Top 10 Reasons for Credit Card Application Rejection

With Central Government’s push for digital transactions and cashless economy, Credit Cards have fast become one of the most sought after financial products in the past few years. The various benefits and advantages that Credit Cards bestow upon the holder make them highly desirable. Some of the major benefits that credit cardholders enjoy are:

  • The convenience of digital & cashless transactions.
  • Special discounts and reward points with spends. 
  • Can buy now & pay later: can complete transactions even with inadequate money in the bank account.
  • Interest-free period of up to 50 days. 
  • Facility for pre-approved loan/ credit limit.
  • Facilities to withdraw cash instantly during an emergency.
  • Option to convert card dues & purchases online as well as offline partner stores to easy EMIs.
  • A tool to build a strong credit history 

With so many benefits to enjoy, it is not surprising that more and more customers are applying for Credit Cards. Therefore, many banks have started offering a new range of Credit Cards that reward users on specific transactions. As per recent research, 

SBI Credit Cards have the biggest customer base in India with more than 5.5 million Credit Cards issued in different variants.

How to Apply for a Credit Card?

The number of Credit Card applicants is indeed increasing every year. This has prompted the Credit Card issuing companies to offer multiple modes of application to allow customers to access Credit Cards effortlessly. Some of the most popular modes to apply for credit cards are:

  • Online: Customers can apply for Credit Cards directly online. Existing customers of the bank can apply for Credit Card through their mobile app or net banking account. There are various online finance platforms as well, which facilitate application for new Credit Cards. 
  • Offline: Customers can visit the nearest branch of the bank with whom they wish to apply for a Credit Card. Many Credit Card companies set-up their kiosks at shopping malls and fuel stations to help customers apply for a Credit Card. 
  • Customer Care: Interested customers can call the customer care department of the Credit Card company and initiate the application process for a new Credit Card.

Top 10 reasons why Credit Card applications are rejection:

Credit Cards are an unsecured offering, and it increases the risk involved for the issuing company. Therefore, these companies follow strict eligibility criteria and screening process to approve new Card applications. As a result, it happens quite so often that some Credit Card applications are rejected on failure to meet the issuing guidelines. If you are also considering applying for any of the reputed cards such as Standard Chartered Credit Card or SBI Credit Cards, you should also keep the following points in mind.

Here are the 10 major reasons for Credit Card application rejections in India:

  1. Low credit score:  Most Credit Card issuing companies have a no-compromise policy when it comes to your Credit Score. A minimum of 750 Credit Score is desired by the card issuing companies. If your score is lower than this level, your application can be rejected. So, always make sure that you enjoy an excellent credit history and robust score to back your credit card application. 
  1. High credit utilization ratio: If you are already using a Credit Card(s), then you must ensure that your Credit Utilisation Ratio is below 30% for each card. Otherwise, it reflects that you are in pressing need of cash and are credit hungry, and as such the application will be rejected. 
  1. Errors in the application form: This may sound like a basic step but you will be surprised to know how many times it goes wrong. Applicants tend to fill the application form incorrectly or write inconsistent details that can not be verified with documents.  
  1. Availed multiple loans in a short while: If you have availed multiple Personal Loans in a short duration, prior to Applying for a Credit Card, then it will lead to the rejection of the application. Your desperation for loans indicates poor financial management and increases the risk for default. 
  1. Lower Income Level: Most banks require you to have a certain income level to be eligible for a Credit Card. For instance, in order to be eligible for Standard Chartered Bank Credit Cards, you must have an annual income of at least Rs. 5 Lakh if you are self-employed or a monthly income of at least Rs. 30,000 if you are a salaried individual. If you do not meet the income criteria, your Credit Card application will be rejected. 
  1. Multiple credit cards: If you already have multiple Credit Cards, then you must think before applying for a new Credit Card. Multiple cards require you to make a minimum payment every month, driving down your income to credit ratio and reducing your eligibility. 
  1. Poor repayment track: If you have a poor repayment track record for your Personal Loans or have been making the only minimum payment for your Credit Card dues, it reflects poorly on your repayment capacity. Credit card issuing companies do not want to take on such a risk and reject applications from applicants with poor repayment track record. 
  1. Issues related to job security: If you have just started working at your new job or have changed multiple jobs in the last year, it shows there are issues related to the stability and security of your job. As a result, the companies feel that the risk involved is higher, and they reject such Credit Card applications. 
  1. Age-related factors:  Credit Card companies in India do not issue cards to the applicants below 18 years of age or older than 60 years of age. The reason behind this rationale is that customers falling under these categories are more likely not to have a stable source of income and might thus not be able to make the repayments on time. 
  1. Verification Report: Before any Credit Card application is approved, the company gets a field verification done. The agent will come to your place and ask certain questions about your application. If the information shared is inconsistent with what is mentioned in the application, then your Credit Card application will be rejected. 

So, you must keep these reasons for rejection in mind before applying for a new Credit Card. This will help you avoid these issues and therefore improve your eligibility. 

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