Getting approved for a credit card is not as easy as it seems to be. One needs to be responsible and keep a lot of things in mind in order to get approved for a credit card. Different credit cards have different types of features and the eligibility criteria for them also vary accordingly. If you are trying to get a credit card, you must do thorough research on different cards applicable in the market so that you can filter out some best cards for which you are eligible. If you are applying for credit cards for a long time but your application is getting rejected, again and again, there are definitely some points that you are missing out on. In this article, we will help you understand some reasons why your credit card application may get rejected:
Possible Reasons For The Rejection of Credit Card Application
The following are some of the common reasons why a credit card application may get rejected. If you want to get approved for a credit card and maintain a good credit score, you should keep the following points in mind:
No Credit History
If you have never used any type of credit before, you would not have a credit history and this might be one of the biggest reasons behind a credit card application being rejected. When you use a credit card or any type of loan, your credit history builds ups side by side and this credit history is checked by the card issuers before approving or rejecting your credit card application. People with an excellent credit history or a credit score above 700 will have a greater chance of approval than those with a low credit score or no credit history.
So, what you should do is try building a credit score using a supplementary credit card or a secured credit card first. This will help you build your credit score and then it will be easier for you to get any unsecured credit card after that.
Low Income or No Income Source
Credit Card issuers also check for your employment details in order to make sure that you have some source of income to repay your outstanding amount. Different credit cards may have different income requirements and it is advisable to check the eligibility criteria of a credit card before you apply for it. If you don’t have an income source or if you have a low annual income, there are high chances that your credit card application will be rejected. So, if you have an average or low income, you should try to get a basic or entry-level credit card first to start your credit journey.
High Utilization Ratio
The credit Utilization Ratio is among the most important factors that are considered while calculating the credit score of an individual. When you apply for a credit card, the card issuer checks for your credit report where detailed information about your credit accounts, payment history, and credit utilization is mentioned. In order to maintain a good credit score, it is advisable not to use more than 30% of your total credit limit. If you have utilized a lot of your credit limit, the card issuer may consider you a risky borrower and as a result, your credit card application may get rejected.
Poor Payment History
Your payment behavior is the most important factor that may affect the card issuer’s decision while approving or rejecting your credit card application. If your credit report reflects all the on-time payments and a good credit score, there are high chances that your credit card application will be approved. On the other hand, if you have missed or defaulted on any repayments in the past, it would be difficult for you to get approved for a credit card. So, you should try to make on-time payments always as even a few payment defaults can make the card issuers doubt your creditworthiness.
Multiple Credit Applications In A Short Period
The no. of hard inquiries on your credit profile is also an important factor to decide your creditworthiness. Whenever you apply for a credit card, the issuer checks your credit report, and it further increases the number of hard inquiries on your credit profile. Too many hard inquiries within a short time period implicate that the applicant is very much in need of credit and may default payments. This may also become a reason why your credit card applications are getting rejected again and again.
Other Reasons
Apart from the above factors, there can be several other reasons behind the rejection of your credit card application. For example, there are some card issuers that don’t provide credit card services in certain cities or villages. So, before applying for any credit card, you must check whether the bank/card issuer is serviceable in your area or not. Sometimes your credit card application may get rejected even when your credit score is excellent as the banks have some inter criteria as well.
Bottom Line
In order to get approved for credit cards or loans, the most important thing is to maintain a good credit score. Now, you might have understood all the possible reasons why your credit card application is getting rejected. If you are making any of the above mistakes, you should try getting them corrected. Moreover, if your application gets rejected, don’t apply for another credit card just after that as it will impact your credit score negatively.