poor credit history
Past credit repayment record of the applicant is an important criteria on which banks decide whether or not to issue a credit card to the applicant. All card issuers check the applicant's credit history (CIBIL report) before making a call as to whether or not to issue the plastic card. In case, a person has failed to repay any of his old dues timely, it will reflect in his/her CIBIL record, seeing which banks could reject the credit card application.
To overcome this hurdle, a person should make efforts to improve his credit score/ CIBIL record by paying back all dues. To come in the good books of the banks, timely payments on loans or credit card expenses have to be made for at least 6 months continuously. A person can also use credit cards to improve his/her credit score.
No credit history
Another common reason for facing rejection from card issuers is the lack of a credit history. It means that those individuals, who have never taken a loan or credit card, can also be rejected by credit card issuers. It is because of the simple reason that if a person has never taken any type of credit, he/she will not have any record with CIBIL. These cases are considered risky by banks as there is no record of such an individual's credit repayment behavior.
In this situation, it is advised to apply for a credit card from a bank with which a person already has a relationship, like a salary account or savings account. In the lack of a credit history, this bank will trust the applicant more than other banks.
Existing level of credit exposure
Generally, card issuers trace the number of existing unpaid loans or credit cards an individual already possesses. If a person is already having multiple credit cards, or is servicing several loans at a time, there are high chances of his new credit card application getting rejected. Banks consider applicants with high exposure to any type of credit (loans, credit cards) as risky.
Several balance transfers
Those having a history of multiple balance transfers may find it difficult to get a credit card. Credit card issuing companies want to earn by the cards that they are issuing and do not want to get outsmarted by their customers who repeatedly avail the balance transfer facility. Therefore, they may not issue cards to applicants who have transferred the balance on their loans many times.