Know the Reasons for Rejection of a Credit Card Application
By Ankit Sharma
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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.

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(Comments Posted : 9) Post Your Comments
1. Well said, Good info. There is no doubt that for a new business setup, most of the people take business loan but some people’s loan application is rejected by the banks and lots of people don’t know what the reasons behind are. But thanks for the post, it’s really informative for those people which are need business loan.
Robin (Posted: Mar 7, 2017)
2. There may be several reasons for a credit card rejection. I have listed down few for you:

1. The Application Is Missing Information

If you hastily complete your credit card application, you may inadvertently skip a few boxes. Credit card companies require detailed information about you, such as your full name, your address, and your income. If you omit important information from your application, the credit card company will deny your request, in which case, you have to reapply.

To ensure you do not make this mistake, apply for a credit card online. While you can easily send off an incomplete paper application, online forms do not submit your request until you’ve complete all required fields.

2. You Are Too Young

Regardless of whether you have a job or another income source, you cannot apply as the sole account-holder of a credit card if you are under the age of 18. Furthermore, if a credit card company were to approve your application as a minor, they cannot take legal action if you default on a bill.

Despite this restriction, persons under the age of 18 can obtain a credit card – but it requires a parent to cosign and include his or her name on the account. Alternatively, a minor can be listed as an authorized user of a parent’s account, which means all payment activity and account history will appear on the minor’s credit report. Keep in mind that becoming an authorized user can be risky for all involved, as any negative account activity will show up on both the primary and authorized users’ credit reports.

Lastly, minors can always obtain a prepaid credit card. Prepaid credit cards don’t build a credit history, but they can teach young people how to make a budget and use a card responsibly.

3. You Do Not Earn Enough Income

Credit card applications invariably ask about annual income. Credit card issuers have minimum income requirements, but they don’t always disclose them on the credit card applications. This minimum varies between cards and issuers, and if you don’t meet the minimum, your application will be denied.

In this case, you must wait until your income increases and then reapply. You can also reapply with a joint applicant, in which the credit card company determines approval based on your combined income. To avoid this headache, shop around and compare different credit card offers. Call credit card companies directly and inquire about the minimum income for approval.

credit card

4. There Is Negative Information on Your Credit Report

Information on your credit report directly influences whether a credit card application is approved or declined. Even if negative information is reported in error, it can still trigger a rejection. Therefore, it’s up to you to get a free credit report and review it for accuracy. Carefully review each line of your credit report, and take note of erroneous information. Write the bureaus to dispute this information, as this will prompt an investigation in which the bureaus will delete any negative information reported in error.

Of course, if your credit report accurately reports negative information, you must take immediate steps to rebuild your credit score. Be sure to pay your creditors on time by setting a schedule or utilizing automatic bill payments, and settle all delinquent accounts. Wait until your credit score improves, then reapply for the credit card you desire.

5. You Have Too Much Existing Debt

The more debt you have, the harder it is to get new credit. In addition to a good payment history and steady income, your debt-to-income ratio needs to be low enough to be approved for a credit card. This is the percentage of how much debt you have relative to your monthly income. Credit card issuers also don’t like to see that you’ve maxed out your existing lines of credit. High debt translates into a risky applicant, as issuers believe you’re more likely to default.

If you’re denied a credit card because of debt, develop a debt elimination plan to pay down your credit card balances and other loans. Pay more than the minimum each month or pay down balances with money from savings. Aim to keep your balances less than 30% of your credit limit, and your debt-to-income ratio well below 36%.

6. Your Employment History Is Unstable

A consistent employment record also plays a role in credit card approvals. If you hop from job to job or were recently unemployed, a credit card issuer may view your employment and income as unstable. Wait until you’re on a job for at least six months to one year before applying for a credit card.
Ishika (Posted: Oct 12, 2015)
3. I have a CIBIL score 822. No negative marks. also I am using a Citi bank credit card. I applied for one more credit card from Citi, HDFC & ICICI banks however all rejected .
I have a home loan also. I am not a defaulter as per CIBIL .
I would like to know what I should to get the new credit card.
pravin dhokale (Posted: Jan 8, 2015)
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