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Top Reasons that Lead to Credit Card Rejection

Updated on April 11, 2024 , 2483 views

Credit card, undeniably, is one such tool that gives you financial independence. Sure, you might be getting numerous calls where telemarketers would be trying to entice you to get a card. However, it is better not to get tangled in their words as there could be millions of reasons that may reject your application altogether.

Credit Card Rejection

Not just self-employed, even salaried individuals face rejection. Moreover, the easier it has become to get a card, the more rejections are happening. What could be the possible reason behind credit card rejection? Also, can you still get a card if rejected once? Read ahead and find out more.

Why would Credit Card Application get Rejected?

Questionable Relationship with the Bank

Would you consider lending something to a person who is not good at returning things? You surely wouldn’t! For a Bank, a credit card is a privilege that is provided to customers. However, this is only resorted to those who have good, significant relations with the bank.

In case you have a bad connection with the staff, chancing of getting approved decrease to a great extent. Even if other parameters are in place, the bank manager can still leave you mid-way, getting denied for a credit card.

Wrong or Incomplete Information

In case you mentioned the wrong address or contact information, whether knowingly or unknowingly, it can lead to a credit card rejection. These days, being more cautious than before, banks only offer cards after verifying everything mentioned on the form.

You may also get a field investigation officer to verify the address. And then, there would be phone calls to ensure that the contact number is appropriate. If you Fail to respond or the investigators couldn’t find your house, you may get rejected right away.

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Applying for an Incorrect Card

Most of the banks offer multiple options in terms of credit cards. These differ on the Basis of monthly limit and are only offered to people after looking into their financial background and spending pattern. Thus, if you have applied for a card that doesn’t match your eligibility, it is possible that you may face rejection.

Applying for Wrong Credit Limit

Basically, if you got denied for a credit card, know that banks have the power to decide the Credit Limit on the basis of your financial liabilities and credentials. Generally, after assessing the documents, Credit Score and Income, they conclude the credit limit that will be assigned to you.

But, during the time of submission, if you mentioned the credit limit to be higher than what will be assigned, the bank gets the authority to reject the application.

Frequent Cheque Bounces

In the past, did you face any cheque bounces? Whether you would have paid to somebody or for any of your bills or EMIs? If you just nodded your head, it just made all the way more challenging to acquire a credit card.

In case your bank has a record of bounced cheque, within the last 6-12 months, this will compel the credit manager to think twice before taking your card application ahead for the processing.

What can you do After the Rejection?

After getting a negative remark from the bank, you must have googled the term, “If I apply for a credit card and get denied, what’s next? If you have, here are your answers.

Go through the Adverse Action Letter

Once your card is rejected, the bank will send you an Adverse Action Letter. Basically, this letter involves the reason behind the rejection of your application. Hence, you will have an idea regarding what needs to be corrected. Then, you can take improvement measurements and apply for the card again.

Apply for a Secured Card

In case your application was rejected for reasons related to your income or employment, you can choose to apply for a secured card. This one is given against a Fixed Deposit that you will have to maintain with the bank. With this, there will be a decreased risk, and the bank will start trusting you even more. Apart from that, good behaviour and appropriate credit from your part can convert this secured card into an unsecured credit card.

Find out your Repayment Capacity

While a credit card backs you up in the time of an emergency, misusing the credit limit, unnecessarily, can leave you in several troubles. Thus, even before you consider applying for a card, make sure that you need it. And then, finalize a repayment capacity; according to which, you can get the card.

Wrapping Up

For a person who likes shopping and swiping recklessly, having a credit card can pose both advantages and disadvantages. Thus, stay cautious and limit your spending. Before you apply, make sure that you are in a position to pay back on time, without hampering the credit score. Stay abreast with the latest developments in the credit card Industry and choose what suits your needs.

All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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